Awatif Hodaed Alsheikh

In recent decades, stakeholders have begun to place a greater emphasis on sustainability-related issues, including climate change. Furthermore, the implementation of climate change initiatives has prompted companies to disclose information regarding their evaluation and handling of climate-related risks and potential benefits. However, there is a lack of existing literature that investigates this issue in less developed markets, particularly in Saudi Arabia, where the capital market is rapidly developing. The objective of this study is to assess the degree of performance in reporting climate risk and investigate potential correlations between climate risk reporting performance and firm characteristics among non-financial firms in Saudi Arabia during the period from 2018 to 2021. To achieve the objectives of the study, a total of 515 firm-year observations were utilized, representing 140 non-financial firms in the context of Saudi Arabia. The study’s findings illustrate that the climate risk reporting performance level has steadily improved in Saudi companies over the years. In addition, the findings reveal that firm size and industry exhibit a positive correlation with climate risk reporting performance. Conversely, firm leverage and profitability do not demonstrate such associations. The results are in line with alternative measures of climate risk reporting performance, as well as when climate risk reporting performance is broken down into the four core elements. Policymakers and market regulators could use these results to promote awareness of the factors that influence climate risk reporting performance and to enhance sustainable practices.