Climate change, asset redeployability, and sustainability: evidence from earnings conference calls

Taking advantage of an innovative measure of firm-specific exposure to climate change generated from a powerful textual analysis, we explore the effect of climate change vulnerability on asset redeployability. Redeployable assets are those that can be used in several ways. Highly redeployable assets improve sustainability as they can be reused when conditions change, decreasing the demand for new assets and thereby conserving natural resources. Our findings suggest that firms more vulnerable to climate change exhibit a lower level of asset redeployability, consistent with the notion that exposure to climate change exacerbates managerial myopia, causing managers to prioritize short-term asset utilization above longterm redeployability. Additionally, we find that the negative effect of climate change exposure on asset redeployability is less pronounced for firms with more innovation. Our research reveals another important aspect of sustainability that is threatened by climate change.