Published June 30, 2026
| Version v1
Journal article
Open
Impact of temperature on the reporting performance of energy sector companies
Authors/Creators
- 1. Higher School of Management, Moscow, Russia|Lomonosov Moscow State University, Moscow, Russia
Description
This study examines the impact of extreme temperatures on energy-sector companies, highlighting the financial and economic consequences of these temperatures as an important aspect of financial performance analysis. The research methodology is based on the application of regression models to corporate financial statements. This research obtained statistically significant evidence of a relationship among asset structure, financial flows, and external temperature for 55 publicly traded energy companies from 20 countries. The transformation of asset and cost structures is a necessary adaptation measure for companies operating in regions with harsh climates; the results reveal a significant excess of capital expenditures over operating expenses under such conditions. This study identified changes in the structure of financial flows that increased the financial burden and reduced investment attractiveness for these companies. The J-factor's nonlinear function reflects greater variability in operating conditions at low temperatures than at high temperatures, explaining contradictions in capitalization between regions with hot and extremely cold climates. The forced nature of the changes and the involvement of many sectoral players heighten the challenges in finding solutions to ensure market fairness and mitigate the uneven impact of climate change on businesses in colder regions. This study's results partially explain inconsistencies in tariff setting and product cost coordination among companies in regions with extreme climates and those in more temperate areas and outline the contours of required management decisions at the global, national, and corporate levels.
The author expresses sincere gratitude to the attendees of the Lomonosov Readings in April 2025 and the 52nd EBES conference in Istanbul in July 2025 for their insightful comments. The author also thanks Professor Viktor Suyts for his continuous support and the companies that provided financial statements and valuable comments for this study.
Files
RUJEC_article_168448.pdf
Files
(646.5 kB)
| Name | Size | Download all |
|---|---|---|
|
md5:fea95126cd954cb53936aa2968c5e21a
|
507.5 kB | Preview Download |
|
md5:c979cce0f07f428d717fc94b1f5678b7
|
139.0 kB | Preview Download |
Additional details
References
- Acharya, V., Bhardwaj, A., & Tomunen, T. (2023). Do firms mitigate climate impact on employment? Evidence from U.S. heat shocks. NBER Working Paper, No. 31967. https://doi.org/10.3386/w31967
- Addoum, J., Ng, D., & Ortiz-Bobea, A. (2020). Temperature shocks and establishment sales. The Review of Financial Studies, 33(3), 1331–1366. https://doi.org/10.1093/rfs/hhz126
- Addoum, J., Ng, D., & Ortiz-Bobea, A. (2023). Temperature shocks and industry earnings news. Journal of Financial Economics, 150(1), 1–45. https://doi.org/10.1016/j.jfineco.2023.07.002
- Al-Shatnawi, Z., Hachem-Vermette, C., Lacasse, M., & Ziaeemehr, B. (2024). Advances in cold-climate-responsive building envelope design: A comprehensive review. Buildings, 14(11), 3486. https://doi.org/10.3390/buildings14113486
- Barreca, A. I. (2012). Climate change, humidity, and mortality in the United States. Journal of Environmental Economics and Management, 63(1), 19–34. https://doi.org/10.1016/j.jeem.2011.07.004
- Bates, R. E., & Bilello, M. A. (1966). Defining the cold regions of the northern Hemisphere. Cold Regions Research & Engineering Laboratory Technical Report, No. 178.
- Bonakdar, F., Sasic Kalagasidis, A., & Mahapatra, K. (2017). The implications of climate zones on the cost-optimal level and cost-effectiveness of building envelope energy renovation and space heat demand reduction. Buildings, 7(2), 39. https://doi.org/10.3390/buildings7020039
- Brzezinska, I., & Jasper, P. (2024). The negative effect of temperature variability on household wealth in low- and middle-income countries. Economics of Disasters and Climate Change, 8(3), 417–452. https://doi.org/10.1007/s41885-024-00160-6
- Burke, M., Hsiang, S., & Miguel, E. (2015). Global nonlinear effect of temperature on economic production. Nature, 527(7577), 235–239. https://doi.org/10.1038/nature15725
- Butt, J., & Abdelaziz, D. K. A. (2025). Sustainable governance in the digital age: E-government innovations for climate action. Journal of Recycling Economy & Sustainability Policy, 4(1), 54–69.
- Butt, J., & Kousar, F. (2024). Harnessing offshore wind for sustainable economic growth in Nordic countries: Legal innovations, economic opportunities, SDG and policy integration. Acta Universitatis Danubius. Œconomica, 20(2), 123–145.
- Cai, X., Lu, Y., & Wang, J. (2018). The impact of temperature on manufacturing worker productivity: Evidence from personnel data. Journal of Comparative Economics, 46(4), 889–905. https://doi.org/10.1016/j.jce.2018.06.003
- Callahan, C. W., & Mankin, J. S. (2022). National attribution of historical climate damages. Climatic Change, 172(3), 40. https://doi.org/10.1007/s10584-022-03387-y
- Chang, J. J., Wei, Y.-M., Yuan, X.-C., Liao, H., & Yu, B.-Y. (2020). The nonlinear impacts of global warming on regional economic production: An empirical analysis from China. Weather, Climate, and Society, 12(4), 759–769. https://doi.org/10.1175/WCAS-D-20-0029.1
- Churchill, S. A., Trinh, T. A., & Danquah, M. (2023). Temperature, climate change, and household financial behavior: Evidence from Viet Nam. WIDER Working Paper, No. 2023/95. Helsinki: UNU-WIDER. https://doi.org/10.35188/UNU-WIDER/2023/403-8
- Coonan, A. (2023). Heat waves scorch margins, employees, infrastructure: Business risks of extreme heat. Bradley Intelligence Report, July.
- Dahl, K., Spanger-Siegfried, E., Licker, R. et al. (2019). Killer heat in the United States: Climate choices and the future of dangerously hot days. Union of Concerned Scientists.
- Dell, M., Jones, B. F., & Olken, B. A. (2009). Temperature and income: Reconciling new cross-sectional and panel estimates. American Economic Review, 99(2), 198–204. https://doi.org/10.1257/aer.99.2.198
- Dell, M., Jones, B. F., & Olken, B. A. (2012). Temperature shocks and economic growth: Evidence from the last half century. American Economic Journal: Macroeconomics, 4(3), 66–95. https://doi.org/10.1257/mac.4.3.66
- Dell, M., Jones, B. F., & Olken, B. A. (2014). What do we learn from the weather? The new climate-economy literature. Journal of Economic Literature, 52(3), 740–798. https://doi.org/10.1257/jel.52.3.740
- Deryugina, T., & Hsiang, S. M. (2014). Does the environment still matter? Daily temperature and income in the United States. NBER Working Paper, No. 20750. https://doi.org/10.3386/w20750
- Fankhauser, S., Smith, J. B., & Tol, R. S. J. (1999). Weathering climate change: Some simple rules to guide adaptation decisions. Ecological Economics, 30(1), 67–78. https://doi.org/10.1016/S0921-8009(98)00117-7
- Galikeev, I. A., Nasyrov, V. A., & Nasyrov, A. M. (2015). Oil field exploitation in abnormal conditions. Izhevsk: Paratsels Print (in Russian).
- Graff Zivin, J., & Neidell, M. (2014). Temperature and the allocation of time: Implications for climate change. Journal of Labor Economics, 32(1), 1–26. https://doi.org/10.1086/671766
- Greßer, C., Meierrieks, D., & Stadelmann, D. (2020). The link between regional temperature and regional incomes: Econometric evidence with sub-national data. Paper presented at the 72nd Economic Policy Panel Meeting, October 22–23.
- Griffin, P. A., Lont, D. H., & Lubberink, M. J. P. (2024). The effects of extreme high temperature spells on financial performance. British Accounting Review, 57(2), 101383. https://doi.org/10.1016/j.bar.2024.101383
- Gudmestad, O., & Karunakaran, D. (2012). Planning for construction work in cold climate regions. In Proceedings of the 31st International Conference on Offshore Mechanics and Arctic Engineering (Vol. 6, pp. 449–455). American Society of Mechanical Engineers. https://doi.org/10.1115/OMAE2012-83301
- Gudmestad, O. T. & Markeset, T. (2015). Oil and gas operations under extreme conditions in the cold north. International Journal of Computational Methods and Experimental Measurements, 3(1), 7–12. https://doi.org/10.2495/CMEM-V3-N1-7-12
- Hsiang, S. (2016). Climate econometrics. Annual Review of Resource Economics, 8(1), 43–75. https://doi.org/10.1146/annurev-resource-100815-095343
- Huang, Y., Zhang, L., Li, Y. et al. (2023). Characteristics of the Northern Hemisphere cold regions changes from 1901 to 2019. Scientific Reports, 13(1), 3879. https://doi.org/10.1038/s41598-023-30263-1
- IFRC (2022). Extreme heat: Preparing for the heatwaves of the future. A joint publication of The United Nations Office for the Coordination of Humanitarian Affairs, The International Federation of Red Cross and Red Crescent Societies, and the Red Cross Red Crescent.
- Kalkuhl, M., & Wenz, L. (2020). The impact of climate conditions on economic production: Evidence from a global panel of regions. Journal of Environmental Economics and Management, 103, 102360. https://doi.org/10.1016/j.jeem.2020.102360
- King, A. D., & Harrington, L. J. (2018). The inequality of climate change from 1.5 to 2 °C of global warming. Geophysical Research Letters, 45(10), 5030–5033. https://doi.org/10.1029/2018GL078430
- Kirdyanov, A. V., Krusic, P. J., Shishov, V. V. et al. (2020). Ecological and conceptual consequences of Arctic pollution. Ecology Letters, 23, 1827–1837. https://doi.org/10.1111/ele.13611
- Köppen, W. (1936). Das Geographische System der Klimate. In: W. Köppen & R. Geiger (Eds.), Handbuch der Klimatologie (Band I, Teil C). Berlin: Verlag von Gebrüder Borntrager (in German).
- Langenbrunner, B. (2023). Global gas pipeline expansion. Global Energy Monitor, December.
- Meierrieks, D. (2021). Weather shocks, climate change and human health. World Development, 138, 105228. https://doi.org/10.1016/j.worlddev.2020.105228
- Meierrieks, D., & Stadelmann, D. (2024). Is temperature adversely related to economic development? Evidence on the short-run and the long-run links from sub-national data. Energy Economics, 136, 107758. https://doi.org/10.1016/j.eneco.2024.107758
- Moyer, E. J., Woolley, M. D., Matteson, N. J., Glotter, M. J., & Weisbach, D. A. (2014). Climate impacts on economic growth as drivers of uncertainty in the social cost of carbon. Journal of Legal Studies, 43(2), 401–425. https://doi.org/10.2139/ssrn.2312723
- Nguyen, D. H., & Khominich, I. P. (2023). The measurement of green economic quality in the BRICS countries: Should they prioritize financing for environmental protection, economic growth, or social goals? Russian Journal of Economics, 9, 183–200. https://doi.org/10.32609/j.ruje.9.101612
- Otto, F. E. L., Philip, S., Kew, S., Li, S., King, A., & Cullen, H. (2018). Attributing high-impact extreme events across timescales: A case study of four different types of events. Climatic Change, 149(3), 399–412. https://doi.org/10.1007/s10584-018-2258-3
- Pankratz, N., Bauer, R., & Derwall, J. (2023). Climate change, firm performance, and investor surprises. Management Science, 69(12), 7352–7398. https://doi.org/10.1287/mnsc.2023.4685
- Ponticelli, J., Xu, Q., & Zeume, S. (2023). Temperature, adaptation, and local industry concentration. NBER Working Paper, No. 31533. https://doi.org/10.3386/w31533
- PwC (2022). Climate change reflected in financial statements, a role for companies and their auditors. PricewaterhouseCoopers B.V.
- Qiu, Y., & Zhao, J. (2019). Too hot to focus: The mean and distributional effects of heat on labor productivity. Available at SSRN: https://doi.org/10.2139/ssrn.3421890
- Rahmstorf, S., & Coumou, D. (2011). Increase of extreme events in a warming world. Proceedings of the National Academy of Sciences, 108(44), 17905–17909. https://doi.org/10.1073/pnas.1101766108
- Rodchenkov, M. V. (2022). Comparability of accounting indicators of international financial statements from the position of investors. Finance, Money, Investments, 3, 18–23. https://doi.org/10.36992/2222-0917_2022_3_18
- Song, Y., Pan, Z., Lun, F. et al. (2023). Temperature impact on the economic growth effect: Method development and model performance evaluation with subnational data in China. EPJ Data Science, 12(1), 51. https://doi.org/10.1140/epjds/s13688-023-00425-2
- Somanathan, E., Somanathan, R., Sudarshan, A., & Tewari, M. (2021). The impact of temperature on productivity and labor supply: Evidence from Indian manufacturing. Journal of Political Economy, 129(6), 1797–1827. https://doi.org/10.1086/713733
- Tol, R. S. J. (2009). The economic effects of climate change. Journal of Economic Perspectives, 23(2), 29–51. https://doi.org/10.1257/jep.23.2.29
- Wan, W., & Wang, J. (2024). The impact of weather on economic growth: County-level evidence from China. Sustainability, 16(22), 9988. https://doi.org/10.3390/su16229988
- Wang, C., & Lin, Q. (2021). How does bad weather affect labor productivity? Evidence from the adaptation behavior of couriers. China Economic Quarterly, 21(3), 797–818.
- Wu, L., Liu, D., & Lin, T. (2023). The impact of climate change on financial stability. Sustainability, 15(15), 11744. https://doi.org/10.3390/su151511744
- Zanocco, C., Boudet, H., Nilson, R., Satein, H., Whitley, H., & Flora, J. (2018). Place, proximity, and perceived harm: Extreme weather events and views about climate change. Climatic Change, 149(3), 349–365. https://doi.org/10.1007/s10584-018-2251-x
- Zehri, C. (2025). Renewable energy and industrial innovation: Catalysts for economic and trade growth. Russian Journal of Economics, 11, 93–122. https://doi.org/10.32609/j.ruje.11.142815
- Zeilinger, J., Kantelhardt, J., & Niedermayr, A. (2025). Climate change, soil conservation measures and farm performance in Austria. Journal of Agricultural Economics, 76(1), 182–210. https://doi.org/10.1111/1477-9552.12620
- Zhang, W., Ding, N., Han, Y., He, J., & Zhang, N. (2023). The impact of temperature on labor productivity — evidence from temperature-sensitive enterprises. Frontiers in Environmental Science, 10, 1039668. https://doi.org/10.3389/fenvs.2022.1039668