In the face of escalating climate risks, investing in a climate-resilient world has become a necessity rather than an option. Climate change is not a distant concern − it is a present reality that has profound implications for our environment, economies and societies (Boubaker and Nguyen, 2012, 2014; Boubaker et al., 2018a, 2018b; Ma et al., 2022; Ilhan et al., 2023; Boubaker et al., 2025; Du et al., 2025). The financial sector plays a crucial role in addressing these challenges by funding innovative green technologies, supporting climate adaptation measures and incentivizing businesses to embrace sustainable practices. Finance has the unique ability to allocate capital toward projects that yield not only financial returns but also substantial environmental and social benefits. Thus, the role of finance extends beyond profit-making; it is integral to shaping a sustainable future and ensuring the well-being of future generations.
The research presented in this special issue delves into the multifaceted role of firms in promoting climate resilience and addressing environmental concerns. Through various empirical studies, this issue highlights how financial decisions, corporate strategies and policy measures contribute to the broader climate solution.
The first study by Hoang (2025) examines the relationship between economic policy uncertainty (EPU) and auditor selection among Chinese listed firms. The findings reveal that during periods of high EPU, firms are more likely to opt for non-Big 4 auditors, primarily due to uncompromising audit fees and lower financial reporting quality. However, corporate social responsibility (CSR) plays a mitigating role in this decision, as firms with strong CSR commitments tend not to compromise their audit quality. This research underscores the importance of CSR as a risk mitigation tool in uncertain economic climates and highlights the link between financial transparency and sustainability.
Next, Tabash et al. (2025) investigate the impact of technological innovation and financial development on environmental quality in Arab countries. Using a data set spanning 30 years and 10 nations, the study finds that both technological advancements and financial development significantly reduce carbon emissions. A well-developed financial sector facilitates access to funding for clean energy initiatives and sustainable production methods, thereby promoting environmental quality. The findings emphasize the need for increased investment in research and development as well as financial sector improvements to enhance environmental sustainability.
The following study by Gabr and ElBannan (2025) explores how environmental investments influence firm financial performance in emerging markets. Using a data set of over 4,000 firms from 25 countries, the study finds that firms with lower carbon emissions experience higher profitability. However, high ESG disclosure scores do not always translate into superior financial performance unless a threshold level is reached. The study also identifies a U-shaped relationship between ESG investments and profitability, indicating that firms may initially face financial drawbacks before realizing long-term gains. Importantly, firms with sustainable investments showed more resilience during the COVID-19 pandemic, highlighting the strategic benefits of environmental sustainability in times of crisis.
Furthermore, Pandey et al. (2025) provide an empirical assessment of how financial markets react to mandatory climate disclosure regulations in Malaysia. Using an event study methodology, the findings indicate an initial negative reaction from investors, followed by a fluctuating trend. The sector-wise analysis reveals heterogeneous effects, suggesting that industries respond differently to climate disclosure mandates. The study highlights the growing importance of ESG considerations in financial markets and underscores the need for tailored strategies that account for industry-specific dynamics. The findings have significant implications for policymakers and regulators seeking to enhance corporate climate disclosure practices.
In the final study, Mirza et al. (2025) examine the role of blue and green lending in optimizing credit portfolios in the Eurozone banking sector. Analyzing data from 20 countries over 11 years, the study finds that banks exposed to green and blue firms benefit from higher interest rate spreads and lower default probabilities. These results confirm that sustainable lending not only supports environmental goals but also enhances financial stability. The study contributes to the growing literature on sustainable finance by extending its analysis to the blue economy, an area that has received limited attention in prior research.
In conclusion, the studies featured in this special issue collectively highlight the critical intersection between finance and climate resilience. The findings in this issue reinforce the urgency of integrating sustainability into financial decision-making and provide a roadmap for achieving a more climate-resilient world. The insights derived from these research papers demonstrate how financial markets, corporate strategies and regulatory frameworks can work together to drive sustainable outcomes. From the role of CSR in mitigating economic policy uncertainty to the financial benefits of sustainable investments, the findings in this special issue provide valuable guidance for investors, policymakers and business leaders navigating the transition toward a climate-resilient world.
