The impacts of climate risks on financial performance of mining industry: Evidence from companies in Mongolia [1]Enkh-Otgon Gankhuyag, [2]Nasantogtokh Erdenebileg, [3]Tushigmaa Zaya, [4]Narantsetseg Amarsanaa
[1] Department of accounting and analyses, Mandakh University, Ulaanbaatar, Mongolia
[2] National center for maternal and child health, Ulaanbaatar, Mongolia
[3] Department of accounting and analyses, Mandakh University, Ulaanbaatar, Mongolia
[4] Department of accounting and analyses, Mandakh University, Ulaanbaatar, Mongolia
Abstract
Abstract- Increasing global climate change has had potential impacts on business operations and gets uncertainty and the mining industry is highly dependent on the climate. Firstly, this paper reviews the impact of climate change on the financial performance of Mongolian mining companies. Secondly, this study reviews climate risk indicator with 5 types of climate risks, to assess effect of climate change risks on the Mongolia^s mineral top companies. The study sample includes 16 Mongolian companies in the mining industry in the period of 2009-2021. Climate change was assessed using the Climate Risk Index (CRI). The panel least square regression and panel structure VAR models were used to examine the impacts of climate risks on the company^s financial performance. Empirical results show that an increase in the CRI score by 1 increases the ROA by 0.2, and the one-time shock is expected to stabilize after one year. There is a statistically significant positive relationship between climate risk and the financial performance of mining companies. An increase in extreme weather events will have a negative impact on the financial performance of Mongolian mining companies after 2 years. As mining activity increases, climate risk increases, and businesses need to consider climate risk assessment. Furthermore, it could add climate events to the model, which include storms, floods, and drought.
