The Impact of Climate Change on the Performance of Agricultural Companies Worldwide

Abstract

This study examines the impact of climate change on agricultural firms, focusing on physical risks, both chronic (e.g., temperature and precipitation) and acute (e.g., droughts and floods). We conduct a panel data analysis of 19,929 companies in 69 countries across five continents from 2013 to 2021. We evaluate firms' vulnerability based on size and geographical location across various climate zones. The study highlights the rising costs that climate risks impose on smaller companies, compromising their operations and profitability. Contrary to previous studies, our findings suggest that companies in continental and temperate climates are the most affected. This challenges the existing literature and demonstrates that the relationship between temperature and agricultural performance is more complex than previously thought. As climate variability increases, it is critical that policymakers and companies adopt tailored strategies to mitigate these risks and enhance resilience, especially for the most vulnerable companies.