Climate change and firm performance : evidence from listed manufacturing companies in Zimbabwe

Abstract

Climate change has become a material governance and performance issue for firms operating in climate-sensitive sectors. This study examined the relationship between climate change management practices and firm performance among listed manufacturing firms in Zimbabwe. The study was motivated by the increasing exposure of manufacturing firms to physical, transition, regulatory and reputational climate risks within a context of energy insecurity, macroeconomic instability, policy pressure and resource constraints. An explanatory sequential mixed-methods design was adopted. The quantitative phase analysed a balanced panel of 13 listed manufacturing firms over the 2021-2024 period, producing 52 firm-year observations. Firm performance was measured using return on assets (ROA), return on equity (ROE) and Tobin's Q. Climate change risk reporting (CCR) and climate change strategy (CCS) were measured using disclosure-based scores derived from annual reports, sustainability reports and publicly available corporate documents. Randomeffects panel regression, fixed-effects sensitivity checks, restricted Hausman testing, diagnostic tests, lagged models and robustness checks were used. The qualitative phase used documentary thematic analysis to explain and contextualise the statistical results. The findings show that CCR and CCS do not have consistently robust direct effects on ROA, ROE or Tobin's Q. CCR appears to function mainly as a risk-identification, compliance and legitimacy signal rather than an independent short-term performance driver. CCS shows stronger practical relevance, but its direct financial effect is constrained by implementation costs, limited climate finance, infrastructure weaknesses and uneven firm capabilities. The strongest evidence is found in the moderation results: the interaction between CCR and CCS is positive and significant for accounting-based performance, particularly ROA and ROE, especially in lagged models. This suggests that climate strategy operates as a conditional resilience capability, shaping whether climate risk exposure becomes financially damaging or manageable. Tobin's Q is more consistently associated with firm size than climate variables, indicating that market valuation in this context may reflect scale, visibility and organisational capacity more than climate strategy alone. The study contributes empirically by providing firm-level evidence from Zimbabwe, theoretically by integrating institutional, legitimacy, stakeholder and resource-based perspectives, and practically by offering a framework for assessing climate governance, strategy, implementation and resilience outcomes in manufacturing firms.