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Open Access CC BY-NC-ND V4.0
Journal article
Renewable Energy, Climate Risk, and the Cost of External Assurance: International Evidence
Business strategy and the environment, Early View
2026
Abstract
Corporate shifts from fossil fuels to renewable energy are central to climate-transition strategies, but their effects on external assurance have not been well understood. This study examines whether, how and where corporate renewable energy consumption affects the cost of external assurance, proxied by statutory audit fees. Using a large international panel of listed firms from 30 countries, we model assurance costs as a function of renewable energy use, three climate-related risk channels (greenhouse gas emissions, environmental fines, and climate-related media controversies), and extensive firm-, engagement-, and country-level controls. We find a robust negative association between renewable energy consumption and assurance costs, consistent with assurers pricing lower environmental and climate risk. Mediation tests show that reduced emissions, fewer environmental fines, and fewer climate-related controversies jointly explain a meaningful share of this relation. The effect is significantly stronger in countries with more stringent environmental policies, indicating that institutional context amplifies the assurance benefits of renewable strategies. Overall, the results position renewable energy as a climate-transition choice that reshapes externally priced risk and highlights assurance costs as a key governance channel through which climate risk is assessed and incentivized.
Details
- Title
- Renewable Energy, Climate Risk, and the Cost of External Assurance: International Evidence
- Authors/Creators
- Rashid Zaman - Curtin Univ, Sch Accounting Econ & Finance, Perth, AustraliaTerri Trireksani - Murdoch University, Murdoch Business SchoolHadrian Geri Djajadikerta - Edith Cowan University
- Publication Details
- Business strategy and the environment, Early View
- Publisher
- ERP Environment and John Wiley & Sons Ltd.
- Number of pages
- 19
- Identifiers
- 991005909775007891
- Copyright
- © 2026 The Author(s).
- Murdoch Affiliation
- Murdoch Business School
- Language
- English
- Resource Type
- Journal article
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