Mandatory Climate Disclosure and Corporate Financial Risk Governance: Evidence from BP

Abstract

Climate change has become an important source of uncertainty for modern businesses. In response to growing environmental and financial concerns, regulators in many countries have introduced mandatory climate disclosure requirements. While previous studies mainly focus on how climate disclosure affects stock prices, financing costs, and investor reactions, fewer studies examine whether disclosure requirements can influence internal corporate management. This paper explores the impact of mandatory climate disclosure on corporate financial risk management through a case study of BP, a leading multinational energy company in the United Kingdom. By reviewing BP’s public reports and governance practices, this paper analyzes changes in governance structure, risk identification, and financial decision-making processes. The findings suggest that mandatory climate disclosure not only improves external transparency, but also encourages firms to strengthen internal governance systems, develop more structured risk management frameworks, and integrate climate factors into financial planning. Therefore, climate disclosure should be viewed not only as a compliance requirement, but also as a useful tool for improving long-term corporate risk management.