The Impact of Climate Change on Dividend Policy in the UK Stock Market

In this paper we ascertain whether or not below average temperature increases have a positive effect on dividend policy. Using FTSE-350 (UK) data from between 1990 and 2019 we documented those seasonal temperatures that had a significant and methodical effect on the UK dividend pay-out policy, both at the cumulative level and across a wide cross-section of economic sectors. We used dividend changes and average temperature (as a proxy for climate change). Our findings show that the effect is strong for winter, summer and autumn; an increase of below average temperatures has positive effects on dividend pay-out policy. This study also looks at industry dynamics to show whether particular industries have any effect on particular sessions on UK dividend policy. The results show that three sessions have a significant effect on dividend pay-out policy and stock market returns and one session has no effect.