Corporate climate risk (CR) disclosures have become more widespread in recent years following enhanced public awareness about climate change and regulatory interventions. We hypothesize that increased CR disclosure allows a firm to appeal to a larger set of institutional investors, and thereby enhances dispersion of ownership. In turn, this leads to a greater supply of lendable shares, less binding short-selling constraints, and improved stock market liquidity as well as price efficiency. Using the SEC (2010) CR-disclosure guidance as a treatment event in a difference in differences (DiD) setting, we find evidence consistent with our hypotheses. Our study identifies CR disclosures as a novel source of ownership breadth, and, ultimately, financial market quality. We also show that socially responsible mutual funds are particularly important in channeling CR disclosures' positive effects on financial markets.