Using a sample of Chinese listed group companies from 2007 to 2022, this study explores the role of subsidiaries’ reverse resource transfer in mitigating the impact of climate risk on the operating performance of business groups. The study finds that when the parent company is exposed to higher climate risk, the overall operating performance of the business group usually declines, and the increase in dividends by subsidiaries can alleviate this adverse impact. Mechanism analysis shows that climate risk prompts the parent company to transfer production activities to subsidiaries, furthermore, the subsidiaries increase dividends to the parent company. This dynamic process effectively exerts the climate risk shelter effect of the business group. Furthermore, the larger the number of subsidiaries located in low climate risk regions and out-of-region subsidiaries, and the more geographically dispersed the subsidiaries are, the more pronounced the mitigating effect of subsidiaries’ dividends. Heterogeneity analysis indicates that in business groups with severe financing constraints and lower subsidiary agency costs, the increase in dividends by subsidiaries is more effective in mitigating climate risk.