Climate change and the transition to low-carbon economies impact financial asset prices
In short: Researchers who reviewed existing literature found that climate-related risks significantly influence the value of financial assets. The study highlights how both the physical consequences of a changing climate and the economic shift toward greener energy can force a revaluation of investments. These factors can create systemic risks, potentially affecting broader financial stability.
The research synthesizes theoretical models and empirical data to explain how climate drivers transmit costs to companies, ultimately altering market prices. It examines how past climate events and current transition dynamics create various pathways for asset price fluctuations.
The study relies on a comprehensive review of existing theoretical and empirical literature rather than a new primary dataset. A limitation of this approach is that it summarizes previous findings rather than providing new primary data from a specific, independent experiment.
Why it matters: Understanding how climate change affects asset values is crucial for maintaining long-term financial stability and informed investing.
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Sources
- Source: Research: Campiglio et al. (2022). Climate‐related risks in financial assets. Journal of Economic Surveys. · cc-by-nc
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