Climate change presents huge challenges for financial markets. How should firm-level exposure to climate change be measured? Does a risk premium for climate change exposure exist? If so, how does it evolve over time? Which underlying climate-related economic variables drive this risk premium? In light of these challenging questions, significant resources have been allocated to develop the area of climate finance to better grasp how the transition to a low-carbon economy affects financial markets. This paper provides additional evidence to understand more fully how climate-related risks and opportunities affect stock returns.
18 Dec 2024
Research