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Climate Finance

Author

Listed:
  • Stefano Giglio

    (School of Management, Yale University, New Haven, Connecticut 06520, USA)

  • Bryan Kelly

    (School of Management, Yale University, New Haven, Connecticut 06520, USA)

  • Johannes Stroebel

    (Stern School of Business, New York University, New York, NY 10012, USA)

Abstract

In this article, we review the literature studying interactions between climate change and financial markets. We first discuss various approaches to incorporating climate risk in macrofinance models. We then review the empirical literature that explores the pricing of climate risks across a large number of asset classes, including real estate, equities, and fixed income securities. In this context, we also discuss how investors can use these assets to construct portfolios that hedge against climate risk. We conclude by proposing several promising directions for future research in climate finance.

Suggested Citation

  • Stefano Giglio & Bryan Kelly & Johannes Stroebel, 2021. "Climate Finance," Annual Review of Financial Economics, Annual Reviews, vol. 13(1), pages 15-36, November.
    • Handle: RePEc:anr:refeco:v:13:y:2021:p:15-36
    DOI: 10.1146/annurev-financial-102620-103311
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Climate Finance
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2021-05-31 11:38:10

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    More about this item

    Keywords

    climate change; climate risk; physical risk; transition risk; ESG; environmental; social; and corporate governance;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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