IDEAS home Printed from https://ideas.repec.org/a/bla/jecsur/v40y2026i3p1615-1625.html

Navigating Climate Risk in Financial Markets: New Theories and Insights for Asset Pricing

Author

Listed:
  • Alessio Capriotti
  • Massimiliano Ferrara
  • Silvia Muzzioli

Abstract

Climate change has a significant impact on the global economy and financial markets, making climate risk and uncertainty central to asset pricing decisions. These risks include potential economic losses due to extreme weather events or gradual changes and can impact business redundancy, infrastructure stability, and approval channels. We review the main theoretical models that incorporate climate risk in asset pricing and the empirical methods to assess the existence of a climate risk premium. Building on this literature, we develop three original theorems that advance our understanding of climate risk pricing dynamics, provide a framework for climate‐adjusted discount rates, and establish the relationship between climate risk diversification and portfolio optimization under uncertainty.

Suggested Citation

  • Alessio Capriotti & Massimiliano Ferrara & Silvia Muzzioli, 2026. "Navigating Climate Risk in Financial Markets: New Theories and Insights for Asset Pricing," Journal of Economic Surveys, Wiley Blackwell, vol. 40(3), pages 1615-1625, July.
    • Handle: RePEc:bla:jecsur:v:40:y:2026:i:3:p:1615-1625
    DOI: 10.1111/joes.70053
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/joes.70053
    Download Restriction: no
    File URL: https://libkey.io/10.1111/joes.70053?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jecsur:v:40:y:2026:i:3:p:1615-1625. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0950-0804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.