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Climate‐related risks in financial assets

Author

Listed:
  • Emanuele Campiglio
  • Louis Daumas

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique)

  • Pierre Monnin
  • Adrian von Jagow

Abstract

The financial risks and potential systemic impacts induced by climate change and the transition to a low‐carbon economy have become a central issue for both financial investors and their regulators. In this article, we develop a critical review of the empirical and theoretical literature concerning the impact of climate‐related risks on the price of financial assets. We first present the theoretical links between asset pricing and climate‐related risks and develop a theory of how climate risk drivers transmit costs to firms and lead to asset price changes. We then discuss studies looking at past climate‐related events, which show that both climate physical impacts and transition dynamics can trigger a revaluation of financial assets through multiple direct and indirect channels. Finally, we review the emerging literature that uses forward‐looking methodologies to estimate future climate‐related asset price changes, which suggests that climate financial risks can indeed have significant implications on financial stability.

Suggested Citation

  • Emanuele Campiglio & Louis Daumas & Pierre Monnin & Adrian von Jagow, 2022. "Climate‐related risks in financial assets," Post-Print hal-04505791, HAL.
    • Handle: RePEc:hal:journl:hal-04505791
    DOI: 10.1111/joes.12525
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    Cited by:

    1. Blasberg, Alexander & Kiesel, Rüdiger & Taschini, Luca, 2024. "Carbon default swap – disentangling the exposure to carbon risk through CDS," LSE Research Online Documents on Economics 128528, London School of Economics and Political Science, LSE Library.
    2. Turek Marian, 2022. "A New Approach to Sustainable Financial Stability and its Prospects," WSB Journal of Business and Finance, Sciendo, vol. 56(1), pages 64-71.
    3. Riaz Tabassum & Selamat Aslam Izah & Nor Normaziah Mohd & Hassan Ahmad Fahmi Sheikh, 2025. "Do Investors Get an Advantage from Corporate Green Bond Issuance? A Cross-Country Study," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 35(2), pages 1-37.
    4. Xing Chen & Fenghua Wen & Jinli Xiao & Gary Gang Tian, 2025. "Weathering the Risk: How Climate Uncertainty Fuels Corporate Fraud," Journal of Business Ethics, Springer, vol. 201(2), pages 519-547, October.
    5. Fan, Wenna & Wang, Feng & Zhang, Hao & Yan, Bin & Ling, Rui & Jiang, Hongfei, 2024. "Is climate change fueling commercial banks’ non-performing loan ratio? Empirical evidence from 31 provinces in China," International Review of Economics & Finance, Elsevier, vol. 96(PA).
    6. Laborda, Juan & Suárez, Cristina & Fernández, Alejandro & Wang, Haoran & Cerdá, Emilio & Ricci, Liana & Quiroga, Sonia, 2026. "Unveiling how financial markets could intensify climate change risks," Ecological Economics, Elsevier, vol. 239(C).
    7. Adriano Bellinvia & Paola Brighi & Valeria Venturelli, 2026. "Banks and climate risk: a bibliometric review and policy perspective," Journal of Banking Regulation, Palgrave Macmillan, vol. 27(2), pages 1-29, June.
    8. Serra, Gustavo Pereira & Gallo, Ettore, 2026. "Climate change mitigation and green energy investment: A stock-flow consistent model," Ecological Economics, Elsevier, vol. 241(C).
    9. Ekaterina Ponomareva Reshetnikova, 2026. "Climate performance evaluation of investment portfolios as driver of net zero economy: comparative study and analysis of existing methodologies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 162(1), pages 121-152, February.
    10. Michele Azzone & Carlo Bechi & Gabriele Sbaiz, 2026. "Temperature Anomalies and Climate Physical Risk in Portfolio Construction," Papers 2604.11143, arXiv.org.
    11. Kumari, Vineeta & Pandey, Dharen Kumar, 2025. "Market reactions to the central bank’s mandate on climate-related financial risk disclosures: Evidence from the Indian banking sector," Finance Research Letters, Elsevier, vol. 84(C).
    12. Iram Hasan & Shveta Singh & Smita Kashiramka, 2025. "Does Socially Responsible Investing Outperform Conventional Investing? A Cross-Country Perspective," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 32(4), pages 1307-1356, December.
    13. Ji, Qiang & Ma, Dandan & Zhai, Pengxiang & Fan, Ying & Zhang, Dayong, 2024. "Global climate policy uncertainty and financial markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 95(C).
    14. Capucine Nobletz, 2026. "The impact of natural disasters on US business credit markets: a comparative analysis of short-term and long-duration events," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 162(1), pages 313-350, February.
    15. Vinzenz Peters, 2025. "How Banks are Impacted by and Mediate the Economic Consequences of Natural Disasters and Climate Shocks: A Review," De Economist, Springer, vol. 173(1), pages 47-85, March.
    16. Waidelich, Paul & Krug, Joscha & Steffen, Bjarne, 2025. "Mobilizing credit for clean energy: De-risking and public loan provision under learning spillovers," Journal of Environmental Economics and Management, Elsevier, vol. 133(C).
    17. Pacelli, Vincenzo & Foglia, Matteo & Mariano, Dayana, 2025. "The link between climate and systemic risk: A bibliometric and systematic literature review," Research in International Business and Finance, Elsevier, vol. 79(C).
    18. You, Wonhee & Kang, Hankil & Ryu, Doojin, 2025. "How do climate and market uncertainties affect ESG performance?," Finance Research Letters, Elsevier, vol. 86(PG).
    19. Pius Gamette & Clement Oteng, 2025. "Implementation of environmental tax in Sub-Saharan Africa: a comparative analysis from policy adopter and policy pioneers," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 30(2), pages 1-23, February.
    20. Michel Alexandre & Angela Modica Scala & Alessandro Caiani & Gilberto Tadeu Lima, 2025. "The Impact of Climate Transition Risks on the Brazilian Financial Sector," Working Papers Series 633, Central Bank of Brazil, Research Department.
    21. Salisu, Afees A. & Ogbonna, Ahamuefula E. & Gupta, Rangan & Bouri, Elie, 2025. "Forecasting spot and futures price volatility of agricultural commodities: The role of climate-related migration uncertainty," Research in International Business and Finance, Elsevier, vol. 80(C).
    22. Olaboopo, Olakunle & Boamah, Evans O., 2026. "Climate change news risk and advertising spending," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 106(C).
    23. Trotta, Annarita & Piluso, Fabio & Strano, Eugenia & Ceraso, Danilo, 2025. "The climate-related financial risks measurement methodologies: Advances, challenges, and frontiers," Research in International Business and Finance, Elsevier, vol. 79(C).
    24. Sabri Boubaker & Thanh Ngo & Aristeidis Samitas & David Tripe, 2025. "An MCDA composite index of bank stability using CAMELS ratios and shannon entropy," Annals of Operations Research, Springer, vol. 353(1), pages 353-376, October.
    25. Naftal Nyarangi Oino & Charles Katua Kithandi, 2025. "Firm Size and Sustainability Reporting in the Nairobi Securities Exchange, Kenya," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(5).

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