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Annual Review of Financial Economics

Volume 13, 2021

Climate Finance

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.

Keyword(s): climate change, climate risk, environmental, social, and corporate governance, ESG, JEL G10, JEL Q54, physical risk, transition risk
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/content/journals/10.1146/annurev-financial-102620-103311
2021-11-01
2025-04-20
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/content/journals/10.1146/annurev-financial-102620-103311
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Climate Finance
Annual Review of Financial Economics 13, 15 (2021); https://doi.org/10.1146/annurev-financial-102620-103311
/content/journals/10.1146/annurev-financial-102620-103311
/content/journals/10.1146/annurev-financial-102620-103311
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