Will Climate Change Crash the Stock Market?

A changing climate creates physical risk potentially affecting businesses, communities and the economy. Changing weather patterns, and previously habitable areas becoming uninhabitable due to temperature or flooding are examples of the physical risks of climate change. The transitional risk of climate change arises from the response of consumers and governments to climate change. The possibility that consumers will demand a lower carbon impact from products and services, and that governments will introduce regulations or taxes designed to reduce emissions, creates meaningful uncertainty for businesses.

Timestamps:
0:00 Climate change in asset prices
3:11 Is climate risk priced in the way that Pastor’s model suggests?
6:11 Transitional risk observed in asset prices
8:23 Carbon-intensive firms in portfolios
10:57 My final thoughts

Referenced in this video:
Sustainable Investing in Equilibrium: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3498354
Market Expectations About Climate Change: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336506
An Inconvenient Cost: The Effects of Climate Change on Municipal Bonds: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3167379
Disaster on the Horizon: The Price Effect of Sea Level Rise: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3073842
Science and the Stock Market: Investors’ Recognition of Unburnable Carbon: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2362154
Environmental Externalities and Cost of Capital: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1677653
Carbon Tail Risk: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3204420
Climate Regulatory Risks and Corporate Bonds: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3563271
Greenhouse Gas Emissions and Expected Returns: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3714874
Five Factor Investing with ETFs: https://www.pwlcapital.com/resources/five-factor-investing-with-etfs/

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Видео Will Climate Change Crash the Stock Market? канала Ben Felix