What is the relationship between financial asset performance and causal studies on climate change?
Best insight from top research papers
The relationship between financial asset performance and climate change is intricate and multifaceted. Climate-related risks, both physical and transitional, can impact the pricing of financial assets through various channels, as highlighted in empirical and theoretical literature . These risks can lead to systemic financial issues, including GDP reductions, company liquidations, losses for financial firms, and investor debt repayment challenges . To address these risks, climate risk management strategies are proposed to mitigate the adverse effects of climate change on financial systems . Moreover, aligning investments with sustainability goals can help achieve global climate targets and reduce exposure to carbon-intensive assets, thereby promoting financial stability . Overall, understanding and managing climate-related risks are crucial for maintaining financial stability and enhancing asset performance in the face of climate change challenges.
Answers from top 4 papers
More filters
| Papers (4) | Insight |
|---|---|
26 Oct 2020 5 Citations | The paper explores how climate change impacts the valuation of production assets within the IFRS framework, aiming to disclose climate-related risks and opportunities for financial stakeholders. |
70 Citations | Not addressed in the paper. |
| Climate-related risks can impact financial asset prices through direct and indirect channels, as shown by empirical and theoretical studies, suggesting a significant relationship between financial asset performance and climate change. | |
01 Jan 2021 2 Citations | Not addressed in the paper. |
Related Questions
A study of the relationships among environmental performance and financial performance?5 answersThe relationship between environmental performance (EP) and financial performance (FP) has been extensively studied in various contexts. Research indicates that EP can have a significant impact on FP, with findings suggesting both positive and negative associations. Studies have shown that as EP improves, FP tends to follow suit, leading to better economic outcomes for firms in the long run. Additionally, the quality of internal control and environmental regulation can moderate the relationship between EP and FP, emphasizing the importance of effective governance and regulatory frameworks in achieving a positive link between the two. Furthermore, the study on the banking sector in Turkey highlights a positive long-term effect of carbon dioxide emissions on financial performance, indicating a complex interplay between environmental factors and economic outcomes.
How does the global financial system respond to climate change mitigation efforts?5 answersThe global financial system responds to climate change mitigation efforts by showcasing interconnectedness and sensitivity to climate-related information. Studies indicate that climate risk impacts systemic financial risks, increasing system-wide connectedness across financial markets. Furthermore, climate-related financial policies are crucial for financing the low-carbon transition and protecting the financial system from climate risks. Investors expect corporations to invest in climate-resilient projects, with mitigation efforts positively affecting stock prices based on income and eco-friendly strategies. Climate finance has evolved to support global climate goals and sustainable development, emphasizing the role of financial systems in emissions reduction and adaptation. By balancing international and domestic strategic demands, countries like China can govern climate finance effectively in the evolving global economic system.
What are climate related financial risk?5 answersClimate-related financial risks encompass both physical risks, such as sea level rise and extreme weather events, and transition risks, like policy changes and technological advancements impacting financial systems. These risks can lead to increased credit risk for banks due to property value fluctuations, defaults, and costly upgrades driven by climate change. The interconnectedness across financial markets can be influenced by climate risk, affecting systemic financial risks. It is crucial for financial institutions to consider the heterogeneity in sectors' sensitivity to climate change to accurately assess risks and rewards. Climate-related financial policies are essential to mitigate these risks and facilitate a low-carbon transition, emphasizing the need for global commitment and enhanced financial disclosure and stress testing. Studies suggest that climate financial risks can significantly impact asset pricing and financial stability through various direct and indirect channels.
How does climate change affect financial statements?4 answersClimate change affects financial statements by introducing both risks and opportunities. Studies have shown that climate change can have a negative impact on economic growth and prosperity, leading to damage caused by extreme weather conditions. The empirical and theoretical literature suggests that climate-related risks can lead to revaluation of financial assets through direct and indirect channels, impacting asset prices and financial stability. As a result, there is a growing demand for climate-related concerns to be included in financial disclosures, leading to the development of international standards for climate-related financial information. The Green New Deal (GND) is a set of policies aimed at countering the effects of climate change, which will have significant implications for financial reporting and disclosure, requiring accountants to focus on compliance and learn new skills. Overall, climate change affects financial statements by influencing economic indicators, asset prices, and reporting requirements, creating both risks and opportunities for businesses.
The relationship between environmental and financial performance?5 answersThere is a relationship between environmental and financial performance. Studies have shown that environmental disclosure is positively related to financial performance. However, the association between environmental strategies and financial performance is more complex, with some studies finding a negative correlation. The impact of environmental performance on financial performance is also influenced by external factors such as economic development and information penetration. Additionally, the relationship between environmental performance and financial performance can vary during times of economic distress, with evidence suggesting that environmentally friendly business practices can positively affect financial structure even during crises like the COVID-19 pandemic. Furthermore, research has found a positive association between environmental performance and financial performance in both the most polluting and least polluting companies in the manufacturing sector.
How climate change adaptation plan can improve the financial performance of a company?2 answersClimate change adaptation plans can improve the financial performance of a company by mitigating risks and identifying opportunities associated with climate change impacts. By developing a robust approach to climate change adaptation governance, risk assessment, and financial disclosure, companies can effectively manage the financial and operational risks associated with climate change. This includes evaluating the investment decisions associated with long-term climate change adaptation measures, valuing and funding such investments, and implementing appropriate risk management and governance practices. Additionally, companies can disclose information to investors and regulators about their exposure to climate change risks, enabling investors to evaluate corporate exposure and make informed decisions. By addressing climate change impacts and implementing adaptation measures, companies can reduce potential financial losses, enhance their resilience, and strengthen their long-term financial performance.