Climate Finance

Giglio, Stefano; Kelly, Bryan T.; Stroebel, Johannes

doi:10.2139/ssrn.3719139

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Climate Finance

NYU Stern School of Business Forthcoming

31 Pages Posted: 14 Dec 2020

See all articles by Stefano Giglio

Stefano Giglio

Yale School of Management; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Bryan T. Kelly

Yale SOM; AQR Capital Management, LLC; National Bureau of Economic Research (NBER)

Johannes Stroebel

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

There are 5 versions of this paper

Date Written: October 26, 2020

Abstract

We review the literature studying interactions between climate change and financial markets. We first discuss various approaches to incorporating climate risk in macro-finance 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.

Keywords: Climate Change, Climate Risk, Physical Risk, Transition Risk, ESG

JEL Classification: G1, E3, Q5

Suggested Citation: Suggested Citation

Giglio, Stefano and Kelly, Bryan T. and Stroebel, Johannes, Climate Finance (October 26, 2020). NYU Stern School of Business Forthcoming, Available at SSRN: https://ssrn.com/abstract=3719139 or http://dx.doi.org/10.2139/ssrn.3719139