Climate‐related risks in financial assets

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