Discussion Paper Details

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Title: Climate Finance

Author(s): Stefano W Giglio, Bryan Kelly and Johannes Ströbel

Publication Date: December 2020


Programme Area(s): Financial Economics and Macroeconomics and Growth

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.

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Bibliographic Reference

Giglio, S, Kelly, B and Ströbel, J. 2020. 'Climate Finance'. London, Centre for Economic Policy Research.