This paper evaluates the global economic consequences of physical climate risks under two Shared Socioeconomic Pathways (SSP 1-2.6 and SSP 2-4.5) using firm-level evidence. Firstly, we estimate the historical sectoral productivity changes from chronic climate risks (gradual changes in temperature and precipitation) and extreme climate conditions (representative of heatwaves, coldwaves, droughts, and floods). Secondly, we produce forward-looking sectoral productivity changes for a global multisectoral sample of firms. For floods, these estimates account for the persistent productivity changes from the damage to firms’ physical capital. Thirdly, we assess the macroeconomic impact of these shocks within the global, multisectoral, intertemporal general equilibrium model: G-Cubed. The results indicate that, in the absence of additional adaptation relative to that already achieved by 2020, all the economies would experience substantial losses under the two climate scenarios and the losses would increase with global warming. The results can be useful for policymakers and practitioners interested in conducting climate risk analysis.

Using quarterly temperature and sectoral value-added data for a large sample of advanced economies (AEs) and emerging markets and developing economies (EMDEs), this paper uncovers nuanced effects of temperature on economic activity. For EMDEs, hotter spring and summer temperatures reduce growth in real value-added of manufacturing, and most significantly, of agriculture, while a warmer winter boosts it. For advanced countries (AEs), a hotter spring hurts growth in real value-added of all considered sectors: services, manufacturing and agriculture. For both country groups, the negative effect of a hotter spring is larger and more persistent than the positive effect of a warmer winter. Furthermore, the adverse impacts of hotter temperatures in advanced economies have accentuated in recent decades. This result suggests increased vulnerability to rising temperatures.

This book weaves together a comprehensive legal analysis of sustainable finance regimes governing Environment, Social and Governance (ESG) derivatives, with insightful sociological perspectives on risks and uncertainties. Sustainable finance offers a unique chance to channel capital towards sustainability goals, with ESG derivatives emerging as potent catalysts for a transition to a more sustainable economy. Beyond amplifying capital flow, they strategically align with effective ESG risk and uncertainty management. The book explores how integrating ESG derivatives can strategically serve sustainable investment, offering insights into optimal risk management. The work not only outlines challenges but presents potential solutions, highlighting ESG derivatives’ role in addressing market failures affecting sustainable finance, which is an aspect often overlooked by regulators in the EU, the UK, and the US. Serving as a strategy guide for countries adopting a diverse sustainable finance portfolio, the book targets policy practitioners and advocacy specialists, catering to a broad multidisciplinary audience amid the increasing interest in ESG-related products. The book’s dual emphasis on financial derivatives for ESG risk management and sociological perspectives positions it as an ideal resource for scholars, experts, practitioners, researchers, and curious minds across law, business, management, and sociological studies.

We use a new dataset to estimate the impact of temperature on economic activity at a more geographically and temporally disaggregated level than the existing literature. Analyzing 30-kilometer grid cells at a monthly frequency, temperature has a negative, highly statistically significant, and quantitatively large effect on output: a 1 °C increase in monthly temperature is associated with a 0.77 percent reduction in nighttime lights, a proxy for local economic activity. The effects of even a temporary increase in temperature persist for almost one year after the shock. Increases in temperature have an especially large, negative impact on growth in poorer countries, indicating that they are more vulnerable to the impact of climate change.

This Working Group III contribution to the IPCC Sixth Assessment Report provides a comprehensive and transparent assessment of the literature on climate change mitigation. The report assesses progress in climate change mitigation options for reducing emissions and enhancing sinks. With greenhouse gas emissions at the highest levels in human history, this report provides options to achieve net zero, as pledged by many countries. The report highlights for the first time the social and demand-side aspects of climate mitigation, and assesses the literature on human behaviour, lifestyle, and culture, and its implications for mitigation action. It brings a wide range of disciplines, notably from the social sciences, within the scope of the assessment. IPCC reports are a trusted source for decision makers, policymakers, and stakeholders at all levels (international, regional, national, local) and in all branches (government, businesses, NGOs). Available as Open Access on Cambridge Core.

We stress test the global economy to extreme climate change-related shocks on large and interconnected economies. Our analysis (i) identifies large and interconnected economies vulnerable to climate change-related shocks; (ii) estimates these economies’ external financing needs-at-risk due to these shocks, and (iii) quantifies the spillovers to the global economy using a global network model. We show that large and interconnected economies vulnerable to climate change could trigger a drain of $1.8 trillion in international reserves (2 percent of 2019’s global GDP). Domestic and multilateral macroeconomic policies can help reduce these global lossess to about $0.8 trillion. The scenario highlights the importance of considering global spillovers when assessing the impact of climate change-related shocks.

Assess the likelihood, timing and scope of climate risks In Climate Risks: An Investor’s Field Guide to Identification and Assessment, financial analyst Bob Buhr delivers a risk-based framework for classifying and measuring potential climate risks at the firm level, and their potential financial impacts. The author presents a “climate risk taxonomy” that encompasses a broad range of physical, transition and natural capital risks that may impact a firm’s financial profile. The taxonomy presented in the book will be of interest to investors and lenders involved in: The identification and assessment of the potential scope and impact of a wide range of risks that might normally remain outside of more traditional risk or credit analysis, usually for horizon issues; The determination of the points at which climate risks may crystallize into real and significant financial exposure The assessment of the relative aggregate riskiness of portfolios exposed to climate and natural capital risks at the firm level A rigorous and practical toolkit for the assessment and measurement of a broad range of potential climate risks, this book offers fund managers, portfolio analysts, risk experts, and other finance professionals a clear blueprint for assessing potential financial impacts at firms arising from climate change.

This report provides a synthesis of the OECD Net Zero+ project, covering the first phase of an ongoing, cross-cutting initiative, representing a major step forward for an OECD whole-of-government approach to climate policy.

To achieve society's goals, as set out in the UN Sustainable Development Goals and the Paris Agreement, the finance sector has a crucial role to play in driving sustainable business and the transition to a net zero economy. To achieve this change, it is vital for the finance sector to allocate capital to the firms, investments and activities looking to create a more sustainable world. Green and Sustainable Finance offers a comprehensive guide to green and sustainable principles and practice in banking, investment and insurance to help finance professionals manage sustainability risks and support their clients and customers in transition. Given the need for urgent, rapid and sustained change, it is essential that all finance professionals understand and apply these principles so that every professional financial decision takes account of sustainability. Written by the CEO of the Chartered Banker Institute this fully updated second edition includes the most recent assessments of climate science from the IPCC, extended coverage of sustainability reporting and carbon accounting, and regulatory and market developments in sustainability risk management. It also features material on the rapid growth of sustainable lending and investment and the latest finance sector alliances and initiatives. Endorsed by the Chartered Banker Institute as the core text for the global benchmark Certificate in Green and Sustainable Finance, this book is essential reading for finance professionals, university students and individuals working to embed sustainability in business, finance, policy and regulation.