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Climate Risk and Its Hedging-Literature Review
- 1 School of Economics, University of Nottingham Ningbo China, Ningbo, 325100, China
- 2 American Department, Hefei No.1 High School., Hefei, 230601, China
- 3 School of Economics, University of Nottingham Ningbo China, Ningbo, 325100, China
- 4 Department of Mathematics, King's College London, London, WC2R 2LS, United Kingdom
* Author to whom correspondence should be addressed.
Abstract
Entering the 21st century, climate risks such as typhoons, droughts, floods and global warming are becoming more and more significant. This passage will first discuss the types and impacts of climate risks. Since physical and transition part coexist, the second part of this passage will discuss some of the transition effects, from energy, stock markets, to municipal bonds, by analyzing data and examples from other literature. Compared with the same type of research, we find that investors often underestimate for enterprises to the potential impact of climate change, they pay more attention to enterprise's climate risk management practices and the ESG factors related proportion in the investment decision-making. At the same time, this article links green bonds to climate risk, pointing out that investors tend to invest in projects with strong resilience to climate change, which provides a new perspective on the green bond market. In addition, hedging climate uncertainty is receiving increasing attention, with an introduction to the basic concepts of the two risks, hedging strategies and the integration of the management of climate risk into corporate strategies under different mechanisms.
Keywords
climate risk, physical and transition impacts, energy price, financial market, hedging
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Cite this article
Wang,J.;Gao,X.;Guan,X.;Chen,Y. (2024). Climate Risk and Its Hedging-Literature Review. Advances in Economics, Management and Political Sciences,92,307-315.
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