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We examine the impact of takeover vulnerability on firm‐specific climate change exposure using sophisticated text‐based metrics generated from machine learning algorithms and a measure of takeover vulnerability primarily derived from state takeover laws. Based on a large sample of more than 28,000 observations, our findings show that firms more vulnerable to hostile takeovers have higher exposure to physical climate risks, as managers focus on short‐term financial performance over long‐term risk mitigation. These firms also reduce regulatory risk exposure by adopting stringent compliance measures and improving environmental practices to avoid penalties and attract investors. However, they are less likely to invest in new business opportunities related to climate change, prioritizing stability over potential gains in new business opportunities. Propensity score matching and entropy balancing confirm the robustness of these results. Our research provides insights into how hostile takeover threats influence corporate environmental strategies. [ABSTRACT FROM AUTHOR]

This study investigates the impact of climate change-induced risk on bank profitability in the G7 countries from 2001 to 2022. Using dynamic panel GMM estimation to analyse banking industry data with climate risk factors, we find that climate risk has a negative effect on bank profitability. The study also demonstrates that bank liquidity creation plays a key role in transmitting the adverse impact of climate risk on bank profitability. Additionally, the results of the study are robust and withstand different measures of bank liquidity creation. Furthermore, our empirical findings indicate that the influence of climate risk factors is consistent, even for banks primarily focussed on the insurance business. These findings suggest that policymakers may need to implement climate risk management policies to mitigate the detrimental effects of climate change on the banking sector. [ABSTRACT FROM AUTHOR]

Livelihood diversification is a livelihood strategy commonly used by smallholders to cope with climate risk. However, despite the implementation of policy measures, there remains a research gap regarding whether smallholders will continue to adopt livelihood diversification strategies in response to climate risk. To fill this gap, this study used 1,193 smallholder questionnaires collected from the Hehuang Valley (HV) and Pumqu River Basin (PRB) on the Tibetan Plateau (TP), employing the Tobit model to examine the impact of policy measures on smallholder livelihood diversification. The results show that policy measures have had a negative impact on smallholder livelihood diversification and that government-constructed irrigation facilities and low-interest loans can effectively help smallholders cope with climate risk while reducing livelihood activity diversification, a conclusion that remains robust across different income groups. Furthermore, borrowing from relatives positively impacts smallholder livelihood diversification, whereas per capita arable land and altitude exert negative influences. In the HV, vehicles and leadership skills enhance diversification, whereas in the PRB, arable land per capita and distance to markets foster diversification, whereas distance to roads hampers diversification. The findings of this study highlight the importance of understanding the interactions between policy measures and smallholder adaptation strategies and providing valuable insights for policymakers in designing targeted interventions that promote rural development and support smallholders in adapting to climate change. [ABSTRACT FROM AUTHOR]

Climate change‐driven extreme heat events pose a major threat to urban expansion globally. This study evaluates the relationship between extreme heat and housing prices utilizing panel data from Chinese cities between 2009 and 2019. Our findings indicate a significant negative correlation between housing prices and extreme temperatures. Specifically, we observe a 0.1% reduction in housing prices for each additional day per year with temperatures surpassing 35°C. This research evaluates two primary mechanisms underpinning this finding. Firstly, our analysis demonstrates a decline in labor inflows to cities experiencing extreme heat, with a particularly significant effect on the influx of high‐skilled workers. In addition, existing residents in these hotter urban environments exhibit reduced home‐buying intentions and reduced proclivity for long‐term residency, coupled with higher living costs. Secondly, our findings indicate that extreme heat acts as a deterrent to firm entry, thereby further suppressing housing demand. This study contributes valuable empirical insights into the capitalization of climate risk in housing markets, with a specific emphasis on the effect of extreme heat. Moreover, it highlights the urgent necessity for the development and implementation of sustainable adaptation strategies to reduce the negative effects of evolving climatic conditions. [ABSTRACT FROM AUTHOR]

We study the impact of unexpected climate shocks on banks' individual and systemic risks. Employing climate risk measures developed using the Billion-Dollar Weather and Climate Disasters data from the National Oceanic and Atmospheric Administration (NOAA) and Dealscan syndicated lending data, we find that climate risk exposure acquired through cross-state lending increases banks' individual and systemic risks. We also find that bank profitability helps offset some of the adverse effects of climate risk. Banks reduce lending and increase loan loss reserves after the experience of an unexpected climate shock. The loan-level analysis reveals that the effect of climate risk exposure on bank risks is more pronounced for loans granted for operating and capital expenditures. We contribute to a growing literature on the impact of climate risk on financial stability and the development of robust measures of climate risk for banks. [ABSTRACT FROM AUTHOR]

This article investigates the early implementation of the Aotearoa New Zealand Climate Standards, the world's first mandatory climate-related disclosure regime, and its influence on New Zealand business practices. Through interviews with 20 organisations, the study explores challenges and opportunities associated with the new disclosure requirements. Findings range from viewing disclosures as compliance to recognising the strategic value. Key needs include enhanced policy support, data access and capacity building to ensure disclosures contribute meaningfully to New Zealand's climate goals. The insights provide a foundation for refining the Aotearoa New Zealand Climate Standards and offer broader lessons for the global adoption of climate risk disclosure standards. [ABSTRACT FROM AUTHOR]

Climate risk refers to the risks associated with climate change and has already started to impact various sectors of the economy. In this work, we focus on the impact of physical risk on the probability of default for a firm in the agribusiness sector. The probability of default is estimated based on the Merton model, where the firm defaults when its asset value falls below the threshold defined by its liabilities. We study the relationship between the stock value of the firm and global surface temperature anomalies, observing that an increase in temperature negatively affects the stock value and, consequently, the asset value of the firm. A decrease in the asset value of the firm translates into an increase in its probability of default. We also propose a model to assess the exposure of the firm to transition risk. [ABSTRACT FROM AUTHOR]

Increasing flood losses in the Gulf of Mexico related to development patterns and climate hazards pose serious threats to resilience and insurability. The purpose of this study is to understand how scale, social vulnerability, risk, and urban form relate to National Flood Insurance Program (NFIP) policy coverage and flood exposure. Our multilevel models identify that flooding is significantly clustered by region and counties, especially shoreline counties. Our measures of risk suggest that the Federal Emergency Management Agency (FEMA) special flood hazard area (SFHA) underestimates risk and exposure when compared with the Flood Factor and that there is some compensation in terms of insurance coverage, suggesting a pattern of adverse selection. Older housing stock appears both less insured and less exposed, raising questions of whether current growth patterns are increasing risk independent of environmental change. Our models suggest that census tracts with higher percentages of black residents are less insured and more exposed, and a similar pattern exists for rural areas. Our results highlight the need to seek common solutions across the Gulf of Mexico, concentrating on the most flood-exposed counties, and that specific resilience strategies may be necessary to protect areas with socially vulnerable populations, especially in rural areas. Underlying challenges exist due to the spatial relationship between exposure and social vulnerability and the potential for adverse selection in insurance markets due to different measures of risk. [ABSTRACT FROM AUTHOR]

The aim of this study is to classify scientific research on the impact of ESG and climate-related risks on the conduct of the banking business. The systematic literature review was based on a bibliometric analysis of articles found in the Scopus and Web of Science databases. The search was confined to materials published between 2000 and August 2023. After applying criteria limiting the search, the final result was 869 unique literature items which were later analysed towards establishing the relationship of ESG and climate-related risks ('new banking risks') with other (so-called 'traditional') banking risks and identifying research gaps at the interface between traditional and new banking risks. This article introduces a variety of findings, including the most productive authors, organisations, countries and journals, the most cited articles and keyword distribution. In addition, a map of the evolution of the approach to ESG risk in banking was constructed on the basis of the literature review. The study identified 11 clusters of banking risk influenced by ESG risk and 10 clusters of banking risk affected by climate-related risk. [ABSTRACT FROM AUTHOR]

Coastal erosion and sea level rise has become a significant threat to coastal heritage due to climate change. Management bodies are monitoring the risks posed by undertaking studies, ranging from Rapid Coastal Zone Assessments to much larger government and research council funded studies. These studies have incorporated varying techniques and datasets such as environmental sampling, LiDAR, GPS, and UAV surveys. However, these approaches rarely combine study of historic shoreline change with physical susceptibility modeling. This paper presents a combined methodology, utilizing LiDAR and survey data collected by the Climate, Heritage, Environments of Reefs, Islands and Headlands (CHERISH) project, along with historic mapping and aerial photography to produce a risk assessment for the heritage assets located on Ynys Enlli (Bardsey Island), North Wales. By constructing an Historic Erosion Model and an Erosion Susceptibility Model using ESRI's ArcGIS 10.5.1. with the DSAS Plugin and combining them with the LiDAR-derived spatial extents of archaeological features on the island, this project has shown that using both methodologies alongside each other can create a more complete overview of coastal environment change for the creation of vulnerability indexes. [ABSTRACT FROM AUTHOR]

The hourly average temperature and average relative humidity data of 260 meteorological stations in Chongqing from February to June in 2019-2023 were used to simulate the geographic distribution of spring potato late blight infection risk using the CARAH late blight model. The accuracy of the simulation was tested by using the late blight infection data of 26 monitoring stations in Wuxi county, Chongqing in 2022. Based on the geographic distribution of spring potato late blight infection risk simulated, the maximum entropy model was constructed using the climate grid data of the monthly average temperature, maximum temperature, minimum temperature, water vapor pressure and precipitation from February to June in 1970-2000 to analyze the climate impact factors of spring potato late blight in Chongqing, and to evaluate the climate risk of spring potato late blight, providing a reference for the prediction and scientific prevention of the disease. The results showed that simulations of late blight infection based on hourly weather data had high accuracy, with a false positive rate of 12.5%, false negative rate of 18.5% and TS score of 0.73. The mean area under curve (AUC) of the receiver operating characteristic (ROC) was above 0.9, indicating higher accuracy of the simulation results. Precipitation was the dominant climate factor affecting the risk distribution of late blight of spring potato in Chongqing, while relative humidity and temperature were important climate factors. Climate variables at the seedling stage and bud flowering stage had a great impact on the distribution of late blight risk. The low risk area of late blight of each maturity(early/late) and susceptibility (resistant/susceptible) combination of spring potato was less than or close to 10000km², with an average area proportion of 10.2%. The medium risk area and high risk area were both more than 30000km², with an average area proportion of 43.7% and 46.1%, respectively. The climate risk of spring potato late blight showed a spatial distribution characteristic of "high in the middle and low in the periphery" in Chongqing. The high risk area was concentrated in the parallel valley area in eastern Sichuan, the medium risk area was mainly distributed in Daba mountain area in northeast Chongqing, Wuling mountain area in southeast Chongqing, and the hilly area in central Sichuan in west Chongqing, and the low risk area was scattered in the fringe of Chongqing. Spring potato production in Chongqing area faces a high climate risk of late blight, with significant spatial differentiation characteristics. It should be addressed through reasonable production layout and improved cultivation techniques. [ABSTRACT FROM AUTHOR]

Climate change‐induced heat stress has significant effects on human health, and is influenced by a wide variety of factors. Most assessments of future heat‐related risks however are based on coarse resolution projections of heat hazards and overlook the contribution of relevant factors other than climate change to the negative impacts on health. Research highlights sociodemographic disparities related to heat stress vulnerability, especially among older adults, women and individuals with low socioeconomic status, leading to higher morbidity and mortality rates. There is thus an urgent need for detailed, local information on demographic characteristics underlying vulnerability with refined spatial resolution. This study aims to address the research gaps by presenting a new population projection exercise at high‐resolution based on the Bayesian modeling framework for the case study of Madrid, using demographic data under the scenarios compatible with the Shared Socioeconomic Pathways. We examine the spatial and temporal distribution of population subgroups at the intra‐urban level within Madrid. Our findings reveal a concentration of vulnerable populations, as measured by their age, sex and educational attainment level in some of the city's most disadvantaged neighborhoods. These vulnerable clusters are projected to widen in the future unless a sustainable trajectory is realized, driving vulnerability dynamics toward a more uniform and resilient change. These results can guide local adaptation efforts and support climate justice initiatives to protect vulnerable communities in urban environments. Plain Language Summary: Heat stress is a major risk factor for human health, especially in cities where more people are exposed to increasingly higher temperatures in summer. Cities are usually hotter than their surrounding rural areas due to the predominance of dark, impervious surfaces which absorb more heat. Assessing heat risks for public health requires measurements of the hazard, such as a prolonged period with high temperatures, the population exposed to the hazard and characteristics of populations that make them more vulnerable to heat related diseases or even death. Various approaches and tools for risk assessment have been developed, but most of them focus on the hazard and exposure components. In this paper, we measure and project vulnerability to heat stress in alternative scenarios, using different population characteristics, such as age, sex and education. Our results show that there are compelling differences between areas within the city of Madrid and that areas that are vulnerable today will become even more vulnerable unless we follow a path of sustainable development. Detailed assessments of the spatial distribution of vulnerability within a city are relevant for developing adaptation solutions that target vulnerable populations and are thus more effective in reducing heat‐related risks. Key Points: Population projections by age, sex and education at small‐area levels allow for high‐resolution heat vulnerability modelingVulnerability to heat stress can vary widely between different areas in a city, and even within a single neighborhoodAreas that are vulnerable today are projected to become even more vulnerable in all Shared Socioeconomic Pathway scenarios except for that assuming a sustainable development narrative [ABSTRACT FROM AUTHOR]

Aimed at preserving firm-level and macro-financial stability against climate-related physical and transition risks, green financial policies are often viewed as complements to fiscal policies. While the latter are aimed directly at an economy-wide state-led green transformation, the former are targeted specifically towards the financial sector. In this context, this article makes two contributions to the climate change/green finance literature. First, it creates a green financial policy intensity index which measures the cumulative number of such policies rolled out by countries from 1995 till 2021. Second, it empirically examines the nexus between the uptake of these policies and fiscal space. Our findings suggest that higher physical and transition climate risks are associated with more green financial policies being undertaken, but only for countries with limited fiscal space or a high fiscal deficit. [ABSTRACT FROM AUTHOR]

Climate risks are increasingly shaping corporate strategies, raising important considerations for sustainability. This study explores the impact of climate risks on the shadow banking activities of non-financial firms, examining how these risks influence sustainable financial practices. Analyzing a sample of Chinese listed firms from 2010 to 2022, this study finds that climate risks are negatively associated with shadow banking activities, reflecting a shift towards more sustainable financial management. This finding remains robust through various robustness checks and tests for endogeneity. Heterogeneity results indicate that the reduction in shadow activities due to climate risks is more pronounced in firms with higher dependence on external financing and weaker profitability. Mechanism results suggest that climate risks amplify cross-sectional risks for firms, increasing risk sources. Simultaneously, companies enhance their preference for holding cash to address potential risks. The combined effect of these factors leads to a decrease in shadow banking activities among non-financial firms, aligning with a shift towards sustainability. This study provides new insights into understanding how climate risks drive sustainable financial decision-making and enriches the research on the determinants of firm financialization. [ABSTRACT FROM AUTHOR]

We investigate the moderating effect of climate risk, measured by Carbon dioxide (CO2) emissions and a Global Climate Risk Index (CRI), on the relationship between Environmental, Social and Governance (ESG) score and firm performance using data on non-financial listed firms in the MENA region during the period 2006–2021. We perform the analysis in two stages, in the first stage, we examine the impact of ESG score on firm performance. The findings show that ESG score has a negative impact on operational and financial performance and a positive effect on market performance. Next, we hypothesize that ESG will have a more positive and stronger impact on firm performance in high than low climate risk countries. The results indicate mixed evidence. In further analysis, we have examined the effect of environmental performance index and net zero initiatives on the relationship of ESG on firm performance. [ABSTRACT FROM AUTHOR]

We studied the causal link between forage condition and food security in northern Kenya and southern Ethiopia and probed the mechanisms through which the effects occur. The study utilized weekly panel survey data collected over a period of 94 weeks (March 2021–December 2022) from drought-prone pastoral regions and estimated two-stage least squares instrumental variables regression to assess causal impacts. We found that an increase in the normalized difference vegetation index (NDVI) – our proxy for forage condition – by 10% significantly reduced the likelihood of a household experiencing food insecurity by 12 percentage points. The main mechanisms through which improved forage condition increased food security were livestock productivity enhancement, reduced prices of basic food commodities (cereals, legumes, and vegetables), and utilization of better coping strategies by households. These findings suggest the need for interventions and initiatives aimed at boosting livestock productivity and reducing vulnerability to drought-induced poor forage conditions. Efforts focused on the monitoring of forage conditions and supporting market development for livestock feed are important for addressing the adverse impacts of drought and deteriorating forage conditions in the horn of Africa. Furthermore, the monitoring of drought conditions and shocks using high-frequency data has the potential for providing early warning and informing anticipatory action. [ABSTRACT FROM AUTHOR]

We examine the impact of physical climate risks on energy markets in China, distinguishing between traditional energy and new energy stock markets, and the energy commodity market, utilizing a time-varying parameter vector autoregressive model with stochastic volatility (TVP-SV-VAR). Specifically, we investigate the dynamic effects of five specific subtypes of physical climate risks, namely waterlogging by rain, drought, typhoon, cryogenic freezing, and high temperature, on WTI oil prices and coal prices. The findings reveal that these physical climate risks exhibit time-varying similar effects on the returns of traditional energy and new energy stocks, but heterogeneous effects on the returns of WTI oil prices and coal prices. Finally, we categorize and examine the impact of both acute and chronic physical risks on the energy commodity market. [ABSTRACT FROM AUTHOR]

We develop a dynamic, stochastic general equilibrium (DSGE) model for the euro area that accounts for climate change-related risk considerations. The model features polluting ("brown") firms and non-polluting ("green") firms and a climate module with endogenous emissions modeled as a byproduct externality. In the model, exogenous shocks propagate throughout the economy and affect macroeconomic variables through the impact of interest rate spreads. We assess the business cycle and policy implications of transition risk stemming from changes in the carbon tax, and the implications of the micro- and macroprudential tools that account for climate considerations. Our results suggest that a higher carbon tax on brown firms dampens economic activity and volatility, shifting lending from the brown to the green sector and reducing emissions. However, it entails welfare costs. From a policy-making perspective, we find that when the financial regulator integrates climate objectives into its policy toolkit, it can minimize the trade-off between macroeconomic volatility and welfare by fully coordinating its micro- and macroprudential policy tools. [ABSTRACT FROM AUTHOR]

Abstract The aim of this study is to classify scientific research on the impact of ESG and climate-related risks on the conduct of the banking business. The systematic literature review was based on a bibliometric analysis of articles found in the Scopus and Web of Science databases. The search was confined to materials published between 2000 and August 2023. After applying criteria limiting the search, the final result was 869 unique literature items which were later analysed towards establishing the relationship of ESG and climate-related risks (‘new banking risks’) with other (so-called ‘traditional’) banking risks and identifying research gaps at the interface between traditional and new banking risks. This article introduces a variety of findings, including the most productive authors, organisations, countries and journals, the most cited articles and keyword distribution. In addition, a map of the evolution of the approach to ESG risk in banking was constructed on the basis of the literature review. The study identified 11 clusters of banking risk influenced by ESG risk and 10 clusters of banking risk affected by climate-related risk.

Choices by farmers—notably what crop to grow, where—are not only influenced by spatially sensitive environmental attributes but also economic factors that respond to changes in government policies. In South Africa, the policy stance toward agriculture swung toward an extended period of support spanning the middle of the 20th century. Subsequently, the agricultural support policies were eliminated in the post‐Apartheid period beginning in the 1990s. Using a purpose‐built, spatially explicit data set for South African agriculture spanning the period 1918–2015, we show these structural shifts in agricultural policy regimes concord with major shifts in national corn price trends and variability, and the area planted to corn (accounting for half the country's cropped area). More subtly, and much less studied, we reveal that these switching policy regimes also aligned with changes in the location of crop production, with pronounced consequences for crop output and climate risk. At its peak, policy‐aligned crop movement in South Africa reduced corn output by between 7.9% and 15.3%, and placed production in areas with reduced and riskier rainfall patterns. Upon removal of the policy distortions, the decline in total corn area continued, and the crop largely reverted to its predistorted, less climate‐risky geographical locations. The geographical sensitivities of the agricultural policy–production–climate risk nexus we reveal suggest these locational aspects deserve more concerted analytical and policy design attention, especially in light of the longer run, spatially sensitive production and food security risk implications of the changing climate realities facing agriculture the world over. [ABSTRACT FROM AUTHOR]

This article addresses the consequences for Polish commercial banks of modifying capital requirements by adding an environmental factor. Applying a simulation method, CRISK and MCRISK estimation, and a linear ordering method, the following conclusions were drawn: (i) while it is reasonable to consider the way(s) in which climate risk may impact credit, market and operational risks in scenario analyses, the lack of reliable historical data makes any calibration of GSF and BPF very difficult; (ii) simulating the implementation of adjustments to the calculation of capital adequacy ratios by GSF and BPF should not significantly lower the Tier 1 ratio for the largest banks; (iii) large retail banks are characterised by relatively high rankings reflecting a combination of financial characteristics (financial performance) and environmental (taxonomy) disclosures; and (iv) climate risk does not currently (2023) pose an immediate threat to the Polish banking sector, although the risk of climate transformation is a factor of significant importance.

Purpose – Transitioning to a low-carbon economy requires a positive response by society, including business organizations, towards the green concept and also requires the implementation of long-term green strategies. These requirements could impose various transition risks on the sustainable development of the firms; hence, the present study aims to examine the impact of climate transition risk on a firm’s financial performance and market value creation from the Indian perspective. Design/methodology/approach – We have considered the firm-level environmental risk score (ERS) to evaluate the sensitivity of a firm’s profitability (measured by ROA & ROE) and market value (measured by Tobin’s Q) towards the climate transition risk. The present study used multiple regression analysis to examine the impact of climate transition risk on the firm’s financial performance and market value creation, as evidenced by Nifty 50 companies. Findings – The empirical results suggested that corporate climate transition risks have been positively associated with the firm’s financial performance indicators but negatively impacted the firm’s market value creation in the case of select Indian-listed firms. Hence, our results indicate that with the increase of firm-level climate transition risk, the firm’s financial performance increases but negatively affects the firm’s market value creation. The robustness tests have also confirmed the same results and supported our analysis. Originality/value – The present paper contributes to the existing literature on climate risks and firms’ performance by providing insights about firms’ sensitivity towards climate transition risk from the Indian perspective.

Abstract Climate change leading to Climate extremes in the twenty-first century is more evident in megacities across the world, especially in West Africa. The Greater Accra region is one of the most populated regions in West Africa. As a result, the region has become more susceptible to climate extremes such as floods, heatwaves, and droughts. The study employed the Coupled Model Intercomparison Project 6 models in simulating climate extreme indices under the Shared Socioeconomic Pathway scenarios (SSPs) over West Africa between 1979 and 2059 as exemplified by the Greater Accra region. The study observed a generally weak drought in the historical period and expected to intensify especially under SSP585 in Greater Accra. For instance, continuous dry days (CDD) reveal an increasing trend under the SSPs. Similarly, the overall projected trend of CDD over West Africa reveals an increase signifying a more frequent and longer drought in the future. The flood indices revealed a surge in the intensity and duration of extreme precipitation events under the SSPs in the region. For instance, R99pTOT and Rx5days are expected to significantly increase under the SSPs with intensification under the SSP245, SSP370, and SSP585. A similar trend has been projected across West Africa, especially along the Guinean coast. The study foresees a gradual and intensifying rise in heatwave indices over the Greater Accra region. The warming and cooling indices reveal an increasing and decreasing trend respectively in the historical period as well as under the SSPs particularly within urban centers like Accra and Tema. Most West African countries are projected to observe more frequent warm days and nights with cold nights and days becoming less frequent. Expected effects of future climate extreme indices pose potential threats to the water, food, and energy systems as well as trigger recurrent floods and droughts over Greater Accra. The findings of the study are expected to inform climate policies and the nationally determined contribution of the Paris Agreement as well as address the sustainable development goal 11 (Sustainable cities) and 13 (Climate action) in West Africa.

The frequent occurrence of extreme weather events not only poses serious challenges to global economic growth and financial stability but also affects corporate entities negatively across multiple dimensions. Scientific measurement and mitigation of the negative impact of climate risks on enterprise value has become a crucial aspect of enterprise risk management and an essential micro-foundation for sustainable economic development. This paper used a sample of Chinese A-share listed companies from 2012 to 2022 to characterize the climate risks faced by enterprises through text analysis and empirically examine the impact of climate risks on enterprise value and its mechanisms by using a fixed-effect model. The study found that: ① Climate risks had a significant negative impact on enterprise value, and this finding remained robust after a series of robustness tests and dealing with endogeneity issues. ② Both corporate return and credit risk served as effective channels through which climate risks negatively affected enterprise value. Climate risks could negatively affect enterprise value by reducing corporate return on assets and increasing corporate credit risk. ③ The negative impact of climate risks on enterprise value was heterogeneous due to differences in industry characteristics, regional location, and enterprise scale. Climate risks had a greater negative impact on enterprises in high-pollution industries, those in non-eastern regions, and small and medium-sized enterprises, which should pay more attention to the negative impact of climate risks in their operations. ④ Implementing green operational practices, improving risk management and internal control capabilities, and fostering institutional investor shareholding could mitigate the negative impact of climate risks on enterprise value. The moderating effect study found that corporate ESG performance, green transformation, risk management capabilities, internal control levels, and institutional investor shareholding had a positive moderating effect on the relationship between climate risks and enterprise value, significantly inhibiting the negative impact of climate risks on enterprise value. Therefore, enterprises should pay close attention to the impact of climate risks, establish a long-term mechanism for climate risk management, gradually strengthen their understanding of sustainable development concepts, improve risk management and internal control, and adopt multiple measures to strengthen climate risk management. [ABSTRACT FROM AUTHOR]

The economic effect of climate hazard events varies by time and by location. This paper investigates how climate shocks to local property markets transmit to capital markets and provides evidence of the extent to which forward‐looking climate risk is capitalized into the public valuations of those property markets. We first quantify the exposure of real estate portfolios to locations that recently experienced climate events (Event Exposure). Using an event study framework, we find that, in the post‐event period, a one‐standard‐deviation increase in ex‐ante Event Exposure is associated with a 0.2–1.4 percentage points decrease in quarterly stock returns. Cross‐sectional analyses reveal that differences in return effects can be explained by variation in the extent to which the area focuses on climate change. Similarly, we find that forward‐looking climate risk assessment negatively affects firm valuations only in markets with a focus on climate change. Consistent with these findings, we provide evidence that climate events (shocks) induce retail investors (noise traders) to decrease their stock holdings and that blockholders tend to take the opposite side in these transactions. We also show that conditioning on consumer sentiment helps to explain cross‐sectional variation in the response of stock returns to climate events. [ABSTRACT FROM AUTHOR]

Natural disasters such as hurricanes, floods, heatwaves, and wildfires are projected to become more prevalent in the foreseeable future. Climate risk is, therefore, increasingly recognized as an important factor by policy makers, the investment community, and financial markets. Due to the immobility of assets, the commercial real estate industry is especially vulnerable to climate risk, and there is an increasing interest to understand the impact of climate risk on the value of commercial real estate. For commercial real estate lenders, changes in collateral value are only of partial importance. The ability of borrowers to meet their payment obligations is equally, if not more important. By combining historical data on two major climate‐related disasters—Hurricanes Harvey and Sandy—with longitudinal information on commercial mortgage performance, this paper identifies the impact of climate risks on mortgage delinquency rates for commercial real estate mortgages. The results show that both Harvey and Sandy led to elevated levels of commercial mortgage delinquency, with significant heterogeneity based on the extent of damage in the Census block group. Information provided through FEMA 100‐year floodplain maps partially mitigates the effects, an indication that lenders incorporate flood risk information in the underwriting process. An analysis of potential mechanisms indicates a decrease in property income during the 2‐year period following the event for Hurricane Harvey, but no evidence of income effects for Sandy. [ABSTRACT FROM AUTHOR]

This work analyzes the interaction between climate risk, caused by extreme events resulting from the El Niño-Southern Oscillation (ENSO) and/or Climate Change, and its impact on local health services in Ecuador. The analysis focuses on Ecuador's growing vulnerability to the effects of climate change, which exacerbates challenges in the delivery of health services, particularly in the context of severe climate events. The main objective is to analyze the relationship between the number of hectares affected by climate events and the availability and effectiveness of local health services, considering community resilience and health coverage as moderating variables. The methodology uses a linear regression analysis using data from 221 Ecuadorian municipalities, covering variables such as climate risk, health services, community resilience, health coverage, and demographic and socioeconomic factors. The results indicate a significant influence of climate risk on the effectiveness of health services, moderated by community resilience and health coverage. It is observed that areas with greater preparation and health coverage show a better capacity to respond to extreme weather events. Finally, it is important to integrate climate risk management into health services planning, suggesting that greater community resilience and broad health coverage are essential to mitigate the negative impacts of climate change on public health. [ABSTRACT FROM AUTHOR]

We summarize historic New York City (NYC) climate change trends and provide the latest scientific analyses on projected future changes based on a range of global greenhouse gas emissions scenarios. Building on previous NPCC assessment reports, we describe new methods used to develop the projections of record for sea level rise, temperature, and precipitation for NYC, across multiple emissions pathways and analyze the issue of the "hot models" associated with the 6th phase of the Coupled Model Intercomparison Project (CMIP6) and their potential impact on NYC's climate projections. We describe the state of the science on temperature variability within NYC and explain both the large‐scale and regional dynamics that lead to extreme heat events, as well as the local physical drivers that lead to inequitable distributions of exposure to extreme heat. We identify three areas of tail risk and potential for its mischaracterization, including the physical processes of extreme events and the effects of a changing climate. Finally, we review opportunities for future research, with a focus on the hot model problem and the intersection of spatial resolution of projections with gaps in knowledge in the impacts of the climate signal on intraurban heat and heat exposure. [ABSTRACT FROM AUTHOR]

This Introduction to NPCC4 provides an overview of the first three NPCC Reports and contextualizes NPCC4's deliberate decision to address justice, equity, diversity, and inclusion in its collective work and in its own practices, procedures, and methods of assessment. Next, it summarizes the assessment process, including greater emphasis on sustained assessment. Finally, it introduces the NPCC4 chapters and their scope. [ABSTRACT FROM AUTHOR]

New York City (NYC) faces many challenges in the coming decades due to climate change and its interactions with social vulnerabilities and uneven urban development patterns and processes. This New York City Panel on Climate Change (NPCC) report contributes to the Panel's mandate to advise the city on climate change and provide timely climate risk information that can inform flexible and equitable adaptation pathways that enhance resilience to climate change. This report presents up‐to‐date scientific information as well as updated sea level rise projections of record. We also present a new methodology related to climate extremes and describe new methods for developing the next generation of climate projections for the New York metropolitan region. Future work by the Panel should compare the temperature and precipitation projections presented in this report with a subset of models to determine the potential impact and relevance of the "hot model" problem. NPCC4 expects to establish new projections‐of‐record for precipitation and temperature in 2024 based on this comparison and additional analysis. Nevertheless, the temperature and precipitation projections presented in this report may be useful for NYC stakeholders in the interim as they rely on the newest generation of global climate models. [ABSTRACT FROM AUTHOR]

Europe accounts for 51% of international tourist arrivals and the tourism industry provides about 10% of workplaces in Europe. Tourism will be impacted by climate change in a diverse number of ways. At the same time, tourism is also a significant contributor of greenhouse gas emissions. The aim of this article is, therefore, to provide an assessment of climate and carbon risks for the European tourism industry based on a systematic literature review. Climate risk is the dominant category with 313 papers (74%), while 110 papers (26%) were on carbon risks. The following gaps were identified: geographical gaps, especially in countries of the former Soviet Union and former Yugoslavia; a lack of coherent studies on national tourism's and its sub-sectors' emissions; research addressing how climate policies might affect tourism demand; assessments of the integrated carbon and climate risks; lack of evidence on the link between tourism climate indicators and tourism demand; lack of climate change and tourism studies addressing policy and institutional tools for adaptation and implementation of adaptation measures in destinations; and research on rising sea levels and coastal erosion and its impacts on tourism destinations and demand. [ABSTRACT FROM AUTHOR]

The planned relocation of communities away from areas of climate-related risk has emerged as a critical strategy to adapt to the impacts of climate change. Empirical examples from around the world show, however, that such relocations often lead to poor outcomes for affected communities. To address this challenge, and contribute to developing guidelines for just and sustainable relocation processes, this paper calls attention to three fundamental tensions in planned relocation processes: (1) conceptualizations of risk and habitability; (2) community consultation and ownership; and (3) siloed policy frameworks and funding mechanisms. Drawing on the collective experience of 29 researchers, policymakers and practitioners from around the world working on planned relocations in the context of a changing climate, we provide strategies for collectively and collaboratively acknowledging and navigating these tensions among actors at all levels, to foster more equitable and sustainable relocation processes and outcomes. [ABSTRACT FROM AUTHOR]

In the following article, we analyse the relationships among banking stability, the efficiency of the energy system and climate risks at a global level. We present a detailed analysis of the literature relating to the relationship between the banking system and Environmental, Social and Governance (ESG) models. In our research, we try to verify whether it is possible to achieve energy efficiency, stability of the banking system and reduction of climate risk together, i.e. the “Green Trilemma”. The econometric analysis is conducted through the following models: Panel Data with Random Effects, Panel Data with Fixed Effects, Pooled Ordinary Least Squared and Weighted Least Squared-WLS. To estimate the variables, we used World Bank data. The analysis shows that ESG growth is negatively associated with energy efficiency and positively associated with banking stability and climate risk. It therefore follows that the Green Trilemma hypothesis is rejected. Countries can only target banking stability and climate risk through ESG models. [ABSTRACT FROM AUTHOR]

There is an increasing consensus that climate change undermines human security by exacerbating existing challenges, acting as a "threat multiplier". Bangladesh is a climate hot spot due to its geographical location, dense population and vulnerable socio-economic infrastructure. Although there is an increasing number of studies on the impacts of climate change in Bangladesh, aggregated research that combines this evidence and provides a comprehensive overview is lacking. The aim of this research is to thoroughly investigate the characteristics of the academic literature on the complex pathways through which climate variability affects different components of human security in Bangladesh, allowing for determination of the trends and research gaps, as well as whether they lead to conflict or cooperation. We used a systematic mapping methodology to search and screen 1839 publications in Web of Science, including 320 publications for the final synthesis. We found a predominant research focus on rural areas, especially in the southwestern region, with declining crop yield, economic loss, migration, water shortage, food scarcity and health hazards being the highlighted impacts of climate change for Bangladesh. The impacts on food, economic, environmental, health and water security have been well studied, but we found significant research gaps in some human security components, especially energy security. Women and the economically disadvantaged are disproportionately affected, and the causal pathways between conflict or cooperation and the ever-changing climate lack research efforts, implying a dire need to focus on under-researched areas before they become more complex and difficult to address. Policies and interventions should prioritise climate-resilient agricultural practices and infrastructure in high-risk areas, building local capacities and integrating climate risk assessments into urban planning, considering the high influx of environmental migrants. This systematic map provides a foundation for future longitudinal studies, establishes a baseline for this era for future comparisons and serves as a reliable database for relevant stakeholders and policy makers. [ABSTRACT FROM AUTHOR]

Climate change intensifies the frequency and severity of extreme weather events, profoundly altering demographic landscapes globally and within the United States. This study investigates their impact on migration patterns, using propensity score matching and LASSO techniques within a larger regression modeling framework. Here, we analyze historical population trends in relation to climate risk and exposure metrics for various hazards. Our findings reveal nuanced patterns of climate-induced population change, including "risky growth" areas where economic opportunities mitigate climate risks, sustaining growth in the face of observed exposure; "tipping point" areas where the amenities are slowly giving way to the disamenity of escalating hazards; and "Climate abandonment" areas experiencing exacerbated out-migration from climate risks, compounded by other out-migration market factors. Even within a single county, these patterns vary significantly, underscoring the importance of localized analyses. Projecting population impacts due to climate risk to 2055, flood risks are projected to impact the largest percentage of areas (82.6%), followed by heatwaves (47.4%), drought (46.6%), wildfires (32.7%), wildfire smoke (21.7%), and tropical cyclone winds (11.1%). The results underscore the importance of understanding hyperlocal patterns of risk and change in order to better forecast future patterns. [ABSTRACT FROM AUTHOR]

This research investigates the influence of climate science information released by the Intergovernmental Panel on Climate Change (IPCC) on the European stock market, with a particular emphasis on differentiating the stock price reactions based on sector climate sensitivity and corporate emissions responsibility. Performing an event study on Stoxx Europe 600 constituents, we analyse stock price reactions to the sixth IPCC assessment report published between 2018 and 2023. Results show that climate‐sensitive sectors respond more intensely to climate news. We find greater volatility in stock prices for climate‐sensitive sectors than in corporate emissions‐graded portfolios. Cumulative average abnormal returns range from 26.442% for the alternative energy sector to −6.416% for the construction sector. For the corporate emissions responsibility portfolios, we generally observe negative stock price reactions disregarding firms' level of emissions responsibility. Firms with higher emissions responsibility outperform peers only during the synthesis report release. Our study enriches the literature on stock price reactions to climate science news, which is limited to the analysis of the first five IPCC reports and to sector analyses. [ABSTRACT FROM AUTHOR]

While previous studies mainly focus on the valuation of greenhouse gas (GHG) emissions and climate risk exposure, climate opportunity exposure is less frequently visited in the current literature. We use an international sample from 23 countries that have participated in the CDP. By categorizing climate risks/opportunities into physical, regulatory and other, the study suggests that investors have an asymmetrical valuation for different categories of risks and opportunities. Specifically, investors value climate regulatory risk and other (market‐based) climate risks negatively, but not similarly for recognized climate opportunities. Finally, our findings confirm industry matters for investors' valuation decisions by altering their perceptions of the significance of climate risks and opportunities. [ABSTRACT FROM AUTHOR]

This study conducts an empirical analysis of the impact of climate risk on Environmental, Social, and Governance (ESG) investments in Asia. Using monthly data from 2015 to 2022 for 11 Asian countries and applying wavelet coherence analysis with a panel Auto-regressive Distributed Lag Model (ARDL) cointegration approach, the study concludes that (1) ESG and stock market returns are positively correlated during economic turmoil in China and Malaysia; (2) climate risk positively influences ESG returns, suggesting that it enhances returns during uncertain times rather than having a detrimental effect; (3) returns on conventional assets are negatively impacted by climate risk; and (4) ESG investments serve as an effective hedge against climate risk and provide a sound strategy for portfolio diversification in the Asian market. [ABSTRACT FROM AUTHOR]

In the face of the increasing frequency of climate stresses, climate change projections can help in adaptation planning and resilience-building. However, typical climate change projections, such as annual average rainfall and temperature increases, are not helpful for farmers in understanding specific climate risks, like crop loss, and making adaptation decisions. Our study aims to identify and characterise context- and time-specific climate stresses in terms of climate conditions of concern to improve the understanding of future climate risks and enhance the climate resilience of semi-arid farming systems in India. Utilising the concept of critical climate-stress moments, we employ an innovative bottom-up methodology integrating insights from focus group discussions with farmers, key informant interviews, and an ensemble of downscaled and bias-corrected Coupled Model Intercomparison Project Phase 6 (CMIP-6) models. Our case studies include (i) a mixed crop-livestock farming system, (ii) a horticulture-based farming system, (iii) a cash crop–dominant farming system, and (iv) a cereal-dominant farming system. The specific climate conditions of concern identified were (i) increasing volume of late-monsoon rainfall, (ii) rising winter temperatures, (iii) increase in the number of days with temperatures exceeding 40 °C, (iv) increase in days with heavy rainfall (> 25 mm), and (v) increasing rainfall during the dry season. Identifying these critical moments improves understanding of both the temporal and spatial variations in climate risks, providing valuable inputs for targeted and implementable climate resilience–building actions. We recommend revising national and state action plans on climate change by utilising such region-specific assessments of critical climate-stress moments. [ABSTRACT FROM AUTHOR]

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This paper investigates methodological issues and limited coverage of providers' environmental scores, which are increasingly employed by investors, financial institutions and policymakers for corporate environmental assessment. The contribution of the paper is twofold. First, regression analysis shows a substantial heterogeneity among the environmental scores of seven providers in the reliance on raw data. However, as some variables are found meaningful across providers, the request to enhance disclosure should focus on such variables. The heterogeneity of the unexplained component of the regression across providers can be arguably referred to as judgemental factors and underlines the providers' different focus on financial risk or environmental impact. Second, we propose a classification system based on corporate disclosure data that aims to enable investors to extend the environmental assessment of companies not rated by providers. This system has been calibrated to implement two common investment strategies, that is, best‐in‐class and exclusion and allows to build portfolios with both environmental and financial profiles similar to portfolios based on providers' scores. The work aims to contribute to the intersection between the analysis of methodologies of E‐scores and their practical use for investment purposes. Rather than asking for a mirage of full comparability of E‐scores, the paper substantiates that is of utmost importance to improve the disclosure of corporate data to enhance the environmental assessment as well as the transparency on providers' methodologies to enable investors to select E‐scores consistent with their risk‐impact preferences. Such transparency will foster the development of sustainable finance. [ABSTRACT FROM AUTHOR]

The aim of the paper is to examine the influence of climate vulnerability (CV) on the formation of new firms. Employing a large sample of 140 countries spanning the time frame 2006–2020, it has been found that climate vulnerability harms new firm formation. The empirical results show that the negative impact of CV on the average new business formation rate has been 3.40. The results prove to be robust for alternative subsamples and methodology. Furthermore, the results of the quantile regression highlight a parameter heterogeneity in the effect of CV on entrepreneurial activity. Overall, the empirical findings highlight the key role of climate vulnerabilities in developing public policies aimed to spur entrepreneurial activity. [ABSTRACT FROM AUTHOR]

As extreme weather events continue to impact every continent and the world moves towards establishing a lower-carbon economy, the banking industry is expected to incorporate climate risk into their risk management practices. Climate change poses significant risks to bank loan portfolios through increased physical and transition risks. This study systematically analysed the literature to identify effective strategies for managing these risks. Our findings reveal that climate-related events can lead to substantial loan defaults and credit losses. To mitigate these impacts, banks can integrate climate risk into their risk management frameworks, adopt sustainable lending practices, and diversify their portfolios. Some banks have already implemented measures to mitigate climate risk through insurance policies, while others are incorporating sustainability criteria into their lending practices, such as financing green projects. By proactively addressing climate risks, banks can protect their portfolios, enhance financial resilience and contribute to a low-carbon economy. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of climate risk on corporate innovation in China. Employing a city‐level climate risk indicator that we constructed and a sample of 21,430 firm‐year observations of Chinese‐listed companies, we find that climate risk is negatively associated with corporate innovation investment and outcome. These results are robust to alternative empirical designs and identifications. Our mechanism analyses reveal that climate risk impedes corporate innovation by motivating firms to increase cash holdings as financial reserves. Additional analyses suggest that the adverse impact of climate risk on corporate innovation is more pronounced for high‐tech firms, and less salient for firms with higher financial constraints and female Chairperson or CEO. Furthermore, the decrease in corporate innovation due to climate risk can lead to a reduction in firm value. These findings contribute to the existing literature on climate risk and corporate innovation and inform regulators and listed firms concerning climate risk. [ABSTRACT FROM AUTHOR]

Recently, the body of research that assesses belief in climate change has grown, as has the number of studies appraising how experience with the impacts of climate change might affect public opinion. However, less research has addressed the question of whether/how people believe climate change will manifest itself in their own lives, or how it might affect behavioral responses more generally. Using two rounds of national survey data from 2016 and 2020, we examine the associations between climate risk, political party affiliation, and one potential planned adaptation behavior, relocation. Our results suggest that both exposure to risk and political identification help shape respondents’ beliefs. Several measures of risk are associated with respondents’ reports that weather/climate might cause them to move in the future and there is evidence to suggest that their awareness of risk may have increased between the two surveys. Regarding political affiliation, we find in one set of analyses that Republicans interviewed in 2020 were less likely than other political subgroups, including Republicans interviewed in 2016, to say weather/climate could have a potentially strong influence on future relocation decisions. We also find strong effects of age in one set of analyses, where younger respondents were much more likely than those at middle or older ages to report that weather/climate could exert a strong to moderate influence on a future move. [ABSTRACT FROM AUTHOR]

The concept of sustainability has developed significantly from an unrealistic abstract ideology to a framework that can measure companies' environment, society and corporate governance (ESG) performance. While extensive research has established some relational impacts of ESG performance on debt capital cost (DCC), this paper contends that a comprehensive review of these impacts is incomplete without screening them through the lens of climate risk (CR). Companies are subjected to CR that comprises physical and transition factors resulting from climate change. This paper aims to unravel the missing link between CR and ESG performance, and the consequent impacts on DCC. This paper illustrates using Chinese companies that operate in an emerging economy with robust industrial activities under intense global scrutiny to achieve emission reduction and meet carbon neutrality goals. Through considering CR, the impacts of ESG performance on DCC are explained using panel data and mediation effect tests with A-share listed enterprises on the Shanghai and Shenzhen stock exchanges from 2016 to 2020. The findings show that ESG performance significantly and negatively affects DCC, with debt default risk playing a mediating role. The negative effect of ESG performance on DCC is more significant in non-polluting enterprises and non-state-owned enterprises. [ABSTRACT FROM AUTHOR]