EDHEC

Climate risk

Definition

Refers to the negative impacts of climate change on corporations. Climate risks can be decomposed into two broad categories, namely physical risks associated with the direct impact of climate change on business models, and transition risks, which include the impact of policy changes, reputational impacts, and shifts in market preferences, norms and technology.

Related Content

Industry analysis

Bridging the Gap: Making Climate Scenarios Fit for Investors

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Publications

Climate Scenario Analysis and Stress Testing for Investors: A Probabilistic Approach

Portfolio Losses from Climate Damages: A Guide for Long-Term Investors

Asleep at the Wheel? The Risk of Sudden Price Adjustments

Value versus Values: What Is the Sign of the Climate Risk Premium?

What’s in a shade? The market relevance of green bonds’ external reviews

Asleep at the Wheel? The Risk of Sudden Price Adjustments for Climate Risk

The Global Transboundary Climate Risk Report

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Assessing Financial Risks from Physical Climate Shocks: A Framework for Scenario Generation

Derisking the low-carbon transition: investors’ reaction to climate policies, decarbonization and distributive effects

Designing a Sustainable Financial System: Development Goals and Socio-Ecological Responsibility

Managing the financial risks of climate change and pandemics: What we know (and don’t know)

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Handbook of Green Finance

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Videos

Climate Risks: Are the Markets Asleep at the Wheel

Where is the Climate Risk Premium?

Beyond DICE: What the New-Generation Integrated Assessment Models Can Teach Us About the Optimal Abatement Policy

Climate-related physical risks

Cascading Climate Financial Risks

Climate Risks in Financial Markets

Climate Change and Credit Risk

About EDHEC

Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.

About EDHEC-Risk Climate Impact Institute

Marking the priority assigned by the School to sustainability issues and building on its research programmes exploring the relationships between climate change and finance, EDHEC-Risk Institute became EDHEC-Risk Climate Impact Institute in October 2022. The Institute's mission is to help private and public decision-makers manage climate-related financial risks and make the best use of the financial tools available to transition to low-emission and climate-resilient economies. The Institute’s research programmes explore the relationships between climate change and finance and our key ambition is to become a leading academic reference point for long-term investors, helping them to manage the asset-pricing implications of climate change as well as mitigation and adaptation efforts.

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