'40% of global equity value at risk unless decarbonisation efforts accelerate'
Environmental Finance 19/07/2024
" Climate risk poses ‘significant’ impact on global equity valuations, the EDHEC-Risk Climate Impact Institute has claimed, as it calls on ‘aggressive’ climate policies to preserve valuations.
In its study – How does climate risk affect global equity valuations? A novel approach – EDHEC found that over 40% of global equity value is at risk unless decarbonisation efforts accelerate, and losses could exceed 50% if climate tipping points are breached.
It adds that the ‘magnitude of losses’ is dependent on the aggressiveness of upcoming and future policies abating emissions, plus the efforts of central banks to lower rates in states of economic distress.
“By modelling the considerable uncertainty in the physical and economical dimensions of climate change and linking it to top-down equity valuation, this study debunks the notion that the value of financial assets may be immune to climate changes and provides additional support for bold climate action,” said Frédéric Ducoulombier, director of the London and Nice-based EDHEC-Risk Climate Impact Institute."
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'40% of global equity value at risk unless decarbonisation efforts accelerate'
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.
