Webinar: Assessing the Impact of Climate Risk on Global Equity Valuations

Climate Risk and Global Equity Valuations: What Investors Must Know

Traditional discounted cash flow models often disregard state dependence by applying the same discount rate/factor to all cashflows occurring at a given date. But can this approach effectively value climate-sensitive securities?

New research by EDHEC-Risk Climate Impact Institute, with support from Scientific Beta, shows that this is not the case, and that the standard valuation tools are not fit for purpose. Using an upgraded integrated climate-economics model, we capture uncertainties in the climate system, physical damages, and discount rates under various emissions abatement policies, and assess the resulting impact on global equity valuations.

Sensitivity analyses reveal that the severity of the impact on equity markets depends on the pace of abatement, on the precise location of tipping points, and on the continued ability by Central Banks to counter periods of economic distress by lowering rates. The study finds that even in the absence of tipping points, failure to take abatement action can reduce global equity valuation by over 40%.

We are pleased to invite you to the webinar: "Assessing the Impact of Climate Risk on Global Equity Valuations" on Tuesday, July 2nd, 2024 at 2pm CEST.

At the event, Professor Riccardo Rebonato, Scientific Director of EDHEC-Risk Climate Impact Institute, will provide insights from the forthcoming paper titled "The Impact of Physical Climate Risk on Global Equity Valuations," and discuss investor implications with the audience.

This webinar will address the following issues:

What are the limitations of current climate-aware valuation tools?
How is the impact of physical risk on equity valuation being underestimated?
How to make discounting state-dependent and why it matters
What are the key factors affecting the impact of climate change on global equity valuation?
What are the implications of the current emissions abatement course for equity valuation?
Can we rely on a 'Greenspan put' for climate risk?
What are the implications for investment managers?

Riccardo Rebonato, EDHEC-Risk Climate, Felix Goltz, Scientific Beta

You can register for the webinar here

Please note that a recording of the event will be made available and sent to all registrants after the live session.

Date

Tuesday 02/07/2024 - Tuesday 02/07/2024

8pm SGT - 2pm CEST - 1pm BST - 8am EST

Place

Zoom - Webinar

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.