We shed new light on the macroeconomic effects of rising temperatures. In the data, a shock to global temperature dampens expenditures in research and development (R&D). We rationalize this empirical evidence within a stochastic endogenous growth model, featuring temperature risk and growth...

We find that people revise their beliefs about climate change upward when experiencing warmer than usual temperatures in their area. Using international data, we show that attention to climate change, as proxied by Google search volume, increases when the local temperature is abnormally high. In...

This paper investigates whether media climate change concern (MCCC) predicts stock market excess returns by using data for 44 markets. We show that the predictability of the MCCC index is a ubiquitous phenomenon in the international equity market - the higher MCCC index predicts lower market...

This literature overview conducts a systematic study of how the climate related risks from global warming may affect financial markets. The climate related risk is divided into three subcategories, the environmental uncertainty, the economic climate risk and the climate policy risk, which all of...

We identify the climate risk exposure of U.S. commercial banks and assess its financial materiality. Climate risk is positively associated with the environmental, social, and governance (ESG) performance of banks and negatively associated with the stakeholder ESG sentiment towards them. Negative...

In the presence of rising concern about climate change that potentially affects risk and return of investors’ portfolio companies, active investors might have dispersed climate risk exposures. We compute mutual fund covariance with market-wide climate change news index and find that high...

We examine whether professional money managers overreact to large climatic disasters. We find that managers within a major disaster region underweight disaster zone stocks to a much greater degree than distant managers and that this aversion to disaster zone stocks is related to a salience bias...

Funds with an environmental, social and corporate governance (ESG) mandate have been growing rapidly in recent years and received inflows also during periods of market turmoil, such as March 2020, in contrast to their non-ESG peers. This paper investigates whether investors in ESG funds react...

This paper studies the exposure of European investment funds to transition climate risks and its implications for the rest of the financial system. Based on granular data on investment funds’ assets and liabilities, we measure the percentage of brown assets in funds' portfolios and the extent...