IMF: Impact of Climate Change on Stock Market Outlook

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IMF: Impact of Climate Change on Stock Market Outlook


The projected increase in the frequency and severity ofdisasters due to climate change is a potential threat toglobal financial stability.

  • Climate change physical risk does not appear to be reflected in global equity valuations.
  • Beyond climate change mitigation and adaptation, sovereign financial strength and higher insurance penetration help to preserve financial stability.
  • Stress testing and climate risk disclosure are essential to better assess physical risk.
"aggregate equity valuations
as of 2019 do not appear to reflect the predicted changes
in physical risk under various climate change scenarios.
This suggests that equity investors may not be paying
sufficient attention to climate change risks."

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