Let’s get physical: Comparing metrics of physical climate risk
Journal
Finance Research Letters
ISSN
1544-6123
Type
journal article
Date Issued
2022
Author(s)
Abstract (De)
Investors and regulators require reliable estimates of physical climate risks for decision-making. While assessing these risks is challenging, several commercial data providers and academics have started to develop firm-level physical risk scores. We compare six physical risk scores. We find a substantial divergence between these scores, also among those based on similar methodologies. We show how this divergence could cause problems when testing whether financial markets are pricing physical risks. Hence, financial markets may not adequately account for the physical risk exposure of corporations using available risk scores. Finally, we identify key sources of uncertainty for further investigation.
Language
English
Refereed
Yes
Volume
46
Start page
102406
Subject(s)
Eprints ID
267201