Firms that are more exposed to rising temperatures consistently deliver lower-than-expected returns, according to new research from the University of Exeter Business School.

The study analysed over five decades of US stock data and introduced a measure of temperature sensitivity to assess how companies’ share performance responds to unusual shifts. It found that firms more affected by temperature changes tend to be less profitable, take greater risks, and generate weaker stock returns. Yet these same firms retain relatively high valuations, suggesting investors are underestimating the financial impact of climate change, according to the report’s authors.


See the next issue of CIR Magazine for more on this report.

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