Climate-related financial risks

Climate-related financial risks are potential economic threats resulting from climate change impacts. These include physical risks, such as damage to infrastructure and properties from extreme weather events, and transition risks, which arise as economies shift toward cleaner energy and more sustainable practices. Both can affect the value of investments, assets, and businesses. For example, a flood might damage a factory, or new regulations could increase costs for fossil fuel companies. Recognizing these risks helps investors and companies prepare for financially disruptive climate changes, ensuring resilience and sustainability in their operations.