Can conventional stocks finance climate change?

Abstract

This study examines the potential of conventional stocks to finance climate change. It considers the G7 countries, introduces realized volatility of temperature and precipitation as measures of climate change, and covered the post-GFC period. The result shows that (with the exception of Canada) stock markets of G7 countries are though resilient to climate change cannot finance climate change. The best performance was by the US stock market,whichfinanced7.2%and1.5%oftheclimaterisks due to temperature and precipitation, respectively.