FINANCIAL SYSTEMS AND SERVICES

COH335
CIA 3
Submitted to
Dr. Sandeep Kumar Singh
Submitted By
Name of Student Roll Number
1. Ann Grinta J 2211361
2. Keerti Thakkar 2211363
3. Valentina Gonsalves 2211372

Class
3 BCom H D
Date of Submission
31 October 2023

1
 Case Study
Impact Of Climate
Change on Financial
Markets

2
 Table of Contents

Topics Page Numbers

1. Abstract 4
2. Introduction 5
3. Background 6-7
4. Impact on Financial Market 8-9
5. Financial Institution’s Response 10 - 12
6. Problem Statement 13 - 15
7. Stakeholder’s Perspective 16
8. Empirical Research and Similar Events 17 - 19
9. Consequences and Proposed Actions 20 - 21
10.The effect of climate change on the stock markets in
22 – 25
Asia with reference to the Indian Stock Market
11. Conclusion 26 - 27
12. References 28

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ABSTRACT

Climate change has emerged as a significant global challenge, with far-reaching implications for
various sectors, including financial markets. This case study aims to explore the impact of climate
change on financial markets and provide insights into the risks and opportunities that arise as a
result.

The study begins by examining the scientific consensus on climate change, highlighting the key
factors contributing to its progression. It then delves into the potential consequences of climate
change for financial markets, considering both physical risks and transition risks. Physical risks
encompass the direct impact of climate-related events, such as extreme weather events and rising sea
levels, on asset values and financial stability. Transition risks refer to the financial risks associated
with the shift towards a low-carbon economy, including policy changes, technological
advancements, and market responses.

Furthermore, the case study analyses the responses of financial market participants to climate
change. It explores the steps taken by investors, asset managers, and financial institutions to integrate
climate-related factors into their decision-making processes. This includes the incorporation of
Environmental, Social, and Governance (ESG) considerations, the development of sustainable
investment products, and the implementation of stress tests and scenario analyses to assess climate-
related risks.

The study also examines the role of regulatory frameworks and policy interventions in shaping the
response of financial markets to climate change. It highlights the importance of effective climate-
related disclosures and reporting standards in enhancing transparency and enabling informed
decision-making. Additionally, it discusses the potential role of carbon pricing mechanisms, green
finance initiatives, and international collaborations in driving the transition towards a more
sustainable financial system.

In conclusion, this case study underscores the need for comprehensive and proactive measures to
address the impact of climate change on financial markets. It emphasizes the importance of
considering climate-related risks and opportunities in investment strategies and decision-making
processes. By understanding and effectively managing these risks, financial market participants can
contribute to a more resilient and sustainable global economy.

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INTRODUCTION

● Climate change is a major global concern that affects ecosystems, cultures, and the economy.
It is transforming financial markets and providing new environments that require proactive
adaptation.

● The rise in physical risks, such as severe extreme weather events, has resulted in significant
losses for companies and insurers, causing damage to the property and accident insurance
sectors. The transition risks are altering industries that rely on carbon-intensive practices and
exposing high-emission companies to financial penalties. The governments worldwide are
also implementing stronger laws about the environment, by accelerating the transformation
and intensifying the pressure on financial sector participants to adapt. Carbon pricing
methods, such as carbon taxes and cap-and-trade systems, add additional levels of cost, which
impact carbon-intensive companies. This risk revaluation is compelling investors to
reconsider their portfolios and the long-term sustainability of their assets.

● The emergence of "green finance," which includes sustainable investment funds, green
bonds, and other responsible financial instruments that reflect an evolving investing
environment, is another effect of climate change. Climate-related data and environmental
risks are becoming a regulatory requirement for companies listed on stock exchanges, and are
helping investors to more effectively assess climate-related risks and alternatives.

● The climate litigation is another example of how climate change crosses with financial
markets, resulting in major monetary losses for targeted corporations. The insurance sector is
dealing with an increase in claims connected to climate-related disasters, that have impacted
financial market stability.

● The effect of climate change additionally alters supply chains, generating disruptions that
have an impact on the profitability of businesses that rely on these supply networks. Hence in
order to survive in a changing world, financial markets, investors, and companies must
ultimately adjust to the realities of climate change by incorporating climate-related factors
into their decision-making processes and portfolio management.

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BACKGROUND

● Over the past few years, climate change has grown beyond its environment and started to
become a powerful force affecting not only the planet but also the world economy.
Environmental awareness, changing regulations, and economic response have resulted in this
interconnected relationship between climate and money. Thus, we can also explore the
background of how financial markets are being shaped by climate change, emphasizing the
constantly evolving dynamics and historical history that have resulted in this point in time.

● The effect of climate change has become an important topic of discussion worldwide due to
the realization that human actions, specifically the burning of fossil fuels and deforestation,
are causing an unprecedented rise in greenhouse gas emissions.

● Climate science knowledge reached a turning point with the creation of the
Intergovernmental Panel on Climate Change (IPCC) in 1988. The IPCC's assessments
highlighted the grave effects of unrestricted global warming and provided scientific
agreement on the facts of climate change. Greenpeace and Earth Day are two examples of
community environmental organizations that boosted public awareness and activism for
climate change at the same time. Business organizations and governments are driven by these
actions to work on the global economic crisis.

● The adoption of environmental laws and regulations has been one of the main factors
determining how climate change is affecting the financial markets. Governments all across
the world started passing legislation to cut carbon emissions and advance sustainability after
considering how crucial the need was to find solutions to climate change.

● The first international agreement to hold wealthy nations accountable for reducing their
greenhouse gas emissions was the Kyoto Protocol, which was approved in 1997. Following
this, almost every nation agreed to keep global warming to far below 2 degrees Celsius above
pre-industrial levels as they signed the Paris Agreement in 2015. The framework for national
laws and carbon reduction goals was established by these international agreements. To create
economic incentives, governments implemented policies that included carbon pricing

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 mechanisms, such as carbon taxes and cap-and-trade systems to gradually slow down the
emission of such gases and this paved the way to an effective way of functioning creative
dynamics in the market.

● The deep and evolving relationship between climate change and financial markets is shaped
by several factors, including changing investor preferences, governmental and regulatory
changes, decades of environmental consciousness, and the emergence of green finance.

The background study highlights the significant changes occurring place in the financial sector,
where market dynamics, corporate strategies, and investment decisions are now significantly
affected by climate change. There are opportunities and difficulties on the way as we keep on
dealing with this new financial environment, which emphasizes the requirement for adaptable
strategies to create solid and sustainable financial markets.

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IMPACT ON FINANCIAL MARKETS

● Physical collateral with an appraised value greater than the loan capacity provided to it is
required by banks while lending to corporate and individual borrowers whose ability to repay
is not certain. Those tangible collaterals could be anything from commercial or residential
real estate to a fleet of cars or airplanes, machinery, land, etc. The physical assets used to
reduce the exposure to credit risk may sustain major damage from typhoons, flooding, and
landslides, among other extreme weather occurrences. The consequent loss in the bank's
profit and loss statement due to the harm that climate change would do to collateral value
would have a negative impact on the bank's profitability.

● Natural disasters brought on by climate change, such as hurricanes, landslides, and floods,
can harm banks' clientele and revenue. Large-scale damage from storms and floods is a
common occurrence for bank clients, including manufacturing and agriculture companies.
Despite the indirect effects on banks, such occurrences would result in reduced earnings for
banks with a high agriculture sector risk because those affected companies would require
time to get back to normal before they may resume their operations.

● Climate change events are expected to increase insurance costs for businesses and
individuals, as they are often the first to claim on their policies. When multiple businesses
and individuals are affected simultaneously, insurance payouts will be higher, potentially
leading to financial difficulties for insurance companies. Additionally, financial institutions,
which are major lenders to insurance companies, may be indirectly affected by climate
change events.

● When assessing the intensity and frequency of climate change events becomes challenging,
insurance firms have the option to refuse coverage, reduce coverage availability, or raise rates
and deductibles in preparation for such events. When insurance firms think that climate
change-related calamities are likely to happen, this can happen. All the events related to
climate change have the potential to reduce productivity among workers in financial
institutions, particularly when temperatures exceed records and make it difficult to complete
tasks.

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● Employees in financial institutions may experience physical and mental breakdowns as a
result of extreme heat and dehydration, especially when combined with demanding work
schedules and long hours. Severe climate change implies that temperatures will be higher
than in the past and that they may last much longer than in the past.
● Financial firms can be forced to reveal information about their exposure to climate change
risk by additional regulations or laws. In order to reduce this sort of climate change risk, they
might also need to reveal how much risk capital they have saved up. Financial institutions
may also be required by regulations to provide more details about how climate change will
impact their business plan and operational efficiency. Nonetheless, financial institutions bear
a cost associated with these disclosures.

● The capital market regulator may enforce such disclosure requirements to guarantee that
investors are well-informed about how publicly traded corporations plan to mitigate the risk
associated with climate change. The disclosure requirements in the banking industry could be
enforced by bank regulators as a preventative measure to address climate the financial
institutions endure the expense associated with these disclosures since they might have to hire
experts to accurately assess their exposure to climate change risk and determine the amount
of risk capital that needs to be set aside to reduce climate change risk.

● This study examined how the financial system and financial institutions are affected by
climate change, and it demonstrated how these effects, together with those on counterparties
and clients, might have detrimental effects on the longevity of financial institutions. It also
demonstrated how the impact of climate change on financial institutions might have
detrimental effects on the stability of the financial system. Climate change is unquestionably
a developing danger and the reason behind the growing uncertainty in the business sector.

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THE RESPONSE OF THE FINANCIAL INSTITUTIONS

● A major worldwide issue that affects financial markets and institutions, climate change
presents dangers to the environment and society. Implementing risk management techniques,
encouraging sustainable finance, improving transparency, incorporating ESG criteria,
pushing for legislative reforms, and carrying out extensive stress testing are all important
ways that financial institutions contribute to tackling these issues.

● Financial institutions must evaluate and manage risks in order to reduce climate-related
hazards, including transition and physical risks that might lower the value of investments and
assets by providing environmentally friendly financial services and products like green bonds
and sustainable investment funds, they are also encouraging sustainable finance and
investing. Many institutions pledge to disclose their climate-related risks and possibilities
more fully since transparency is crucial in mitigating the impact of climate change on
financial markets.

● They adhere to global reporting standards such as the Task Force on Climate-related
Financial Disclosures (TCFD) to update investors on their risk management strategies
regarding climate change and their shift to a sustainable business model. Businesses are being
encouraged to adopt more sustainable practices and lower their carbon footprints by the
increasing integration of ESG criteria into investment decisions.
● Due to the present financial and economic systems' failure to be inclusive, historically
underprivileged groups have been marginalized and historical injustices have resulted. These
communities have the chance to benefit from new prosperity as a result of the shift to a
decarbonized and sustainable economy, which will advance a society that is more democratic,
equitable, and inclusive. The UN Sustainable Development Goals of eliminating poverty,
decreasing inequality, and encouraging full employment can all be achieved by implementing
a just transition. Governments and the private sector can work together to create high-quality
employment in green industries, enabling communities to participate in building a
decarbonized future. Access to well-regulated financial resources, such as bank accounts and
lending, can help build financial security and resilience. The public sector can establish
infrastructure to facilitate access to financial services for all and provide direct assistance to

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 vulnerable communities with cash transfers, which serve as an entry point into the formal
financial system and are essential for social safety groups.

● Financial organizations are actively advocating for regulatory changes that support climate
resilience and sustainability as part of their policy advocacy efforts relating to climate
change. These financial institutions also evaluate the possible effects of different climate
scenarios on their portfolios and capital adequacy through stress testing and scenario analysis
in response to the unpredictability of climate threats and aid organizations in developing
suitable risk mitigation plans and better understanding their susceptibility to climate-related
risks.
● Climate disclosures are reports that businesses, banks, and other establishments like for
instance the European Central Bank provides the detailing the carbon footprint of their
operations and the risks they face from climate change. They indicate the degree to which an
organization's actions both contribute to and are impacted by climate change. Corporations,
financial institutions, and regulators need to have access to information and a clear
understanding of risks and opportunities to target investments for sustainable business
transformation. Accurate disclosures are necessary for efficient capital deployment and risk

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 management. The Sustainability Accounting Standards Board and Taskforce for Climate-
related Financial Disclosures are creating standards for corporations to disclose climate risks.
36% of the Largest global companies have set climate risk disclosures, with 32% in 2021. By
2030, all businesses must provide disclosures. The Taskforce for Nature-related Financial
Disclosures framework is being finalized with significant private sector support.

In conclusion, financial institutions are adopting risk management techniques, encouraging

sustainable finance, improving transparency, incorporating ESG standards, pushing for legislative
changes, and carrying out extensive stress testing in response to the growing concern over climate
change in the financial markets.

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Problem Statement

Climate Change and Its Impact on Financial Markets

Climate change poses a significant threat to global financial markets, with far-reaching implications
for economies, businesses, and individuals. As the Earth's climate continues to change, the financial
sector faces a multitude of challenges that need to be addressed urgently.

1. Physical Effects of Climate Change:

The physical effects of climate change, such as extreme weather events, pose direct risks to
financial markets. Rising sea levels, intense storms, and prolonged droughts disrupt economic
activities, damage infrastructure, and result in substantial financial losses. Insurance
companies, for instance, face increased claims due to more frequent and severe natural
disasters, leading to financial instability within the industry.

Furthermore, the impact of climate change on agriculture and food production can cause price
volatility and supply chain disruptions. This affects not only the agricultural sector but also
industries that rely on stable and affordable inputs. As a result, companies may face higher
operational costs, reduced productivity, and diminished profitability, which can ultimately
impact their stock prices and market performance.

2. Transition to a Low-Carbon Economy:

The global movement towards a low-carbon economy presents both risks and opportunities
for financial markets. The transition away from carbon-intensive industries and towards
renewable energy sources requires significant investments and changes in business models.
Companies that fail to adapt to this transition risk losing market share, facing regulatory
penalties, and experiencing asset devaluation.
Financial institutions are exposed to these risks as well. They may hold significant
investments in fossil fuel-related assets that could become stranded or lose value as the world
shifts towards cleaner energy sources. This could lead to potential losses and instability in the
financial system, affecting investors, pension funds, and the overall stability of the markets.

The Link to Financial Stability:

The interconnectedness of financial markets and the global economy makes climate change a
systemic risk. The physical effects of climate change and the transition to a low-carbon economy can

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have cascading effects on financial stability. As companies and industries face financial challenges,
the risks are transmitted through supply chains, investment portfolios, and lending practices.

Moreover, sudden shocks to the financial system resulting from climate-related events or the
revaluation of carbon-intensive assets can trigger market volatility and liquidity problems. This can
lead to a loss of investor confidence, reduced access to capital, and potential economic downturns.

Addressing the Challenges:

It is crucial to recognize the risks posed by climate change to financial markets and take proactive
measures to mitigate them. This includes enhancing climate-related financial disclosures, stress
testing financial institutions for climate-related risks, and encouraging sustainable investments.
Additionally, fostering international cooperation and coordination is essential to develop consistent
regulatory frameworks and promote climate resilience across global financial markets.

By acknowledging the intersection of climate change and financial markets, we can work towards
building a more resilient and sustainable financial system that can navigate the challenges of climate
change and support long-term economic grow.

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15
Stakeholder's Perspective

The stakeholder's perspective in the context of the impact of climate change on financial markets
focuses on understanding and addressing the risks and opportunities associated with climate change
for various stakeholders in the financial sector.

This perspective recognizes that climate change can have significant implications for the financial
markets, including the potential for physical risks, transition risks, and reputational risks.

From an investor's perspective, climate change can affect the value of investments by introducing
new risks related to changing weather patterns, regulations, and market dynamics. Investors may
need to consider the potential impact of climate-related events, such as hurricanes or droughts, on
their investment portfolios.

Financial institutions, including banks and insurance companies, also need to assess and manage
the risks associated with climate change. They may face exposure to climate-related risks through
their lending and investment activities, as well as potential liabilities from climate-related claims.

Furthermore, regulators and policymakers play a crucial role in addressing the impact of climate
change on financial markets. They can implement regulations and disclosure requirements to
promote transparency and encourage financial institutions to assess and disclose their climate-related
risks. This helps stakeholders make informed decisions and promotes the integration of climate-
related considerations into financial decision-making processes.

Stakeholders' overall perspective on how climate change is affecting financial markets highlights the
need for proactive risk management, strategic planning, and stakeholder collaboration to overcome
obstacles and take advantage of possibilities.

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Empirical Research

Numerous studies have been conducted to examine the impact of climate change on financial
markets. Some key areas of empirical research include:

1. Physical Risks Assessment: Based on changes in temperature trends, increasing sea levels,
and extreme weather, researchers examine the direct physical risks associated with climate
change and understanding how these risks may impact different financial market sectors is
made easier with the help of this assessment.

2. Transition Risks Evaluation: This research focuses on the risks associated with
transitioning to a low-carbon economy. It explores how policy changes, regulatory actions,
and technological advancements aimed at mitigating climate change can influence financial
markets and asset valuations.
3. Financial Risk Modeling: Researchers develop models to assess the financial implications
of climate change. These models incorporate factors like carbon pricing, climate-related
regulations, and the potential for stranded assets. By evaluating the potential financial risks
and opportunities, these models help investors make informed decisions.
4. Asset Pricing and Valuation: This area of research investigates how climate-related risks
and opportunities are priced into financial assets. It explores the relationship between climate
factors and asset returns, as well as the impact of climate-related events on asset valuation.
5. Investor Behavior and Preferences: Researchers study how climate change information
influences investor behavior and preferences. They examine the role of environmental, social,
and governance (ESG) factors in investment decision-making, as well as the demand for
sustainable financial products.

These empirical research efforts aim to provide insights into the potential impacts of climate change
on financial markets, assisting policymakers, investors, and other stakeholders in making informed
decisions.

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Similar Events

Hurricane Katrina in 2005

Hurricane Katrina, which struck the Gulf Coast of the United States in 2005, had a profound impact
on the insurance and reinsurance markets. The widespread devastation caused by the hurricane led to
a surge in insurance claims and exposed vulnerabilities in the industry's ability to handle such
catastrophic events.

The massive scale of the damages caused by Hurricane Katrina resulted in significant losses for
insurance companies. Many policyholders filed claims for property damage, flooding, and business
interruption. The high volume of claims put immense pressure on insurance companies, leading to
substantial payouts and financial strain.

Reinsurance companies, which provide insurance coverage to primary insurers, also faced significant
challenges. The magnitude of the losses caused by Hurricane Katrina exceeded the capacity of
individual insurance companies, necessitating the involvement of reinsurance companies to spread
the risk. This event highlighted the importance of robust reinsurance arrangements and the need for
adequate coverage against extreme weather events.

The impact of Hurricane Katrina on the insurance and reinsurance markets led to increased scrutiny
of risk assessment and underwriting practices. Insurers and reinsurers reevaluated their exposure to
natural disasters and implemented stricter policies for high-risk areas. This event also prompted
discussions and reforms regarding the pricing and availability of insurance coverage in regions prone
to hurricanes and other climate-related risks.

Overall, the case of Hurricane Katrina demonstrated the significant financial implications that can
arise from climate-related events. It underscored the importance of understanding and effectively
managing the risks associated with natural disasters, leading to a greater emphasis on climate risk
modeling and the development of more resilient insurance and reinsurance practices.

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Multiple Breadbasket Failure

The 'Multiple Breadbasket Failure' scenario examines the impact of production shocks resulting from
climate events on crop prices and agricultural commodities markets. This scenario considers a
situation where multiple major agricultural regions experience significant crop failures
simultaneously due to extreme weather events, such as droughts, floods, or heatwaves, caused by
climate change.

When such production shocks occur simultaneously across different breadbasket regions, it can lead
to a sharp decrease in global food supply and a subsequent increase in crop prices. This can have far-
reaching consequences for the agricultural commodities markets and the global economy as a whole.

The 'Multiple Breadbasket Failure' scenario highlights the increasing systemic risk posed by climate
change to the financial sector. The interconnectedness of global commodity markets means that
disruptions in one region can quickly propagate throughout the entire system. In this scenario, the
financial sector plays a crucial role in addressing the challenges posed by such systemic risks.

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Consequences and Proposed Actions on the Impact of Climate Change on
Financial Markets

Financial markets are significantly at danger from climate change. Climate change can have multiple
effects, such as increasing frequency and intensity of extreme weather events, as well as transitional
hazards associated with the shift to a low-carbon economy.

These consequences can have substantial implications for businesses, investors, and economies. For
instance, physical risks can lead to property damage, supply chain disruptions, and increased
insurance costs. Transition risks can include stranded assets, regulatory changes, and shifts in
consumer preferences.

To address these risks and mitigate the impact of climate change on financial markets, several
proposed actions can be taken. These actions include:

1. Enhancing risk assessment and disclosure: Financial institutions should conduct thorough
risk assessments to identify and measure climate-related risks in their portfolios. They should
also improve the disclosure of climate-related information to enable informed decision-
making by investors and stakeholders.
2. Incorporating climate considerations into investment decisions: Investors should integrate
climate-related factors into their investment strategies. This involves considering climate
risks and opportunities when allocating capital, conducting due diligence, and engaging with
companies to encourage sustainable practices.
3. Supporting the development of sustainable finance: Governments, regulators, and
financial institutions should collaborate to develop frameworks and incentives that promote
sustainable finance. This can involve measures such as creating green bonds, establishing
sustainable investment funds, and providing financial support for renewable energy projects.
4. Encouraging research and innovation: Continued research and innovation are crucial for
understanding the financial implications of climate change and developing new solutions.
Governments, academic institutions, and private organizations should support research efforts
and incentivize innovation in areas such as climate risk modeling, renewable technologies,
and sustainable finance practices.

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By taking proactive measures and implementing these proposed actions, financial markets can better
adapt to the challenges posed by climate change and contribute to a more sustainable and resilient
global economy.

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The effect of climate change on the stock markets in Asia with reference to the
Indian Stock Market

https://a-e-l.scholasticahq.com/article/37142-climate-change-and-asian-stock-markets-a-garch-
midas-approach?attachment_id=94584

According to the following research paper - Oloko, T. F., Adediran, I. A., & Fadiya, O. T. (2022).
Climate Change and Asian Stock Markets: A GARCH-MIDAS Approach. Asian Economics
Letters, 3(Early View). https://doi.org/10.46557/001c.37142 - the following observations have been
drawn:

On average, as the effects of climate change worsened over the course of the period, stock returns rose
in India (BSE and NSE), South Korea, Thailand, and Taiwan, while they decreased in Hong Kong,
China (Shanghai, Shenzhen), Singapore, and Tokyo, especially between the first and second three
years.

1. Category 1: About 40% of Asian stock markets are thought to experience more volatility as a
result of climate change, according to the substantial favourable impact of climate change on

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 long-term stock return volatility. In almost 40% of Asian stock markets, more volatility
indicates that the markets are riskier, which implies that climate change reduces investment
and lowers stock returns.

2. Category 2: This result also applies to roughly 20% of Asian stock markets, where it was
discovered that the volatility of stock returns was significantly impacted negatively by climate
change. Put another way, these markets' stock return volatility decreases as a result of climate
change. Therefore, despite an increase in the frequency of climate change, it is anticipated that
investment demand and stock returns in these markets will rise due to lower associated risk.
This implies that it is impossible to discount the prospect of investors switching from climate-
focused investments to traditional stocks.

3. Category 3: Finally, the findings indicate that 40% or so of Asian stock markets are resilient
to climate change because there is little to no correlation between climate change and stock
return volatility and returns.

India, as of the year 2023, can be placed in the Category 3. This is because the Indian stock market is
resilient to climate change as compared to other countries for a number of reasons, including:
1. Diversification: The Indian economy is diversified across a range of sectors, including
agriculture, manufacturing, and services. This helps to mitigate the impact of climate change
on any one sector.
2. Strong domestic demand: India has a large and growing domestic market, which is less
vulnerable to external shocks. This provides a buffer against the economic impact of climate
change.
a. India's economy stands out for its strong reliance on domestic demand, a distinctive
feature compared to its regional counterparts that heavily rely on exports. Domestic
consumption and investments have been the primary driving forces, contributing
significantly, around 55-60%, to the overall economic growth. However, a persistent
challenge has been the drag on growth due to India's current account deficit, where
net exports have played a limiting role.
b. Recent developments indicate a shift in this scenario, marked by a noteworthy increase
in services exports. This uptick in services exports has provided a cushion to the current
account balances, signalling a positive trend in India's trade dynamics. Nevertheless, it

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 is crucial to recognize the impact of global commodity prices on the macroeconomy.
India, with its large population, heavily relies on imported commodities. Consequently,
fluctuations in global commodity prices have direct repercussions on key
macroeconomic indicators, including inflation, fiscal deficit, and the current-account
deficit, posing challenges that need careful management and policy consideration.
3. Government support: The Indian government is committed to supporting the economy in the
face of climate change. This includes investing in renewable energy, green infrastructure, and
climate-resilient agriculture.
a. National Solar Mission (NSM): NSM is a government initiative aimed at promoting the use
of solar energy in India. It focuses on increasing solar capacity, reducing the cost of solar
power, and promoting research and development in the solar energy sector to make India a
global leader in renewable energy.
b. National Mission for Enhanced Energy Efficiency (NMEEE): NMEEE aims to enhance
energy efficiency across various sectors in India. It focuses on promoting energy conservation
practices, implementing energy-efficient technologies, and creating awareness among
industries and consumers to reduce energy consumption and minimize environmental impact.
c. National Mission on Sustainable Habitat (NMSH): NMSH focuses on promoting
sustainable urban development. It aims to develop eco-friendly and energy-efficient habitats,
improve urban infrastructure, and implement policies to ensure sustainable growth in cities and
towns while minimizing the environmental footprint.
d. National Water Mission (NWM): NWM addresses water-related challenges in India. It
emphasizes efficient water use, conservation, and management. The mission aims to ensure
sustainable water supply, improve water quality, and promote water-saving practices in
agriculture, industries, and households to mitigate the impact of water scarcity.
e. National Mission for Sustaining the Himalayan Ecosystem (NMSHE): NMSHE focuses on
preserving the fragile Himalayan ecosystem. It aims to enhance the resilience of the region
against climate change impacts, conserve biodiversity, promote sustainable land use practices,
and improve the livelihoods of the local communities residing in the Himalayan region.
f. National Mission on Strategic Knowledge for Climate Change (NMSKCC): NMSKCC
emphasizes the importance of knowledge and research in addressing climate change
challenges. It supports scientific research, innovation, and knowledge dissemination related to
climate change mitigation and adaptation strategies, fostering a climate-resilient future for
India.

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g. National Mission for a Green India (GIM): GIM aims to enhance forest and tree cover,
restore ecosystems, and conserve biodiversity. It focuses on afforestation, reforestation, and
promoting sustainable forest management practices. GIM also involves local communities in
conservation efforts, ensuring ecological balance and environmental sustainability.
h. National Mission for Sustainable Agriculture (NMSA): NMSA promotes sustainable
agricultural practices in India. It encourages the adoption of climate-resilient crop varieties,
efficient water management techniques, soil health improvement, and integrated pest
management. NMSA aims to enhance agricultural productivity while ensuring the long-term
sustainability of natural resources and the environment.

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Conclusion
India is transitioning towards greater renewable energy generation while prioritizing improved
energy access, affordability, and security. With the country poised to experience rapid economic
growth, there is a critical choice between fossil fuels and green alternatives, a decision that could
significantly influence India's greenhouse gas emissions trajectory for years to come.

Despite significant progress in meeting emissions reduction targets outlined in the Paris Agreement,
current policies suggest a potential increase of over 40 percent in total greenhouse gas emissions by
2030. While a slight rise in short-term emissions might be necessary to achieve poverty reduction
and energy security objectives, accelerating the implementation of existing policies could
substantially decrease emissions in the medium term. This approach could pave the way for India to
move closer to a trajectory leading to net zero emissions by 2070.

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On April 11, The International Monetary Fund (IMF) released its latest World Economic Outlook
report, projecting that the Indian economy will grow by 5.9 per cent in the current fiscal year,
making it the fastest-growing economy in the world. Nonetheless, the organization also warned that
disruption in the financial system could have a detrimental effect on overall global growth.

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References & Citation

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10.1108/978-1-80043-095-220201011.

https://www.cnbc.com/2021/04/21/why-climate-change-is-a-risk-to-financial-
markets.html
Amaro, S. (2021, April 21). How climate change could be a risk to your savings. CNBC.

https://www.cnbc.com/2021/04/21/why-climate-change-is-a-risk-to-financial-markets.html

https://www.weforum.org/agenda/2021/11/cop26-climate-change-is-driving-a-
financial-crisis-heres-what-needs-to-change-risk-mitigation-investment/
Climate change is driving a financial crisis – here’s what needs to change. (2022, May 20). World

Economic Forum.

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