Climate change not a risk to financial markets in short term

The direct physical effects of climate change “very likely do not constitute a risk” for the stability of European financial markets until 2030, according to preliminary results of an upcoming report by the Federal Ministry of Finance. “How likely transitional risks […] might occur is difficult to assess”, as they depend on changes in national climate policy regulations, writes the ministry in its monthly report for August. As an example, the ministry warns of a “transitional shock” if the federal government were to decide to steer CO₂-emission prices towards the true economic costs, instead of the current market price. These real economic costs were not taken into account in the evaluation of relevant financial assets, so many assets “would heavily lose in value”.

Find the finance ministry's monthly report for August in German here.