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Mapping global financial risks under climate change

Nature Climate Change volume 15, pages 329–334 (2025)Cite this article

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Abstract

There is growing concern about the potential impacts of climate change on financial stability but little quantitative evidence available on the potential magnitude of financial risks induced by climate extremes. Here we provide a forward-looking assessment of the impacts of floods, storms, and wildfires on a universe of securities representative of global market capitalization, using the structural climate credit-risk model CLIMACRED-PHYS. We show that there can be a substantial amplification of direct economic losses arising from firms’ financial leverage. We highlight the importance of cross-border climate financial risks, notably the transfer of impacts from production facilities in emerging economies to firms in developed economies. Finally, we quantify the potential increase of financial risks induced by climate change. Overall, our results emphasize the relevance of asset-level climate risk assessment for financial regulation and the importance of integrating financial impacts in the assessment of adaptation policies.

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Fig. 1: Distribution of losses over the universe of bonds and equities.
Fig. 2: Summary of equity impacts generated and received per country.

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Data availability

All data on natural hazards used in our analysis are publicly available from their respective sources mentioned in Methods. Data on firms’ geolocation can be requested from Sequantis (alou@sequantis.com).

Code availability

Replication code is available from the corresponding author on request but requires at this stage over 1 terabyte of storage space to be executed.

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Acknowledgements

The authors acknowledge the financial support from the European Union’s Horizon Europe research and innovation programme under the grant agreement no. 101056898 DECIPHER (Decision-making Framework and Processes for Holistic Evaluation of Environmental and Climate policies). In particular, the work of A.M. on this paper has been entirely supported by CLIMAFIN through the DECIPHER project.

Author information

Authors and Affiliations

  1. Climate Finance Alpha, Paris, France

    Antoine Mandel

  2. Centre d’Economie de la Sorbonne, Paris School of Economics, University Paris 1 Pantheon-Sorbonne, Paris, France

    Antoine Mandel

  3. Department of Economics, Ca’ Foscari University of Venice, Venice, Italy

    Stefano Battiston

  4. Department of Finance, University of Zurich, Zurich, Switzerland

    Stefano Battiston

  5. Centre for Economic Policy Research (CEPR), London, UK

    Stefano Battiston & Irene Monasterolo

  6. School of Economics, Utrecht University, Utrecht, the Netherlands

    Irene Monasterolo

Authors
  1. Antoine Mandel
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  2. Stefano Battiston
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Contributions

A.M., S.B. and I.M. designed the research. A.M. designed the model and the computational framework. A.M. wrote the paper. S.B. and I.M. provided comments and suggestions.

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Correspondence to Antoine Mandel.

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Mandel, A., Battiston, S. & Monasterolo, I. Mapping global financial risks under climate change. Nat. Clim. Chang. 15, 329–334 (2025). https://doi.org/10.1038/s41558-025-02244-x

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