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Role of Financial Markets in Climate Change Adaptation and Mitigation

Role of Financial Markets in Climate Change Adaptation and Mitigation
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Author(s): P. Selvakumar (Department of Science and Humanities, Nehru Institute of Technology, Coimbatore, India), Prabakaran (Sri Balaji University, Pune, India), T. C. Manjunath (Rajarajeswari College of Engineering, India), Riyazuddin (Maharishi University of Information Technology, Noida, India), M. Gayathri (School of Computing, SRM Institute of Science and Technology, Kattankulathur, India)and A. R. Kanagaraj (Dr. N.G.P. Arts and Science College, India)
Copyright: 2026
Pages: 30
Source title: Impacts of Climate Risk and Energy Consumption on Financial Markets
Source Author(s)/Editor(s): Abdelkader Mohamed Sghaier Derbali (Taibah University, Saudi Arabia)
DOI: 10.4018/979-8-3373-6766-8.ch011

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Abstract

Financial markets act as the primary intermediaries between capital suppliers and users, thereby playing a decisive role in mobilizing, allocating, and channeling investments towards low-carbon, climate-resilient solutions. As the world faces mounting challenges from rising global temperatures, more frequent extreme weather events, biodiversity loss, and the socioeconomic disruptions that follow, the ability of financial markets to redirect capital flows from environmentally wealth funds, private equity, venture capital, and capital markets, holds the keys to accelerating the transition from fossil fuel dependency to clean energy systems, from linear resilience. One of the most significant contributions of financial markets lies in their capacity to price climate risk. When risks are priced accurately, investors can better differentiate between climate-resilient and climate-vulnerable assets, leading to capital reallocation that strengthens sustainable businesses and reduces exposure to high-carbon sectors.

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