We were delighted to host the IMF Global Financial Stability Report – Climate Change: Physical Risk and Equity Prices webinar.

Disasters as a result of climate change are projected to be more frequent and more severe, which could threaten financial stability. Chapter 5 of the IMF’s Global Financial Stability Report looks at the impact of climate change’s physical risk on global equity valuations to assess this threat. The chapter shows that the impact of large disasters on equity markets, bank stocks, and non–life insurance stocks has generally been modest over the past 50 years. High levels of insurance penetration and sovereign financial strength can help preserve financial stability in the face of climatic disasters. The chapter does not find that aggregate equity valuations—as of 2019—reflect the predicted changes in physical risk under various climate change scenarios, which suggests that investors do not pay sufficient attention to climate change risks. Better disclosure of exposures to climatic disasters and stress testing for financial firms can help preserve financial stability and should complement policy measures to mitigate and adapt to climate change.



  • Tobias Adrian, Financial Counsellor and Director, Monetary and Capital Markets Department, IMF
  • Sonja Gibbs, Managing Director and Head of Sustainable Finance, Global Policy Initiatives, IIF
  • Jan Loeys, Managing Director and Senior Advisor, Strategic Research, J.P. Morgan
  • Felix Suntheim, Financial Sector Expert, IMF
  • Jérôme Vandenbussche, Deputy Division Chief, IMF



  • The impact of large climatic disasters on equity prices has been modest in the past.
  • Climate change physical risk does not appear to be reflected in global equity valuations.
  • Beyond climate change mitigation and adaptation, sovereign financial strength and higher insurance penetration help to preserve financial stability.
  • Stress testing and climate risk disclosure are essential to better assess physical risk.