EDHEC Research Insights supplement to Investment & Pensions Europe (IPE) 2026

This issue examines how climate risk is reshaping asset valuation, financial modelling and disclosure across sectors and markets. It brings together new research addressing key methodological and practical challenges in climate finance:
 

• A framework for constructing macroeconomic damage functions with sectoral heterogeneity
  Where and how does climate change translate into economic damage? An innovative geo-sectoral analysis provides a more granular answer, showing that impacts vary not only across regions but also across sectors within the same geography.
• Climate risk in financial markets: a quantitative framework
  We examine climate state-dependent discount factors and show how linking discount rates to climate conditions reshapes expectations, aggregate risk and asset pricing.
• A climate-consistent DCF (Discounted Cash Flow) framework for enterprise value, equity and credit risk
  We introduce an innovative valuation framework that translates climate data into company-specific financial metrics across enterprise value, equity and credit risk.
• From climate hazard to asset value
  We quantify the impact of climate risk on infrastructure valuation, highlighting both the consistency of the methodology across asset classes and the specific challenges associated with long-lived, asset-specific and capital-intensive investments.
• Weather risk, market response: measuring climate betas across commodity systems
  A shorter-term perspective on climate risk, showing how weather conditions directly influence commodity pricing while informing risk management strategies over shorter time horizons.
• A tale of two taxonomies: a practical guide to ClimaTech and the EU Taxonomy
  Extending our earlier work on infrastructure to corporate sectors, we explore how ClimaTech's work on infrastructure resilience and decarbonisation can be integrated into the EU Taxonomy.
• Do sustainability standards show measurable climate risk reduction in hotels?
  A real-estate case study assessing whether sustainability standards effectively capture climate risk reduction in the hotel sector, a segment often overlooked despite its high exposure.
• From the tragedy of the horizon to the tragicomedy of climate disclosure
  Revisiting the legacy of Mark Carney's "Tragedy of the Horizon", we examine how a decade of disclosure progress reshaped finance and how the backlash against transparency and climate action now threatens both risk management and the transition.