We investigate the impact of climate risks on sovereign credit ratings worldwide. Our analysis shows that higher temperature anomalies and more frequent natural disasters – measures of physical risk – correlate with lower credit ratings. We find that long-term shifts in climate patterns (“chronic risk”) primarily affect advanced economies, while the increased frequency and severity of extreme weather events (“acute risk”) matters more for emerging economies. However, the estimated impact of both types of risk on credit ratings is low and the economic effects are negligible.

The best ideas may never make it to the patent office.

How do we prepare for a world of constant shocks—climate disasters, financial crises, pandemics, conflict, and inequality?

We typically view competition as a positive force that lowers prices, improves quality and service, and increases variety. However, competition can sometimes be toxic.