Climate Change Reduces Stock Returns by Up to 1.2% Annually, Says Fidelity

According to Bloomberg's analysis of 12 major asset managers and Fidelity projections, climate change from extreme heat this summer is reducing expected stock returns by up to 1.2 percentage points annually over the next decade if climate-related damage worsens.

Extreme temperatures and weather disasters damage agricultural facilities, trigger business shutdowns, and force companies to invest in cooling infrastructure, eroding asset values across real estate, farming, and fishing. In response, insurers are exiting high-risk regions where fire and weather disasters are frequent, while banks including Spain's BBVA are adjusting lending rates based on clients' climate exposure. The financial industry is increasingly viewing climate change as a material risk to borrower repayment capacity and investment returns.