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Constructing Climate Hedge Portfolios

Robert Engle

Nobel Prize winning economist

In this video collaboration with MMF, Nobel Laureate and economist Robert Engle outlines how to construct a climate hedge portfolio using two strategies and explores why it's not that easy to hedge physical risks.

Climate Crisis

Sustainability Essentials

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Constructing Climate Hedge Portfolios

11 mins 11 secs

Overview

Robert Engle shows us numerous strategies for constructing a climate hedge portfolio and their respective benefits. Robert then explores why it’s hard to hedge physical risks, the part of climate change most people worry about, and why the demand for oil and coal is going up.

Key learning objectives:

Learn how to construct climate hedge portfolios
Define the characteristics of a stranded asset portfolio and a factor mimicking portfolio
Understand why fossil fuel energy stocks are rising
Define why it’s difficult to hedge physical risks

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This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Summary

Join now to watch

This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Expert

Robert Engle

Robert Engle is a co-director of the Volatility and Risk Institute. He was awarded the 2003 Nobel Prize in Economic Sciences for his work on autoregressive conditional heteroskedasticity. He holds a Ph.D. in economics from Cornell University in New York, United States.

Introduction to Portfolio Climate Risk Mitigation

13:01

Asset Pricing Theory of Climate Hedge Portfolios

06:14

Climate Stress Scenarios and Stress Tests

11:26

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