A STUDY ON CLIMATE RISK IN FINANCIAL DECISIONS

Abstract

Climate risk has become an important factor influencing financial decision-making as businesses, investors, and financial institutions face increasing environmental uncertainties. This study examines the impact of climate-related risks, including physical risks such as extreme weather events and transition risks arising from regulatory, technological, and market changes, on financial decisions. It explores how organizations integrate climate risk assessments into investment planning, lending, portfolio management, and corporate financial strategies to enhance long-term sustainability and resilience. The study also highlights the role of environmental, social, and governance (ESG) practices in improving financial performance, reducing exposure to climaterelated losses, and supporting informed decision-making. The findings emphasize that incorporating climate risk into financial decisions not only strengthens risk management but also promotes sustainable growth, investor confidence, and long-term value creation in an increasingly climateconscious global economy.