In most developing countries, the impact of climate change is of great importance given the high temperature
level, poor adaptation capacity, and lack of early warning system. Apart from the above, climate change affects
economies whose economic activities are natural resource sensitive such as agricultural activities. Climate change
will have an impact on the global economy; hence, this paper attempted to understand these impacts.
Consequently, data indicates that, more extreme weather has the potential to weaken economic growth through
damage to the capital stock and labor supply, and labor productivity will weaken as the world economy adjusts to
higher temperatures. Similarly, inflation will rise through the growing cost of food, energy and insurance, just as
monetary policy will be limited as it attempts to combat the stag factionary pressures of climate change. The
general consensus, which is supported by a growing amount of evidence, suggests that economies should act
sooner rather than later to avoid potential future costs. Successful mitigation policies will necessitate actions from
all parties thus, this paper concluded that recognizing that quantifying the impact of climate change on
shareholder’s investments is critical in creating an incentive to act, will enable stakeholders incorporate climate
change effects into an extended long-run return forecast for different asset classes.