When storms hit markets, investors feel it

Emmi’s latest research reveals that extreme weather events are leaving a measurable footprint in financial markets, and that their effects run far deeper than traditional physical risk tools suggest. By analysing how 45 billion-dollar storms, wildfires and floods impacted U.S. companies over 24 years, the study uncovers clear evidence that certain industries systematically underperform when disasters strike. Homebuilding, Electric Utilities, Energy Infrastructure and Insurance show the strongest storm-sensitivity, with each additional billion dollars in damages translating into meaningful declines in 26-week stock performance.

The research shows that markets respond not just to physical destruction, but to the wider economic shockwaves that storms unleash, supply chain failures, infrastructure outages, operational shutdowns and shifts in demand that unfold long after the event has passed. Hurricane Harvey, for example, disrupted petrochemical flows across the country, affecting companies thousands of miles from the flood zone. These second-order impacts do not appear in location-based risk models, yet they are clearly reflected in observable market behaviour.

For investors, the findings mark a significant shift. Acute climate risk is not confined to exposed facilities; it is a market-priced, portfolio-wide phenomenon. Emmi’s market-based methodology captures this reality by measuring how companies actually performed across decades of storms, offering investors a more accurate and decision-useful view of climate-driven financial risk. As billion-dollar events become more frequent, with 27 recorded in 2024 alone, understanding how markets absorb and price these shocks is becoming fundamental to risk management and forward-looking scenario analysis.

Emmi translates these insights into physical risk factors that investors can apply across portfolios, enabling more robust valuation, stress testing and climate-risk reporting grounded not in theory, but in real-world market outcomes.

Download the paper (below) to explore the full analysis and investment implications.

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