The Mechanism of Green Finance to Prevent the Risks Brought by Climate Change to Economic Development.

Nowadays, environmental issues have become one of the important factors affecting economic development. Green financing is crucial to the green and sustainable development that nations are becoming more and more focused on. Global warming has a negative impact on economic development, such as frequent extreme weather, sea level rise, etc., and these physical risks will eventually be converted into financial risks. Green finance can guide more resources to the green and low-carbon field, adjust carbon prices, and promote establishing a carbon emission trading market. At the same time, green finance directly links the physical risks in the environment with financial risks. This article summarizes relevant research on how green finance can prevent financial risks caused by climate change. It mainly analyzes the prevention of financial risks caused by green finance from three aspects. Green finance prevents relevant risks by promoting policy and market innovation, enhancing climate resilience, and promoting low-carbon transformation. It identifies the constraints of the existing research and development of green finance under the current circumstances by talking about the effect mechanism of green finance.