Climate Change is a much talked about issue now, with discussions around carbon emissions and efforts towards de-carbonization. Less recognized, but equally important is the issue of water scarcity. The implications of water stress are huge, and capital markets are becoming cognizant of this, creating financial instruments linked to water and thus converting water into a new asset class!

Climate change (and the corresponding mitigation efforts) are impacting many parts of the economy and financial markets, a phenomenon also known as transition risks. These structural changes will impact well-known relationships between many variables. One likely impact would be to weaken the well-known strong positive correlation between Crude Oil and Copper