Amid a scorching global heatwave a noteworthy finding has emerged from a recent Man Group report – stock markets are underpricing climate risks.

“Investors on average under-react to public information on climate-change risks,” says the London-listed active investment group, resulting in under-valuation of green stocks, and over-valuation of so-called brown stocks.

Under-pricing climate risks mean greener stocks are especially likely to outperform when climate change is in the news (like today).

Historically the stocks most positively exposed to climate concerns substantially outperformed (by 5.9 per cent annually) the stocks most negatively exposed. Ironically, this market inefficiency may persist due to continued doubts about the financial benefits of climate investing. In other words, the report says, investors should consider climate investing “not only a ‘do good’, but also a ‘do well’ proposition”.