Schroders' global economist Irene Lauro and diversified asset investment strategist Ben Popatlal pointed out that financial markets often tend to view climate-related risks as long-term risks. However, in fact, several factors may impact investment portfolios in the near future, even in the next few years or months. With global warming intensifying in the coming decades, and the world moving towards achieving zero carbon emissions, climate inflation is likely to become a significant investment theme. Schroders global stated that extreme weather and rainfall patterns are occurring worldwide. Heatwaves in the United States, Latin America, Southern Europe, and parts of Asia have worsened drought conditions, affecting agricultural output, hydroelectric power generation, and shipping. These disruptions have led to inflation heating up, causing significant impacts on financial markets. Food inflation has intensified, with prices of various crops such as cocoa, coffee, olive oil, and oranges hitting historic highs. At the same time, decreasing rainfall over the years has put significant pressure on global hydroelectric power, posing problems for countries like the United States, China, and India. Losses in local electricity production could lead to higher energy prices, and power outages could hinder industrial activities. Moreover, reduced rainfall could result in lower water levels in major trade routes, limiting the navigation capacity of crucial passages like the Panama Canal. This could lead to increased transportation costs and delays in the shipment of goods, affecting industries that require timely delivery of raw materials or finished products. As extreme temperatures continue to affect business activities across industries, climate inflation is likely to become a significant investment theme. Investors can reduce market interest rate risks in sectors heavily reliant on hydroelectric power production and where food inflation constitutes a significant portion of the Consumer Price Index (CPI) to mitigate the pressure of rising yields. Additionally, reducing investments in stocks highly impacted by disruptions in the supply chain is an effective hedging strategy. The transition from fossil fuels to renewable energy largely depends on metals like lithium, cobalt, and nickel. Facing growing demand and limited geographically concentrated supply, some major metal-producing countries may adopt trade protectionist policies, such as export restrictions and tariffs, to protect domestic industries while ensuring their own energy transition needs are met. These protectionist measures could impact supply chains, increase production costs, and pose significant challenges to global energy transition. Currently, production is mainly concentrated in China, the Democratic Republic of the Congo, Australia, and Chile. Major consumer countries likely to be significantly affected include the United States, the European Union, Japan, and South Korea. Investors could address this trend by increasing exposure to industrial metals and commodities currencies such as the Australian dollar. Some investors believe that the recent uptrend in the Japanese stock market is attributed to corporate governance reforms in Japan. The Tokyo Stock Exchange has been pressuring listed companies to focus more on shareholder rights through monthly voluntary disclosures of companies recognizing capital costs and stock price management. Initially, the market focused on companies with price-to-book ratios below 1, but recently, the scope has expanded to improving Japan's overall corporate governance culture. Under pressure from stakeholders, Japanese companies have gradually improved their corporate governance practices, contributing to the recent strong performance of the Japanese stock market. If corporate governance continues to strengthen, the financial operational efficiency and operating models of Japanese companies could help sustain long-term stable development of the Japanese stock market. Research from Goldman Sachs shows that companies responding to the Tokyo Stock Exchange's corporate governance improvement requirements outperform those that have not made changes.