How does climate risk disclosure serve investors?

Climate risk disclosure serves investors by providing transparency into potential risks that may affect investment performance. This transparency is crucial for investors as it allows them to better assess the resilience and vulnerabilities of their investments in the face of climate-related factors. By understanding these risks, investors can make more informed decisions regarding asset allocation, identify companies that are managing these risks effectively, and perhaps avoid those that are likely to face negative impacts due to climate change.

Additionally, this transparency can lead to a clearer understanding of a company's long-term sustainability and financial health, which are increasingly important in today's market. As the effects of climate change become more pronounced, the ability to identify and evaluate climate risks plays a vital role in determining the potential return on investment and ensures that portfolios are aligned with the growing focus on environmental sustainability.

The other options, while they may touch on aspects of corporate communication or regulatory compliance, do not capture the primary benefit that climate risk disclosure provides to investors in terms of risk assessment and informed decision-making.