Abstract

Latin America, key to the global energy transition due to its critical metals, faces high exposure to climate risk. This study uses a QVAR model to analyze the asymmetric connectivity between climate risk and the region's critical metals. Under normal conditions, copper and zinc are net emitters of connectivity. In bearish conditions, these metals exhibit a stronger predictive transmission toward climate risk, and Brazil is the main net recipient of connectivity. In bullish conditions, Brazil's climate risk acts as a net emitter, while Chile's appears as a net recipient of connectivity, which could be explained by its dependence on copper. These findings could be key to formulating investment strategies and designing differentiated environmental policies.