Facing the increasing cost due to climate change, governments and academia recognised that addressing physical climate risk will require more systematic risk management, accelerating adaptation and decarbonisation. The financial economics provide tools in channelling funding, valuing and managing risky future outcomes, which is useful in responding to climate change risk. Despite a significant increase in green finance investment and scientific consensus on the role played by human activities in causing climate changes, it is not uncommon to find disagreement and opposition to curb emissions from the climate deniers. In particular, the awareness and attitudes of ordinary people and individual investors towards climate risks, and the effects of climate risks on investment decisions are yet to be fully understood in the literature.

This study contributes to the inconclusive evidence by conducting experiments in an experimental asset market setting. The three treatments include a baseline SSW (1988) experiment, the second treatment – project team donates money to an environment protection charity based on subjects' trading of the green stock and the third treatment – subjects' payoff was deducted to pay to an environment protection charity as brown tax based on their trading of brown stock.

The results show that in general, the subjects trading has a pattern of pro-green and avoid brown assets behaviour. The multilevel regression results show that some unique subject's attributes explain their trading decisions. Relative to male subjects, female subjects trade with significantly lower average prices. And also, female subjects bought and sold significantly fewer brown assets and sold fewer green assets too. Female subjects also sold brown assets at significantly lower prices. Subjects with higher level of trust tend to trade more assets (particularly green ones) but at lower prices. On the other hand, Subjects with high CRT have better cognitive ability to make the optimal trading decision with more patience to wait for the right timing and prices hence we do not observe over trading at excessively high price for those subjects. In addition, subjects who self-report higher impact of climate change on their daily decision-making also buy more green assets. Similarly, the less concerned the subjects are about climate change, the lower green asset they sell. Subjects good at basic financial knowledge sell green assets at significantly higher prices while subjects with more advanced level of financial literacy may not restrict their investment decisions only to the environmental aspects but also try to take into account the risk and return dimensions in their overall trade decisions. Other than the fixed part at subject level, for the random part, a highly significant proportion of variances are explained by the unobservable period, session and subject level variations respectively.