Climate change shocks pose a threat to the stability of the financial system. This study examines the influence of climate risks on systemic risk in the Chinese market by utilizing extreme risk spillover network. Moreover, we construct climate risk indices for physical risks (abnormal temperature), and transition risks (Climate Policy Uncertainty). We demonstrate a significant increase in systemic risk due to climate risks, which can be attributed, in part, to investor sentiment. Furthermore, institutional investors can mitigate the adverse impact of climate risks. Our findings suggest that policymakers and investors need to exercise greater vigilance in addressing climaterelated adverse effects.