Oesterreichische Nationalbank, Vienna, Austria
The dynamic links between the financial system and environmental sustainability have rapidly moved to the center of the public debate. Terms like ‘sustainable finance’, ‘green bonds’, ‘climate-related risks’ are increasingly spread buzzwords among policy-makers, financial practitioners and civil society. The topic exhibits several layers of complexity. First, climate change creates substantial new uncertainties for economic agents, whose repercussions need to be studied. For instance, the potentially large losses faced by insurance firms are pushing them towards a better assessment of physical risks. For investors, climate change might pose both risks and opportunities. Existing investments might dramatically lose in value, some firms might vanish, while others may enter and flourish. Green investment thus goes far beyond ethical behavior and may have very concrete financial drivers. Second, financial and banking regulation can influence the allocation of finance in environmentally friendly or harmful economic activities. Central banks’ monetary policy operations might unintentionally favor environmentally harmful activities. New empirical research findings help to identify such unintended effects and show avenues to correct for them. Finally, innovative green financial instruments might actively encourage investment in climate-saving sectors, R&D and clean technologies. The conference aims to provide an overview of the current state of research and policy debates on these themes. Non-technical presentations aim to encourage discussions among academics, policy makers and financial practitioners.
Scientific Committee:
Ernest Gnan, OeNB and SUERF
Emanuele Campiglio, WU Wien
Irene Monasterolo, WU Wien
Program
There is growing consensus that aligning the financial system to sustainability requires the introduction of transparent and systematic metrics and methods of individual portfolios’ exposure to climate risks and impact on climate action. This session will present public and private financial institutions’ progresses to mainstream climate risk and impact metrics within their business, identifying challenges and the opportunities. Further, we will discuss to what extent could research support financial institutions in the process of understanding risks and scaling-up opportunities for climate action.
The European Commission and other policy-making institutions are considering the introduction of environmental factors in risk assessment and prudential requirements. This panel will discuss whether, and to what extent, such interventions would be justified, and what their optimal design would be.
A number of major central banks have started to pay increasing attention to climate change and its impact on the economy and the financial system. What justifies the intervention of central banks in climate-related issues? Would they have a role even in the presence of strong government climate action? What are the likely future scenarios, in terms of both research and policy, of central banks’ engagement with climate-related issues?
