We are delighted to invite you to submit towards our conference and a special issue in International Review of Financial Analysis (1st of August deadline):
Guest editors: Lucia Alessi (European Commission), Theodor F. Cojoianu (Queen’s University Belfast and EU Platform on Sustainable Finance), Declan French (Queen’s University Belfast), Andreas G.F. Hoepner (University College Dublin & EU Platform on Sustainable Finance).
In December 2015, 195 countries around the world signed the Paris Agreement and pledged to work towards limiting global greenhouse gas emissions in order to limit the average global temperature increase to 1.5°C above preindustrial levels. From a scientific perspective, the stabilisation of global warming under any target requires the achievement of a net-zero emissions economy (Matthews and Caldeira, 2008). In support of global investors looking to provide capital towards green solutions and shift capital away from economic activities which are harmful towards the environment, the EU has proposed Paris-Aligned Investment Benchmarks (Hoepner et al., 2019a,b) as well as a Taxonomy for environmentally sustainable activities in the areas of climate change mitigation and adaptation, water, biodiversity, pollution and circular economy (Slevin et al., 2020). Similar green finance policy initiatives have emerged around the world, including in response to the pandemic (Hepburn et al. 2020).
In this light, financial economists have recently started to take a keen interest in solving such environmental problems by understanding the source of risk and uncertainty related to environmental issues and how these can be accounted for in innovative financing solutions (Giglio, Kelly & Stroebel, 2020) and green policies (Hoepner et al., 2021). These range from green bonds (Flammer, 2021), impact investing funds (Barber, Morse & Yasuda, 2021) or fossil fuel divestments (Cojoianu et. al, 2020a) at the investment strategy and financial product level, to the level of green monetary policies (Batiston, Monasterolo & Visentin, 2016; Campiglio, 2018), non-financial disclosure requirements for companies (Liesen et al., 2015) or the set-up of bespoke institutions such as national green investment banks. Such new developments have the opportunity to significantly affect the financial performance of green and unsustainable industries across asset classes, including equities (Alessi et al. 2021; de Oliveira et al., 2020), bonds (Tang & Zhang, 2020), corporate syndicated loans (Hoepner et al., 2016), derivatives (Ilhan et al., 2020), project finance (Steffen, 2018) or venture capital (Cojoianu et al.,2020b).
In light of these developments, the Special Issue will attempt to answer questions such as: what is the impact of different environmental policies on the side of governments, central banks and financial institutions? How can economic actors effectively advance the low carbon transition through green financial instruments and low carbon investment strategies? What are the drivers of the cost of debt for green and polluting industries? How have cultural, spatial and institutional factors shaped the funding of green and de-funding of polluting intensive business models?
We welcome full manuscripts of up to 9,000 words maximum (excluding references and appendices). Papers will be first presented at the conference and authors given time to address issues raised. Papers for the SI must have been presented at the conference, and will have submission fees for the journal submission waived. We aim to complete the review process with a maximum of two drafts (i.e., a single ‘revise and resubmit’) before a final decision is made — unless special circumstances call for an additional revision round.
Indicative timeline
1 August : Deadline for submissions to the conference
9-10 September: Conference
Mid October : First round of reviews completed
February 2022: Special Issue Publication
Papers should be submitted here
Papers are invited that address the following issues
1. Sustainable banking and finance policies:
- How can we assess the role and scope of sustainable finance policy across the world?
- Which financial assets are impacted by sustainable finance policies and to what extent?
- How can policy facilitate climate-related financial disclosure?
- What could be the implications of central bank green monetary policies on the banking sector and financial markets?
- What is the role of sovereign wealth funds in financing the low carbon economy? How do governments influence sovereign wealth fund investment policy towards low carbon investments?
- What is the role government-backed funds in financing the low carbon economy and how do they align with country and regional level decarbonisation policies?
- How does sustainable finance policy impact the asset allocation of institutional investors (e.g. pension funds) towards low carbon assets and businesses?
- How do traditional environmental policies and subsidies impact green and fossil fuel finance and how are these moderated by recent sustainable finance policy interventions?
- Does the European Commission’s ‘Taxonomy for Sustainable Activities’ impact corporate disclosure and/or financing? Beyond climate change mitigation, what is the impact of different financial instruments on climate adaptation, biodiversity, water, pollution or the circular economy?
2. Green vs. fossil fuel financing
- What is the relative financial performance of green vs. polluting industries? Which asset classes perform best and why? Which markets price in climate risk and to what extent? What drives investors’ choices?
- How has the COVID-19 pandemic impacted the financial performance of green vs. polluting industries?
- What drives the cost of debt of green vs. polluting firms?
- How have cultural, spatial and institutional factors shaped the funding of green and de-funding of polluting intensive business models?
- What drives the funding or de-funding of fossil fuels across asset classes?
- Should bank capital requirements be linked to their green and/or brown exposures? If yes, how should a green supporting factor and/or a brown penalizing factor be calibrated?
- How effective are divestment campaigns across asset classes?#
3. Financial market barriers towards effective decarbonisation and how to overcome them:
- How do inherent conflicts of interest in financial markets influence the effective transition to a net-zero economy?
- How do EU Climate Transition Benchmarks perform, financially and environmentally?
- How does lobbying for and against climate progress influence green and fossil fuel financing?
- How can we define, detect and measure greenwashing? How is greenwashing related to financial market outcomes? To what extent do financial markets encourage or discourage greenwashing?
- Are financial institutions aware of climate-related risks they are exposed to, including physical and transition risks?
- How should climate-stress testing models for financial institutions be designed?
References
Alessi, L., Ossola, E. and Panzica, R., 2021. What greenium matters in the stock market? The role of greenhouse gas emissions and environmental disclosures. J. Financial Stability. Forthcoming.
Barber, B. M., Morse, A., & Yasuda, A. 2021. Impact investing. Journal of Financial Economics, 139(1), 162-185.
Battiston, M., & Monasterolo, S. Visentin, 2016. A climate stress-test of the financial system. Nature Climate Change 7, 283–288 (2017). https://doi.org/10.1038/nclimate3255
Campiglio, E., Dafermos, Y., Monnin, P., Ryan-Collins, J., Schotten, G., & Tanaka, M. (2018). Climate change challenges for central banks and financial regulators. Nature Climate Change, 8(6), 462-468.
Cojoianu, T.F., Ascui, F., Clark, G.L., Hoepner, A.G.F., Wójcik, D., 2020a. Does the fossil fuel divestment movement impact new oil and gas fundraising? J. Econ. Geogr. https://doi.org/10.1093/jeg/lbaa027
Cojoianu, T. F., Clark, G. L., Hoepner, A. G., Veneri, P., & Wójcik, D. 2020b. Entrepreneurs for a low carbon world: How environmental knowledge and policy shape the creation and financing of green start-ups. Research Policy, 49(6), 103988.
de Oliveira, E.M., Cunha, F.A.F. de S., Palazzi, R.B., Klotzle, M.C., Maçaira, P.M., 2020. On the effects of uncertainty measures on sustainability indices: An empirical investigation in a nonlinear framework. Int. Rev. Financ. Anal. https://doi.org/10.1016/j.irfa.2020.101505
Giglio, S., Kelly, B. T., Stroebel, J. 2020. Climate Finance. NYU Stern School of Business Forthcoming, Available at http://dx.doi.org/10.2139/ssrn.3719139
Flammer, C. (2021). Corporate green bonds. Journal of Financial Economics.
Hepburn, C., O’Callaghan, B., Stern, N., Stiglitz, J., & Zenghelis, D. 2020. Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change?. Oxford Review of Economic Policy, 36(Supplement_1), S359-S381.
Hoepner, A. G. F.; Majoch, A. A. A. & Zhou, X. (forthcoming) ‚Does an asset owner’s institutional setting influence its decision to sign the Principles for Responsible Investment?’ Forthcoming in Journal of Business Ethics.
Hoepner, A. G. F.; Masoni, P.; Kramer, B.; Slevin, D.; Hoerter, S; Humphreys, N.; Viñes Fiestas, H.; Lovisolo, S.; Wilmotte, J.-Y.; Latini, P.; Fettes, N.; Kidney, S.; Claquin, T.; Blasco, J. L.; Dixson-Decleve, S.; Kusterer, T.; Martínez Pérez, J.; Suttor Sorel, L.; Löffler, K.; Vitorino, E.; Pfaff, N.; Brockmann, K. L.; Micilotta, F.; Coeslier, M.; Menou, V.; Aho, A.; Fabian, N.; Philipova, E.; Hartenberger, U.; Lacroix, M.; Baumgarts, M.; Bolli, C.; Pinto, M.; Bukowski, M. & Krimphoff, J. (2019a) ‘Handbook of Climate Transition Benchmarks, Paris-Aligned Benchmark and Benchmarks’ ESG Disclosure‘. Brussels: European Commission.
Hoepner, A. G. F.; Masoni, P.; Kramer, B.; Slevin, D.; Hoerter, S; Ravanel, C.; Viñes Fiestas, H.; Lovisolo, S.; Wilmotte, J.-Y.; Latini, P.; Fettes, N.; Kidney, S.; Dixson-Decleve, S.; Claquin, T.; Blasco, J. L.; Kusterer, T.; Martínez Pérez, J.; Suttor Sorel, L.; Löffler, K.; Vitorino, E.; Pfaff, N.; Brockmann, K. L.; Micilotta, F.; Coeslier, M.; Menou, V.; Aho, A.; Fabian, N.; Philipova, E.; Hartenberger, U.; Lacroix, M.; Baumgarts, M.; Bolli, C.; Pinto, M.; Bukowski, M. & Krimphoff, J. (2019b) ‘TEG Final Report on Climate Benchmarks and Benchmarks’ ESG Disclosure‘. Brussels: European Commission.
Hoepner, A., Oikonomou, I., Scholtens, B., & Schröder, M. 2016. The effects of corporate and country sustainability characteristics on the cost of debt: An international investigation. Journal of Business Finance & Accounting, 43(1-2), 158-190.
Ibikunle, G., Steffen, T., 2015. European Green Mutual Fund Performance: A Comparative Analysis with their Conventional and Black Peers. J. Bus. Ethics.
Ilhan, E., Sautner, Z. & Vilkov, G. (2021) ‘Carbon Tail Risk’ Forthcoming in Review of Financial Studies
IPCC, 2018. Special Report. Global Warming of 1.5 °C. Summary for Policymakers.
Liesen, A., Hoepner, A.G., Patten, D.M., Figge, F., 2015. Does stakeholder pressure influence corporate GHG emissions reporting? Empirical evidence from Europe. Accounting, Audit. Account. J. https://doi.org/10.1108/AAAJ-12-2013-1547
Matthews, H. D., & Caldeira, K. 2008. Stabilizing climate requires near‐zero emissions. Geophysical research letters, 35(4).
Slevin, D.; Hoerter, S; Humphreys, N.; Viñes Fiestas, H.; Lovisolo, S.; Wilmotte, J.-Y.; Latini, P.; Fettes, N.; Kidney, S.; Dixson-Decleve, S.; Claquin, T.; Blasco, J. L.; Kusterer, T.; Martínez Pérez, J.; Philipponnat, T.; Löffler, K.; Vitorino, E.; Pfaff, N.; Brockmann, K. L.; Redondo Pereira, P.; Coeslier, M.; Menou, V.; Aho, A.; Fabian, N.; Hartenberger, U.; Lacroix, M.; Baumgarts, M.; Bolli, C.; Philipova, E.; Pinto, M.; Bukowski, M.; Krimphoff, J.; Hoepner, A. G. F.; Masoni, P. & Kramer, B. (2020) ‘Taxonomy: Final report of the Technical Expert Group on Sustainable Finance‘. Brussels: European Commission.
Steffen, B. (2018). The importance of project finance for renewable energy projects. Energy Economics, 69, 280-294.
Tang, D. Y., & Zhang, Y. 2020. Do shareholders benefit from green bonds? Journal of Corporate Finance, 61, 101427.
