The E-axes Forum on Climate Change, Macroeconomics, and Finance

U.S. Banks’ Exposures to Climate Transition Risks

Climate change can pose risks to banks through the transition to a low-carbon economy. Hyeyoon Jung (New York Federal Reserve Bank) and her co-authors João A.C. Santos, and Lee Seltzer in their new paper investigate the impact of climate transition policies on U.S. banks’ credit risk. Their results are surprising.

Transition risk and macro prudential policy

Anh H. Le (Goethe University Frankfurt) highlights the need for heterogeneous responses to transition risk, such as macroprudential policies, carbon market permits, green quantitative easing, and green bonds

Brown Capital (Re)Allocation

Olivier Darmouni (Columbia Business School) and Yuqi Zhang (Columbia Business School) examine who owns brown coal power plants, the single largest source of carbon emissions globally. They conduct a new study that shows while ownership by stock market investors is on the decline, private and especially state investors have grown significantly, slowing down the phase-out of fossil fuels.

Funding the Fittest?

Yasmine van der Straten (University of Amsterdam) discusses an interesting finding of her research: investors reward carbon emission intensive companies that make an effort to become more green, as the risk premium is smaller for emission intensive firms that engage in green innovation.

2023 E-axes Forum Research Prize: Honorable Mention

Incomplete markets and uncorrected environmental externalities result in the under-provision of low-carbon technologies. In her paper “Bringing breakthrough technologies to market: solar power and feed-in tariffs” , Sugandha Srivastav (University of Oxford) examines whether the United Kingdom’s renewable energy feed-in-tariff (FiT), which is a risk-reduction and price instrument, helped bring utility-scale solar energy to market.

The reaction of customers to corporate ESG performance

While there is growing evidence of the impacts of regulatory actions and investors on firms’ ESG practices, there is only scant systematic evidence on whether consumers are a possible group of influence. Frank Weikai Li (Singapore Management University) explores recent research which examines whether customers care about firms’ ESG reputation, and in turn, how their reactions impact firms’ financial and ESG performance.

2023 E-axes Forum Research Prize: Honorable Mention

Mayank Kumar (University of Michigan) argues in his paper “Getting Dirty Before You Get Clean: Institutional Investment in Fossil Fuels and the Green Transition” that private investment in fossil fuel companies does not adversely affect climate outcomes but rather it can support the green transition by financing clean technologies. Specifically, the paper studies the effects of PE investment in fossil fuel on solar energy technologies.

The politics of green financial policies

Monica DiLeo (Hertie School) discusses the role of different public institutions in the green transition and examines what kinds of green financial policies are both institutionally and politically feasible.

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