Book contents
- Making the Financial System Sustainable
- Making the Financial System Sustainable
- Copyright page
- Contents
- Figures
- Tables
- Boxes
- Contributors
- Foreword
- Preface
- Introduction
- 1 Capitalism Meets Multilateralism
- 2 Public Meets Private
- 3 Central Banking and Climate Change
- 4 Sustainable Finance and Prudential Regulation of Financial Institutions
- 5 Transparency and Accountability Standards for Sustainable and Responsible Investments
- 6 Environmental Risk Analysis by Financial Institutions
- 7 Sustainable Governance and Leadership
- 8 ESG Risks and Opportunities
- 9 Active and Responsible
- 10 Passive-Aggressive or Just Engaged
- 11 Financing a Just Transition
- 12 Sustainable Finance for Citizens
- 13 Individual Impact Investors
- 14 Strengthening Green Finance by Better Integrating the Social Dimensions in the European Union’s Sustainable Finance Laws
- Index
- References
6 - Environmental Risk Analysis by Financial Institutions
Published online by Cambridge University Press: 30 October 2020
Edited by
Book contents
- Making the Financial System Sustainable
- Making the Financial System Sustainable
- Copyright page
- Contents
- Figures
- Tables
- Boxes
- Contributors
- Foreword
- Preface
- Introduction
- 1 Capitalism Meets Multilateralism
- 2 Public Meets Private
- 3 Central Banking and Climate Change
- 4 Sustainable Finance and Prudential Regulation of Financial Institutions
- 5 Transparency and Accountability Standards for Sustainable and Responsible Investments
- 6 Environmental Risk Analysis by Financial Institutions
- 7 Sustainable Governance and Leadership
- 8 ESG Risks and Opportunities
- 9 Active and Responsible
- 10 Passive-Aggressive or Just Engaged
- 11 Financing a Just Transition
- 12 Sustainable Finance for Citizens
- 13 Individual Impact Investors
- 14 Strengthening Green Finance by Better Integrating the Social Dimensions in the European Union’s Sustainable Finance Laws
- Index
- References
Summary
The role of financial institutions in sustainable transitions has been conceptualised for a number of years. There is a growing recognition that traditional approaches are insufficient in the face of new levels of scale, likelihood and interconnectedness of environmental sources of risk. This chapter conducts a review of existing approaches to incorporating environmental sources of risk into mainstream financial risk frameworks. The review generated 14 illustrative case studies from submissions of G20 countries, financial institutions and private-sector stakeholders. The chapter makes several contributions to the research on sustainability transitions. First, it proposes a simple analytical framework for understanding environmental sources of financial risks. That helps financial actors understand and engage with environmental sources of risk. Second, it underlines the role of financial firms in sustainability transitions. Environmental risks must be priced correctly, so that sufficient capital is allocated. The progress of financial firms in incorporating environmental risk management into mainstream financial risk frameworks is summarised as are the challenges and solutions.
- Type
- Chapter
- Information
- Making the Financial System Sustainable , pp. 122 - 144Publisher: Cambridge University PressPrint publication year: 2020
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