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Carbon Risk and Green Finance

Release Date: 2020/12/01
ISBN: 9781000320268
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As the world plans for economic recovery following the global COVID-19 pandemic, major economies are looking to comprehensive strategies for addressing carbon risks and identifying green finance opportunities. Since Bank of England Governor Mark Carney and Michael Bloomberg began tackling climate change as a financial concern, the international financial community has been developing sophisticated analytical tools that will enable the success of comprehensive efforts to address carbon risks and identify green finance opportunities.

This timely publication offers a cutting-edge analysis of the financial aspects of climate change. It discusses the most important analytical tools, their origin, how they work, where they can go, and how they fit into a larger strategy. First, reporting frameworks can allow companies to see how well they are addressing carbon risks, in particular with respect to the recommendations of the Task Force on Climate-related Financial Disclosures. Second, by quantifying how much greenhouse gas companies emit into the atmosphere as a direct or indirect result of their operations, carbon footprint calculations can help identify carbon risks with particular companies, especially within supply chains. Third, brown taxonomies can help investors identify current carbon risks by classifying fossil fuel assets in a systematic manner. Fourth, green taxonomies can help investors identify current green finance opportunities by classifying sustainable activities in a systematic manner. Fifth, scenario analysis for assets can help investors identify future carbon risks and green finance opportunities. Finally, stress testing for liabilities can help insurers and banks address future carbon risks and better inform policymakers.

Scholars, policymakers, and business professionals will find this book informative. They will gain a comprehensive understanding of the analytical tools supporting efforts to address carbon risks and identify green finance opportunities. This will hopefully make these individuals more successful in their personal endeavors to build a more sustainable and resilient economy for future generations.

Table of Contents

  1. Cover
  2. Half Title
  3. Series
  4. Title
  5. Copyright
  6. Dedication
  7. Contents
  8. List of figures
  9. List of tables
  10. Preface
  11. Acknowledgments
  12. 1 Climate change becomes a financial concern
  13. 2 Reporting frameworks
    1. 2.1 Development
    2. 2.2 Harmonization with Task Force on Climate-related Financial Disclosures recommendations
    3. 2.2.1 CDP climate change questionnaire
    4. 2.2.2 Global Reporting Initiative Sustainability Reporting Standards
    5. 2.2.3 Climate Disclosure Standards Board framework using Sustainability Accounting Standards Board standards
    6. 2.2.4 French Energy Transition Law
    7. 2.2.5 National Association of Insurance Commissioners Climate Risk Disclosure Survey
    8. 2.2.6 Comparing reporting frameworks
    9. 2.3 Emerging efforts
    10. 2.3.1 United States Securities and Exchange Commission requirements
    11. 2.3.2 Additional European disclosure requirements
    12. 2.3.3 Chinese disclosure requirements
  14. 3 Carbon footprint calculations
    1. 3.1 Quantifying emissions
    2. 3.1.1 Emissions scopes
    3. 3.1.2 Global warming potential
    4. 3.2 Aggregating emissions
    5. 3.3 Evaluating investments
  15. 4 Brown taxonomies
    1. 4.1 Carbon bubble hypothesis
    2. 4.2 Classifications
    3. 4.2.1 California pension funds
    4. 4.2.2 Climate Risk Carbon Initiative
    5. 4.2.3 Global Coal Exit List
    6. 4.2.4 Additional taxonomies
    7. 4.2.5 Comparing classifications
  16. 5 Green taxonomies
    1. 5.1 Chinese efforts
    2. 5.1.1 Guidance on Green Loans
    3. 5.1.2 Green Bond Endorsed Project Catalogue
    4. 5.2 Nonprofit efforts
    5. 5.2.1 Green Bond Principles
    6. 5.2.2 Climate Bonds Initiative
    7. 5.3 European Union efforts
    8. 5.3.1 European Union taxonomy
    9. 5.3.2 European Union Green Bond Standard
    10. 5.4 Comparing green classifications
    11. 5.5 Emerging efforts
  17. 6 Scenario analysis
    1. 6.1 Transition risks
    2. 6.1.1 Energy transition
    3. 6.1.2 Warming potential
    4. 6.1.3 Carbon price
    5. 6.1.4 Capex
    6. 6.1.5 Comparing tools
    7. 6.2 Physical risks
    8. 6.2.1 Generating ratings
    9. 6.2.2 Applying ratings
    10. 6.3 Comparing risks
  18. 7 Stress testing
    1. 7.1 Weather-related catastrophes
    2. 7.2 Metrics
    3. 7.2.1 Overview
    4. 7.2.2 Bank of England
    5. 7.2.3 Chinese efforts
    6. 7.2.4 California Climate Assessment
    7. 7.2.5 Emerging efforts
  19. 8 A comprehensive strategy requires analytical tools
  20. Appendix A – Glossary of terms
  21. Appendix B – Timeline
  22. Index
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