COP22 Marrakesh Side Event

“Disentangling the Climate-Finance Nexus: methods for 2°C alignment
and climate stress-tests for institutional investors and development banks.”

Time: 09:00-10:30, Thursday Nov 10th 2016, Theme Energy
Venue: COP22  Green Zone, Room Souss

Aims and Scope. The urgency of estimating the impact of energy transition risks on the financial system is increasingly recognised among scholars and practitioners. Indeed, assessing the implications of climate policies in terms of both systemic risk and opportunities for economic growth is a precondition to assess the political feasibility of climate policies. However, traditional risk analysis is inadequate to deal with the intrinsic uncertainty of models estimates of the effects of climate policies on carbon stranded assets, and calculations of expected losses/gains can be largely inaccurate. The findings of recent research work support the idea that the timing and governance process in the implementation of climate policies matters. In a scenario in which policies are implemented early on, and within a stable policy framework, climate policies could result in potential net winners and losers across investors in the energy sector but would not have adverse systemic impact. However,, while the Paris Agreement (Art. 2.1.c) states the importance of “Making finance flows consistent with a pathway towards low greenhouse gas emissions”, the finance sector itself is not well-equipped to ensure its alignment with the “well below 2°C” target.

In the context above, this COP22 side-event will provide first-hand knowledge on (1) recent innovative approaches to assess exposures to climate-relevant sectors (fossil fuels, utility, transport, housing and energy intensive sectors) and portfolios’ alignment with climate targets; (2) successful applications to empirical case-studies of interest to practitioners, regulators and multi-lateral development banks and institutions. Our event contributes to the COP22 objectives of moving forward the agreement signed in COP21, by empowering the relevant stakeholders with appropriate methods to assess climate-finance risk in the low carbon transition. The event will deliver two main expected results: (i) communicate to the relevant stakeholders the state-of-the-art in the analysis of public and private investors’ exposures to decarbonization policies and portfolios’ alignment with the 2 C target (ii) identify best practices and lessons learnt from the case studies, in order to mainstream among institutional investors and development banks the analysis of climate-policy risk exposures and portfolios’ alignment with the 2 C target.

Target Audience: Practitioners and policy makers (central banks, investment funds, development banks e.g. EIB, WB), civil society (e.g. WWF, CBI) and academics.


  • Stefano Battiston (UZH), Climate stress-test of the EU financial system
  • Thomas Braschi (2dii), SEI Metrics methodology for 2deg portfolio compliance
  • Irene Monasterolo (BU), Financing the energy transition: green bonds, carbon tax and fossil fuels subsidies’ trade-off
  • Luigi Carafa (Barcelona Centre for International Affairs), Climate finance in developing and emerging economies: the role of policy de-risking.

Keywords: climate stress test, climate policy, green bonds, energy transition, renewable energy, financial risk, public and private investors.

The SIMPOL Project is currently funded by the H2020 European grant DOLFINS (no. 640772) in the Global Systems Science area of the Future Emerging Technologies program.