This blog post contains several interactive dashboards to explore the exposure of financial institutions to climate risk. Because investment fund and pensions funds turn out be the most exposed these dashboard of interest not only to scholars and practitioners but also to ordinary citizens. The results are based on a series of scientific papers supported by the DOLFINS project, cited below. The policy issues specific to the pension fund sector have been discussed in the final DOLFINS conference in January 2018: see here a blog post on on pension funds background information. See here the video of the pension funds session .
The above dashboard is based on the methodology developed in (Battiston ea. 2017, Nature Climate Change). On the filter, select “Insurance and Pension funds” to visualize the exposure of pension funds to economic sector affected by climate policy risk.
The climate policy risk mostly comes from the risk of a too-late and too-sudden implementation of climate policies in order to stay within the limit of 2 degrees Celsius of global warming, as agreed by most countries of the world in the 2016 Paris Agreement.
For instance: the fossil sector (in black) represents all economic activities whose revenues directly depend on fossil fuel; the utility sector represent the production of electricity out of all sources, both fossil and renewable; energy intensive sectors are activities particularly exposed to changes in the cost of energy, such as steel production. As we can see, from the chart, investment funds and pension funds have significant exposure to these sectors. In the dataset used here, market players are located everywhere in the world, however, their exposure is only within the EU and US.
The following dashboard shows the exposure to the climate-sensitive sectors of the economy specifically for the Euro Area institutional sectors with exposure everywhere in the world. Data source: own elaborations on ECB Data Warehouse data, see Stolbova and Battiston 2017 “The climate-finance macro-network”, working paper , Stolbova ea. 2017 A Financial Macro-Network Approach to Climate Policy Evaluation, working paper .
NOTE: hovering on the labels one can exclude some investor types and/or sectors. For instance, the dashboard allows to focus on the financial exposures more directly related to citizens in the Euro Area. Keep only the institutional sectors as follows:
• Households (e.g. literally speaking the balance sheet of the average citizen), among institutional sectors in the Euro Area,),
• investment funds, banks, insurance and pension funds: citizens place their savings and investments in these institutions, through deposits, life insurance schemes, pension schemes etc., which manage the funds on their behalf.
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.