Data and methods to assess climate risk and impact – Research & Practice Plenary Session @ FINEXUS Conference

Time and Venue: Wed, 17 Jan 2018, 16:30 – 17:30. Aula KOL-G-201, Univ. of Zurich
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Summary. There is growing consensus on the fact that sustainable finance needs appropriate and systematic methods to measure progress towards climate action at the level of project portfolios in order to provide actionable information. In particular, progress needs to be measured both in terms of risk and impact. Regarding risk, it is crucial to integrate in current metrics of financial risk sources of risk that are often not considered, such as climate, physical and transition risk. Regarding impact, we need to assess the contribution of project portfolios to climate action. This session examines current approaches and their applications as well as future directions.

Panelclick here for speaker biographies:

Stefano Battiston (Professor, UZH)
  Renat Heuberger (CEO, South Pole)
   David Uzsoki (Sustainable Finance Specialist – Infrastructure Finance Program, International Institute for Sustainable Development)
Irene Monasterolo (Professor, WU)
Veronika Stolbova (PostDoc, UZH)

Background and policy context. Many financial actors and policy makers call for market-based solutions to climate change in order to foster a smooth transition to a low-carbon economy. However, to help the market to price in climate risk it is crucial to provide investors with relevant information on climate related risks. On the one hand, there is a need for a better disclosure of climate-relevant information, which would address the question of imperfect information on investors’ portfolios’ exposure to climate-related risks. On the other hand, the lack of concise and comparable measures of portfolios’ exposure to climate risk fails to provide major investors with the full incentives to reallocate their portfolios. In addition, it is not clear how to measure the market share of participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along the supply chain (Monasterolo ea 2017 Climatic Change). In order to address these gaps, novel metrics are needed to assess climate risk and impact of the portfolios of the market players. In this regard, academic research aimed at developing robust and targeted methods is key to enable measuring the risks and opportunities associated with climate change: both in terms of physical risks associated with climate change and transition risks connected with transition to a low-carbon economy.
Current finance valuation methodologies ignore a range of climate-related risks. This session will discuss existing approaches to measure climate risk and impact from the perspective of the South Pole Group, the International Institute of Sustainable Development, Vienna University and University of Zurich. In addition, barriers and challenges on the way to improve this assessment will be discussed as well as the role of research in developing novel methods and tools for climate risk and impact assessment.

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.