Climate Change: Managing the Financial Risk and Funding the Transition serves as a practical and accessible reference for an essential understanding of climate-related risks and opportunities in financial institutions. Editor Jing Zhang has gathered more than 30 experts from world-leading financial and consultant institutions in a four-part book that focuses on climate change as the most profound challenge our social, political and economic systems have ever faced.
Climate change is the most profound challenge our social, political and economic systems have ever faced. We are at an inflection point in how to deal with it. On the one hand, climate change poses significant, emerging risks to financial institutions and financial stability. The risks are not well understood, measured or quantified, as financial institutions try to incorporate them effectively into their risk management practices. On the other hand, massive amounts of capital will be required to finance climate resilience and transition, creating significant demand for new financial products and services.
One of our most prolific editors, Jing Zhang, has gathered more than 30 experts from world-leading financial and consultant institutions, including commercial banks, institutional asset managers, insurance firms, strategic consultancies, and climate specialists, to contribute 16 chapters. Climate Change: Managing the Financial Risk and Funding the Transition serves as a practical and accessible reference for an essential understanding of climate-related risks and opportunities in financial institutions.
The book is structured into four parts:
Part 1: Overview
Explains how climate change manifests as a source of economic and financial risk. Chapters in this section lay the foundation for the subsequent sections by describing climate change’s regulatory and legislative landscape within the financial sectors and providing an overview of climate risk tools and analytics.
Part 2: Framework, Methodology and Tools
Focuses on the frameworks, methodologies and tools used for assessing and managing the financial impacts of climate change. Chapters cover critical details of identifying and modelling physical and transition risks and embedding the results in decision-useful financial metrics.
Part 3: Managing Climate-Related Risk
Features a practical set of topics for managing climate-related risks, from incorporating climate change in asset allocation and portfolio construction in investment management, constructing a net-zero investment portfolio, to special considerations for small financial institutions such as community banks.
Part 4: Climate Finance
Discusses funding climate resilience, adaptation and the transition to a low-carbon economy.
International Sustainability Standard Board
Part I: Sustainabilty and Climate Change Overview
1 Sustainability for critical ecosystems: The future of risk management – more of the same or a new paradigm?
2 Climate change Is a source of financial risk
Glenn D. Rudebusch
3 The climate disclosure landscape in the finance sector
Independent Climate Consultant
4 Green boxes? An overview of climate risk tools and analytics
Independent Climate Consultant
Part II: A Framework, Methodology and Tools for Managing Climate-related Risk
5 Embedding climate change in financial metrics
Natalie Ambrosio Preudhomme, James Edwards, Juan Licari and Olcay Ozkanoglu
Moody's Analytics, Moody's ESG Solutions
6 Modeling climate physical risks
Dapeng Hu, Mark Hu, Amit Madaan and Shubhin Puri
Aladdin Sustainability Lab, BlackRock
7 Climate-related stress testing: Transition risks
Pierpaolo Grippa and Samuel Mann
8 Catastrophe risk modelling and climate change
Robert Muir-Wood and Joss Matthewman
RMS, a Moody's Analytics Company
9 Evidence-based climate stress testing
Part III: Managing Climate-Related Risk
10 Climate risk drives a new paradigm in risk management
Kenneth Wee, Kirill Katsov, Chi Lai, Duncan Martin, James Mackintosh and Zubin Mogul
Boston Consulting Group
11 Incorporating climate change in asset allocation and portfolio construction
12 (Car)Bon voyage: The road to low carbon investment portfolios
Christopher Palazzolo, Lukasz Pomorski and Alice Zhao
AQR Capital Management
13 Climate risk primer for community banks: Concepts and policies during a period of significant change
Mike Gullette and Joe Pigg
American Bankers Association
Part IV: Climate Finance
14 Next-generation analytics for climate finance
Josh Gilbert and Gopal Erinjippurath
15 Climate finance post-COP26
Climate Risk Review
16 Mobilising private funding
Christopher A. McHugh
University of Southampton