Harnessing Cutting-edge Research with Practical Solutions
Research
Our emerging research efforts are globally oriented, aiming to contribute to the understanding of the role finance has in fostering a sustainable future.
By merging cutting-edge research with practical solutions, we empower businesses and individuals to contribute a more prosperous, equitable world.
Through our Advisory Council, Scientific Committee and Affiliated Researchers, we aim to be a global facilitator in this transformative journey, ensuring that the transition to a more sustainable world is a successful reality that benefits all.
Research Areas
Within Sustainable Finance, we chose Climate Change and the Transition to a Sustainable Society as our inaugural focus research area, given that both are pressing issues.
Nevertheless, our research efforts will evolve to cover other topics within Sustainable Finance, such as the sustainability of retirement systems under current public finance and demographic trends.
Climate Change
Why act now?
Because it is already occurring and, since it deregulates Earth’s self-active natural cycles, has damaging consequences for us, our economy and the Planet. Real examples consists of more extreme weather events threatening food and water security, human health, infrastructure or significant loss of biodiversity.
What is it?
Climate Change is commonly referred to as the abnormal change in the climate, mainly triggered by human activity. Perhaps the most evident example is global temperature warming.
How is Finance involved?
Finance has been central to the significant development of our societies. Finance can play a key role in fueling innovation and channeling capital toward solutions to climate change mitigation, adaptation and resilience. Being it an urgent matter to all societies and economies, it is here where our initial focus will be, studying and disseminating knowledge on the development, consequences, and tackle of Climate Change, always standing from a financial point of view.
Accordingly, we highlight some of the topics we want to contribute with research on regarding this area, considering a financial perspective:
— Climate Physical Risk and Adaptation
— Climate Transition Risk and Mitigation
— Biodiversity and Natural Capital
Transition to a Sustainable Society
Why act now?
Because our current economy is still heavily rooted in high-carbon-emitting economic activities (the main driver of accelerated Climate Change) and is characterized by misallocation and overconsumption of valuable nonrenewable resources, as well as unequal social and economic development.
What is it?
Transitioning to a sustainable society means progressing to an economic model that ensures a sustained equitable allocation and use of resources, fostering broad long-term economic development; all while emitting the smallest possible amount of greenhouse gases into the atmosphere.
How is Finance involved?
Finance can play a key role in stimulating innovation and directing capital toward a well-managed, more efficient and fairer transition to a thriving and sustained economic system that is less dependent on carbon emissions. Being this transition a top-priority, it is also here where our initial focus will be, studying and disseminating knowledge on how Finance can support the transition to a sustainable, low-carbon economy.
Accordingly, we highlight some of the topics we want to contribute with research on regarding this area, considering a financial perspective:
— Carbon and Labor Markets
— Ecosystem services and biodiversity
— Consumer and Investment Choice
— Energy Transition
Research Papers and Publications
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“In this paper we introduce a new multivariate conditional correlation GARCH model capable ofdescribing the transmission mechanism of volatility spillovers across assets or markets.
Our illustrative application using carbon emission futures and climate concerns suggests that if the nonstationary component of the variance was left unmodelled we would find no supporting statistical evidence for causality from past squared climate concerns returns in the variance of carbon futures returns. Causal effects of media-based concerns on future carbon markets are found to be statistically significant for most recent rolling periods.”
Responsible Investment and Responsible Consumption
Authors: Eva Schliephake with Hendrik Hakenes
Date: November 2023
Publisher: SSRN
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“To reduce a negative externality, socially responsible households can invest responsibly (SRI), consume responsibly (SRC), or do both. Which is better?
In a closed microeconomic model with intertwined product and capital markets, we show that a mere focus on SRC is inefficient; SRI should be part of any responsible action. In a benchmark model, the greatest responsible impact is achieved by an optimal combination of SRI and SRC. This prevents price changes and corresponding market responses that would partly offset the responsible choice. The responsible investment’s relative financial performance is determined by the households’ risk aversion, product preferences, and their ability to commit to the efficient exit and boycott strategy.”
— Ongoing Projects