Metrics of climate risk and impact for public investment banks
Date and time: Wed, 18 Jan 2018, 11:30 – 12:30.
Aims and scope: The session aims to discuss the challenges and opportunities to mainstream climate risk and impact metrics within development banks, looking both at the governance and at the project pipeline dimensions. In addition, it will identify the role that academia could play in this process, and how synergies could be successfully exploited. The session will provide actionable information on the contribution of development banks and the academia to align portfolios to the global sustainability agenda.
|Irene Monasterolo (WU)
|Barbara Buchner (CPI)
|Gael Giraud (AFD)
|Monica Scatasta (EIB)
Background and policy context: There is a growing support among scholars and practitioners to the view that mitigating and adapting to climate change could represent an opportunity for green growth, both at the macroeconomic and microeconomic level. In either context, a stable long-term framework of economic and environmental policies is regarded as key to make risk-return profiles of investments sufficiently predictable to trigger private actors, and to scale up the impact of climate-finance projects. In addition, sustained consumers’ demand for green projects is also recognized as an important factor.
Development banks and national promotional banks play a crucial role in climate-finance. In particular, their expertise and credibility in designing, implementing and monitoring climate projects, together with the financial structure of private-public partnerships, enables them to catalyze and scale up investments by leveraging on the private sector. In this regard, academic research aimed at developing robust and targeted metrics and methods is key to enable development and national promotional banks to fulfil their role in climate-finance.
However, standardized climate risk and impact metrics are needed to allow development banks to deliver on their objectives. The introduction of metrics to measure development banks’ progress towards climate action (e.g. the Sustainable Development Goals) at the level of project portfolios could provide actionable information to decision makers. Progress needs to be measured both in terms of risk and impact. Regarding risk, it is crucial to integrate climate physical and transition risk factors in current financial risk metrics. Regarding impact, we need to assess the contribution of projects’ portfolios to climate action.
Summary: This session will focus on climate risk and impact metrics and methods to assess the exposure of development banks’ portfolios to climate risk, as well as their contribution to climate action (e.g. Sustainable Development Goals). By building on the experience of main development banks, we will discuss their progress towards better climate risk and impact disclosure, as well as the challenges and opportunities that they experience, both at the governance and project level. Finally, we will discuss what role could the academia play to support development banks in this process, by identifying specific areas of collaboration where synergies could be successfully exploited.
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