IDEAS home Printed from https://ideas.repec.org/a/mnb/finrev/v22y2023i1p57-76.html
   My bibliography  Save this article

Measuring Climate Risks with Indirect Emissions

Author

Listed:
  • Orsolya Szendrey

    (University of Debrecen)

  • Mihaly Dombi

    (University of Debrecen)

Abstract

Climate change poses completely new challenges for the financial markets, and thus the consideration of green aspects is becoming explicitly required by regulators and investors. Most of the reports which influence the market in this way evaluate the climate or environmental impact of a product or process based on their alignment with a regulatory standard. However, the methods applied for measurement do not always provide a proper description of the relationship between the investments and the natural resources. Most analyses evaluate investments related to economic sectors based exclusively on direct emissions, while indirect impacts, which represent a substantial part of total emissions, are not taken into account. In the study, the methods and results which are currently applied are compared to calculations including indirect impacts as well.

Suggested Citation

  • Orsolya Szendrey & Mihaly Dombi, 2023. "Measuring Climate Risks with Indirect Emissions," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 22(1), pages 57-76.
    • Handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:57-76
    as

    Download full text from publisher

    File URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-22-1-st2-szendrey-dombi.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Roncoroni, Alan & Battiston, Stefano & Escobar-Farfán, Luis O.L. & Martinez-Jaramillo, Serafin, 2021. "Climate risk and financial stability in the network of banks and investment funds," Journal of Financial Stability, Elsevier, vol. 54(C).
    2. Dikau, Simon & Volz, Ulrich, 2021. "Central bank mandates, sustainability objectives and the promotion of green finance," Ecological Economics, Elsevier, vol. 184(C).
    3. Arnold Tukker & Arjan de Koning & Richard Wood & Troy Hawkins & Stephan Lutter & Jose Acosta & Jose M. Rueda Cantuche & Maaike Bouwmeester & Jan Oosterhaven & Thomas Drosdowski & Jeroen Kuenen, 2013. "Exiopol - Development And Illustrative Analyses Of A Detailed Global Mr Ee Sut/Iot," Economic Systems Research, Taylor & Francis Journals, vol. 25(1), pages 50-70, March.
    4. Hansen, Lars Peter, 2022. "Central banking challenges posed by uncertain climate change and natural disasters," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 1-15.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Baer, Moritz & Campiglio, Emanuele & Deyris, Jérôme, 2021. "It takes two to dance: Institutional dynamics and climate-related financial policies," Ecological Economics, Elsevier, vol. 190(C).
    2. Radu Șimandan & Cristian Valeriu Păun & Bogdan Glăvan, 2023. "Post-Pandemic Greenness? How Central Banks Use Narratives to Become Green," Sustainability, MDPI, vol. 15(2), pages 1-28, January.
    3. Monasterolo,Irene & Mandel,Antoine & Battiston,Stefano & Mazzocchetti,Andrea & Oppermann,Klaus & Coony,Jonathan D'Entremont & Stretton,Stephen John & Stewart,Fiona Elizabeth & Dunz,Nepomuk Max Ferdina, 2022. "The Role of Green Financial Sector Initiatives in the Low-Carbon Transition : A Theoryof Change," Policy Research Working Paper Series 10181, The World Bank.
    4. Joaquín Bernal-Ramírez & Jair Ojeda-Joya & Camila Agudelo-Rivera & Felipe Clavijo-Ramírez & Carolina Durana-Ángel & Clark Granger-Castaño & Daniel Osorio-Rodríguez & Daniel Parra-Amado & José Pulido &, 2022. "Impacto macroeconómico del cambio climático en Colombia," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 102, pages 1-62, July.
    5. Daniel Moran & Richard Wood, 2014. "Convergence Between The Eora, Wiod, Exiobase, And Openeu'S Consumption-Based Carbon Accounts," Economic Systems Research, Taylor & Francis Journals, vol. 26(3), pages 245-261, September.
    6. Zhang, Dongyang, 2023. "Does green finance really inhibit extreme hypocritical ESG risk? A greenwashing perspective exploration," Energy Economics, Elsevier, vol. 121(C).
    7. Yongke Yuan & Yitong Wang & Jialin Li & Mengwan Zhang, 2023. "Input-output Table and Input-output Model of Import and Export Internalization," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(6), pages 1-15.
    8. Tobias Kranz & Hamza Bennani & Matthias Neuenkirch, 2024. "Monetary Policy and Climate Change: Challenges and the Role of Major Central Banks," Research Papers in Economics 2024-01, University of Trier, Department of Economics.
    9. Anton Nakov & Carlos Thomas, 2023. "Climate-conscious monetary policy," Working Papers 2334, Banco de España.
    10. Bruckner, Martin & Giljum, Stefan & Fischer, Günther & Tramberend, Sylvia & Börner, Jan, 2018. "The global cropland footprint of the non-food bioeconomy," Discussion Papers 271062, University of Bonn, Center for Development Research (ZEF).
    11. Eivind Lekve Bjelle & Johannes Többen & Konstantin Stadler & Thomas Kastner & Michaela C. Theurl & Karl-Heinz Erb & Kjartan-Steen Olsen & Kirsten S. Wiebe & Richard Wood, 2020. "Adding country resolution to EXIOBASE: impacts on land use embodied in trade," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-25, December.
    12. Wang, Chih-Wei & Wu, Yu-Ching & Hsieh, Hsin-Yi & Huang, Po-Hsiang & Lin, Meng-Chieh, 2022. "Does green bond issuance have an impact on climate risk concerns?," Energy Economics, Elsevier, vol. 111(C).
    13. Gouriéroux, C. & Monfort, A. & Renne, J.-P., 2022. "Required Capital for Long-Run Risks," Journal of Economic Dynamics and Control, Elsevier, vol. 144(C).
    14. Josep Ferret Mas & Alexander Mihailov, 2021. "Green Quantitative Easing as Intergenerational Climate Justice: On Political Theory and Pareto Efficiency in Reversing Now Human-Caused Environmental Damage," Economics Discussion Papers em-dp2021-16, Department of Economics, University of Reading.
    15. Alessi, Lucia & Battiston, Stefano, 2022. "Two sides of the same coin: Green Taxonomy alignment versus transition risk in financial portfolios," International Review of Financial Analysis, Elsevier, vol. 84(C).
    16. Freire-González, Jaume, 2017. "Evidence of direct and indirect rebound effect in households in EU-27 countries," Energy Policy, Elsevier, vol. 102(C), pages 270-276.
    17. Roncoroni, Alan & Battiston, Stefano & D’Errico, Marco & Hałaj, Grzegorz & Kok, Christoffer, 2021. "Interconnected banks and systemically important exposures," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    18. Chakraborty, Lekha S, 2022. "Analysing Union Budget 2022-23: Fiscal Policy and Global Uncertainties," MPRA Paper 112700, University Library of Munich, Germany.
    19. Curcio, Domenico & Gianfrancesco, Igor & Vioto, Davide, 2023. "Climate change and financial systemic risk: Evidence from US banks and insurers," Journal of Financial Stability, Elsevier, vol. 66(C).
    20. Mathias Lund Larsen, 2023. "Bottom-up market-facilitation and top-down market-steering: comparing and conceptualizing green finance approaches in the EU and China," Asia Europe Journal, Springer, vol. 21(1), pages 61-80, March.

    More about this item

    Keywords

    climate change; sectoral exposure; greenhouse gas emissions; indirect flows;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:finrev:v:22:y:2023:i:1:p:57-76. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Morvay Endre (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.