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Green finance – opportunities for the Austrian financial sector

Author

Listed:
  • Andreas Breitenfellner

    (Oesterreichische Nationalbank)

  • Susanne Hasenhüttl

    (Österreichische Gesellschaft für Umwelt und Technik)

  • Georg Lehmann
  • Andreas Tschulik

    (Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology)

Abstract

Climate change and the internationally agreed decarbonization of the global economy not only pose risks to the financial sector and the economy but also open up opportunities. While focusing on the risks, mandate-driven central banks and financial supervisors also need to understand the dynamics and potential of green or sustainable finance markets. The investment needs at the global, European and national level to fund the transition to a climate-neutral economy are mind-blowing. Earmarked public funds alone will not suffice. In addition, financial markets will have to channel (excess) resources above all into sustainable projects. In other words, breaking out of its niche, green finance will have to scale up. Though dynamic, the development of Austria’s green finance markets is still sobering. At the same time, customer surveys suggest that demand for sustainable finance products will grow. The absence of common definitions of sustainability may give rise to “greenwashing,” i.e. making misleading claims about the environ-mental sustainability of a financial product. To prevent this, regulators and supervisors should help overcome market barriers and dysfunction on the supply and demand side. Noteworthy efforts in this respect are the European Commission’s action plan on sustainable finance, the ECB’s paying greater attention to climate change issues as well as the Austrian government’s green finance agenda. Predefining a credible pathway for linking carbon pricing to greenhouse gas emission targets would be the most effective – and least distorting – way to foster green finance and a smooth transition.

Suggested Citation

  • Andreas Breitenfellner & Susanne Hasenhüttl & Georg Lehmann & Andreas Tschulik, 2020. "Green finance – opportunities for the Austrian financial sector," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 40.
    • Handle: RePEc:onb:oenbfs:y:2020:i:40:b:2
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    File URL: https://www.oenb.at/dam/jcr:314567c2-c4c9-4521-8153-bbb55150d159/05_FSR_40_Green_finance.pdf
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    References listed on IDEAS

    as
    1. Thomas Pöchel & Alexandra Schober-Rhomberg & Alexander Trachta & Matthias Wicho, 2019. "Nonbank financial intermediation in Austria – developments since 2008," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 38, pages 74-86.
    2. Andreas Breitenfellner & Wolfgang Pointner & Helene Schuberth, 2019. "The Potential Contribution of Central Banks to Green Finance," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(2), pages 55-71.
    3. Elinor Ostrom, 2014. "A Polycentric Approach For Coping With Climate Change," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 97-134, May.
    4. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808, Decembrie.
    5. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    6. Wolfgang Pointner & Doris Ritzberger-Grünwald, 2019. "Climate change as a risk to financial stability," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 38, pages 30-45.
    7. Guin, Benjamin & Korhonen, Perttu, 2020. "Does energy efficiency predict mortgage performance?," Bank of England working papers 852, Bank of England.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ziyu Duan & Seiyong Kim, 2023. "Progress in Research on Net-Zero-Carbon Cities: A Literature Review and Knowledge Framework," Energies, MDPI, vol. 16(17), pages 1-27, August.

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    More about this item

    Keywords

    climate change; financial market development; sustainable finance;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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