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What Role for Financial Supervisors in Addressing Environmental Risks?

Author

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  • Dirk Schoenmaker

    (Department of Finance, Rotterdam School of Management, Erasmus University & Bruegel)

  • Rens Van Tilburg

    (Sustainable Finance Lab, Utrecht University)

Abstract

A literature is rapidly developing on financial shocks originating from ecological imbalances. These shocks can be triggered by either intensified environmental policies, clean tech breakthroughs or due to the economic costs of crossing ecological boundaries. However, financial supervisors have so far given little attention to this ecological dimension. This allows systemic financial imbalances resulting from ecological pressures to build up and concentrate in financial institutions and markets. This paper sketches the ecological dimension of the prudential policy framework and illustrates the working for the case of carbon emissions.

Suggested Citation

  • Dirk Schoenmaker & Rens Van Tilburg, 2016. "What Role for Financial Supervisors in Addressing Environmental Risks?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 58(3), pages 317-334, September.
    • Handle: RePEc:pal:compes:v:58:y:2016:i:3:d:10.1057_ces.2016.11
    DOI: 10.1057/ces.2016.11
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    References listed on IDEAS

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    11. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Revista de Estabilidad Financiera, Banco de España, issue Autumn.
    12. D’Orazio, Paola & Popoyan, Lilit, 2019. "Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?," Ecological Economics, Elsevier, vol. 160(C), pages 25-37.
    13. Dafermos, Yannis & Nikolaidi, Maria, 2022. "Greening capital requirements," Greenwich Papers in Political Economy 37779, University of Greenwich, Greenwich Political Economy Research Centre.
    14. Laurence Scialom & Gaëtan Le Quang & Thomas Lagoarde Segot, 2024. "Sustainable economic policies: exploring the effects of ecosystemic macroprudential regulations," EconomiX Working Papers 2024-28, University of Paris Nanterre, EconomiX.
    15. Florian Böser & Chiara Colesanti Senni, 2020. "Emission-based Interest Rates and the Transition to a Low-carbon Economy," CER-ETH Economics working paper series 20/337, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    16. 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.
    17. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Revista de Estabilidad Financiera, Banco de España, issue Otoño.
    18. Braun, Nele, 2021. "The Role of the European Central Bank in a Sustainable Financial System," Junior Management Science (JUMS), Junior Management Science e. V., vol. 6(3), pages 468-488.
    19. J. Nieto, María, 2017. "Banks and Environmental Sustainability: Some reflections from the perspective of financial stability," CEPS Papers 12503, Centre for European Policy Studies.
    20. Louis Daumas, 2021. "Should we fear transition risks - A review of the applied literature," Working Papers 2021.05, FAERE - French Association of Environmental and Resource Economists.
    21. Jakob Thomä & Stan Dupré & Michael Hayne, 2018. "A Taxonomy of Climate Accounting Principles for Financial Portfolios," Sustainability, MDPI, vol. 10(2), pages 1-18, January.
    22. Maria Folqué & Elena Escrig‐Olmedo & Teresa Corzo Santamaría, 2021. "Sustainable development and financial system: Integrating ESG risks through sustainable investment strategies in a climate change context," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(5), pages 876-890, September.
    23. Hyoungkun Park & Jong Dae Kim, 2020. "Transition towards green banking: role of financial regulators and financial institutions," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 5(1), pages 1-25, December.

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