Vulnerable yet relevant: the two dimensions of climate-related financial disclosure

• DOI: 10.1007/s10584-017-2095-9
• Publication Date: 2017-11-27T02:36:35Z
• Authors: Irene Monasterolo; Stefano Battiston; Anthony C. Janetos; Zoey Zheng
• Keywords: Competitor analysis; Equity; Climate risk

Market-based solutions to climate change are widely advocated by financial actors and policy makers in order foster a smooth transition low-carbon economy. A first important limiting factor this approach is recognized be the imperfect information on investors’ portfolios’ exposure climate-related risks. While better disclosure of climate-relevant often recommended as remedy, current lack concise comparable measures risk fails provide major investors with full incentives reallocate their portfolios. second arises from fact that context transition, it not clear how measure market share participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along supply chain. The common relevant hampers ability ensure fair competition policies assess effects own competitors’ portfolio reallocation. To address these two gaps, we propose novel complementary indices: (i) “GHG exposure,” capturing single portfolios risks, (ii) holding,” each actor weighted its contribution GHG emissions. We illustrate use indices dataset equity holdings loans Euro-Area, discuss implications for transition.