Workshop on “Measuring, managing and hedging indirect climate-transition risk”

Abstract

Climate change can directly affect the stability of financial and economic systems through more frequent and severe disasters affecting the economy, while the uncertainty related to the conversion process towards a low-carbon economy and its timing and speed have the potential to produce negative indirect consequences especially in carbon-intensive sectors. Despite the growing attention of scholars and policy makers to the risks of climate change for the economy, the debate on how to correctly measure externalities and design adequate policies is still heated. Many economic activities are, in fact, not immune from direct and indirect exposures to climate change and economic transition. The transmission mechanisms of risks from environmental threats and climate change to economic systems and individual institutions are still largely unknown and their study envisions a multidisciplinary research agenda. The Workshop aims to present and discuss multiple perspectives on transition risk for firms and financial systems, focusing on the indirect risks related to the interconnections among economic activities. I am participating as discussant.