Climate change has profoundly shaped the modern view of finance. The Climate Finance research can be typically broken down into two categories; direct and indirect.
The direct climate change effects, which are related to changes in weather patterns (e.g., heavy-storms, more frequent heatwaves, and increasing global temperature), can deplete labour productivity and reduce food production and thus increase the overall climate change risk. In turn, heightened climate change risk can alter the perception of investors about the financial markets. Investors are concerned about an imminent increase in energy demand because firms would spend more in order to maintain standard working conditions. Moreover, weather shocks act as a systematic negative productivity shock, which will eventually affect the stock valuations. Finally, evidence from psychological literature shows that changes in weather patterns affect investors’ mood.
The indirect impact of climate change can be observed in the financial markets in the form of Climate Policy. Policy-makers make an effort to stabilise rising global temperatures by regulating the carbon emissions of firms. For example, European emission trading scheme is a market for reducing firms’ emissions. Emissions have been financialised as commodities and are exchanged in a cap and trade system. Cap and trade system indicates that the quantity of emissions has to be capped, otherwise the polluters will be penalised. Therefore, firms place particular emphasis on reducing their carbon footprint. For this reason, there is an increasing volume of funds allocated to greens investments (e.g clean-tech). Firms benefit from this type of investments in three ways; first, they comply with the regulatory limits, second social investors would reward environmental sensitive firms and third firms establish long-term objectives, which can potentially lead them to gain and sustain a competitive advantage.
Tzouvanas, Panagiotis, Kizys, Renatas, Chatziantoniou, Ioannis and Sagitova, Roza (2020) Environmental disclosure and idiosyncratic risk in the European manufacturing sector. Energy Economics. 104715. https://doi.org/10.1016/j.eneco.2020.104715
Papavasileiou, Emmanouil F and Tzouvanas, Panagiotis (2020) Tourism carbon Kuznets-curve hypothesis: a systematic literature review and a paradigm shift to a corporation-performance perspective. Journal of Travel Research. https://doi.org/10.1177%2F0047287520915276
Tzouvanas, Panagiotis, Renatas, Kizys, Ioannis, Chatziantoniou and Roza, Sagitova (2019) Environmental and financial performance in the European manufacturing sector: an analysis of extreme tail dependency. British Accounting Review. ISSN 0890-8389 (Accepted)
Tzouvanas, Panagiotis, Kizys, Renatas, Chatziantoniou, Ioannis and Sagitova, Roza (2019) Can variations in temperature explain the systemic risk of European firms? Environmental and Resource Economics. ISSN 0924-6460 (Accepted)
Tol, Richard (2019) A social cost of carbon for (almost) every country. Energy Economics. ISSN 0140-9883
Letta, Marco and Tol, Richard (2019) Weather, climate and total factor productivity. Environmental and Resource Economics, 73 (1). pp. 283-305. ISSN 0924-6460
Busch, Jonathan, Foxon, Timothy J and Taylor, Peter G (2018) Designing industrial strategy for a low carbon transformation. Environmental Innovation and Societal Transitions, 29. pp. 114-125. ISSN 2210-4224
Hardt, Lukas, Owen, Anne, Brockway, Paul, Heun, Matthew K, Barrett, John, Taylor, Peter G and Foxon, Timothy J (2018)Untangling the drivers of energy reduction in the UK productive sectors: efficiency or offshoring? Applied Energy, 223. pp. 124-133. ISSN 0306-2619
Morgan, Elizabeth, Foxon, Timothy J and Tallontire, Anne (2018) ‘I prefer 30°’?: Business strategies for influencing consumer laundry practices to reduce carbon emissions. Journal of Cleaner Production, 190. pp. 234-250. ISSN 0959-6526
Barton, John, Davies, Lloyd, Dooley, Ben, Foxon, Timothy J, Galloway, Stuart, Hammond, Geoffrey P, O’Grady, Áine, Robertson, Elizabeth and Thomson, Murray (2018) Transition pathways for a UK low-carbon electricity system: comparing scenarios and technology implications. Renewable and Sustainable Energy Reviews, 82. pp. 2779-2790. ISSN 1364-0321
Tol, Richard (2018) Economic impacts of climate change. Review of Environmental Economics and Policy. ISSN 1750-6816
Hiteva, Ralitsa, Foxon, Timothy and Lovell, Katherine (2018) The political economy of low carbon infrastructure in the UK.In: Handbook of international political economy of energy and natural resources. Edward Elgar Publishing. (Accepted)
Bergman, Noam and Foxon, Timothy (2018) Reorienting finance towards energy efficiency: the case of UK housing.Working Paper. SPRU Working Paper Series, University of Sussex.
Van der Linden, Marcel, Reis, Elisa, Bacci, Massimo Livi, Castles, Stephen, Delgado-Wise, Raul, Kabeer, Naila, Kannan, K P, Munck, Ronaldo, Roberts, Adrienne, Schot, Johan, Therborn, Göran, Wagner, Peter, Foxon, Tim and Kanger, Laur(2018) Social trends and new geographies. In: IPSP, International Panel on Social Progress (ed.) Rethinking society for the 21st century. Report Of The International Panel On Social Progress, 1 . Cambridge University Press, Cambridge, pp. 9-40. ISBN 9781108436328
Khazaei, Javad, Coulon, Michael and Powell, Warren B. (2017) ADAPT: a price-stabilizing compliance policy for renewable energy certificates: the case of SREC markets. Operations Research, 65 (6). pp. 1429-1445. ISSN 0030-364X
Stua, Michele and Coulon, Michael (2017) The Mitigation Alliance target and its distribution. In: Stua, Michele (ed.) From the Paris Agreement to a low-carbon Bretton Woods: rationale for the establishment of a mitigation alliance. Springer, Cham, pp. 69-84. ISBN 9783319546995
Brockway, Paul E, Saunders, Harry, Heun, Matthew, Foxon, Timothy, Steinberger, Julia, Barrett, John and Sorrell, Steve(2017) Energy rebound as a potential threat to a low-carbon future: findings from a new exergy-based national-level rebound approach. Energies, 10 (1). p. 51. ISSN 1996-1073
Morgan, Elizabeth, Tallontire, Anne and Foxon, Timothy (2017) Large UK retailers' initiatives to reduce consumers' emissions: a systematic assessment. Journal of Cleaner Production, 140. pp. 227-238. ISSN 0959-6526
Hall, Stephen, Foxon, Timothy J and Bolton, Ronan (2017) Investing in low-carbon transitions: energy finance as an adaptive market. Climate Policy, 17 (3). pp. 280-298. ISSN 1469-3062
Chilvers, Jason, Foxon, Timothy J, Galloway, Stuart, Hammond, Geoffrey P, Infield, David, Leach, Matthew, Pearson, Peter JG, Strachan, Neil, Strbac, Goran and Thomson, Murray (2017) Realising transition pathways for a more electric, low-carbon energy system in the United Kingdom: challenges, insights and opportunities. Proceedings of the Institution of Mechanical Engineers, Part A: Journal of Power and Energy, 231 (6). pp. 440-477. ISSN 0957-6509
Brand-Correa, Lina I, Brockway, Paul E, Copeland, Claire L, Foxon, Timothy J, Owen, Anne and Taylor, Peter G (2017)Developing an input-output based method to estimate a national-level energy return on investment (EROI). Energies, 10 (4). p. 534. ISSN 1996-1073
Robertson, Elizabeth, O'Grady, Áine, Barton, John, Galloway, Stuart, Emmanuel-Yusuf, Damiete, Leach, Matthew, Hammond, Geoff, Thomson, Murray and Foxon, Tim (2017) Reconciling qualitative storylines and quantitative descriptions: an iterative approach. Technological Forecasting and Social Change, 118. pp. 293-306. ISSN 0040-1625
Tol, Richard (2017) Policy Brief- Leaving an emissions trading scheme: implications for the United Kingdom and the European Union. Review of Environmental Economics and Policy, 12 (1). pp. 13-189. ISSN 1750-6816
Keerthiratne, Wendala and Tol, Richard S J (2017) Impact of natural disasters on financial development. Economics of Disasters and Climate Change, 1 (1). pp. 33-54. ISSN 2511-1280
Hwang, In Chang, Reynès, Frédéric and Tol, Richard S J (2017) The effect of learning on climate policy under fat-tailed risk. Resource and Energy Economics, 48. pp. 1-18. ISSN 0928-7655
Koopman, Jason F L, Kuik, Onno, Tol, Richard S J and Brouwer, Roy (2017) The potential of water markets to allocate water between industry, agriculture, and public water utilities as an adaptation mechanism to climate change. Mitigation and Adaptation Strategies for Global Change, 22 (2). pp. 325-347. ISSN 1381-2386
Tol, Richard S J (2017) Population and trends in the global mean temperature. Atmósfera, 30 (2). pp. 121-135. ISSN 2395-8812