TARGET GROUP | Mid-level to senior public officials central banks, ministries of finance or economics, financial supervisory authorities and regulators.
DESCRIPTION | Climate change poses significant long-term risks to financial assets, to the financial institutions which hold those assets and to financial stability. Supervisors, regulators and asset managers must account for these risks or else their expectations on risk-adjusted returns will be systematically biased. Taking these risks into consideration will change the relative prices of climate-friendly and climate-damaging assets. If market participants do not anticipate this change, financial stability may be endangered. The transition towards a climate-neutral economy requires more investments in climate-neutral assets. Policymakers like the EU and national governments need to increase public investments and to create more incentives for private funding of safe and sustainable climate friendly technologies.
The course will cover the channels through which climate change affects the economy and financial markets, different climate change scenarios and especially the impact of climate change on the financial system. It will present methods for identification and assessment of climate risks to banks and other financial institutions (e.g. stress testing exercises) and discuss macroprudential instruments to tackle climate related risks. It will also present ways for funding the transition towards a climate-neutral economy and discuss recent policy proposals to that end.