OECD Journal: Financial Market Trends

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The articles in Financial Market Trends focus on trends, structural issues and developments in financial markets and the financial sector.


English


Finance and climate

The transition to a low-carbon and climate-resilient economy from a financial sector perspective

Climate change is a major political and economic challenge. This paper sketches out its relevance for the financial sector. Necessary low-carbon investments imply a significant yet manageable financing gap. However, we argue that beyond capital mobilisation that has attracted most attention until now, the main challenge is ensuring a transition-consistent capital reallocation. The financial sector has a key role to play in that respect, complementary to appropriately designed climate policies. To help the financial system fulfil its role, the understanding of the economics of climate change should be deepened and a sector-wide businessoriented appropriation of these issues should be promoted.

JEL classification: Q54, E10, E44, G12, G14, G21, G22, G23, G28.


Keywords: Climate change, low carbon, climate finance, green finance, investment, capital allocation, financial system, risks


English

JEL:
G22: Financial Economics / Financial Institutions and Services / Insurance; Insurance Companies; Actuarial Studies;
E44: Macroeconomics and Monetary Economics / Money and Interest Rates / Financial Markets and the Macroeconomy;
G28: Financial Economics / Financial Institutions and Services / Financial Institutions and Services: Government Policy and Regulation;
Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming;
G23: Financial Economics / Financial Institutions and Services / Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors;
G14: Financial Economics / General Financial Markets / Information and Market Efficiency; Event Studies; Insider Trading;
G21: Financial Economics / Financial Institutions and Services / Banks; Depository Institutions; Micro Finance Institutions; Mortgages;
E10: Macroeconomics and Monetary Economics / General Aggregative Models / General Aggregative Models: General;
G12: Financial Economics / General Financial Markets / Asset Pricing; Trading volume; Bond Interest Rates