Friday 17: Academic sessions

Thank you to everyone who attended the sessions! The presentation slides are now available on this webpage.

Venue: KOL-G-204


09:00 - 10:45 Climate economics. Understanding climate-related financial risk requires to understand the economics of climate change and the low-carbon transition. The session discusses the insights from various modeling approaches.

The challenge to decarbonize the world economy with rising income and population is better understood when applying appropriate climate economic theory and policy analysis. Prof. Lucas Bretschger will introduce the Basic Climate Economic (BCE) model and show the economic implications of climate policy. The setup is extended by introducing risk and uncertainty. His talk then will link the real economy to financial markets and derives implications for asset allocation. Finally, the issue of policy uncertainty will be discussed.

Limiting climate change to 2 degrees will require fast and decisive policy action. If not implemented in an orderly fashion, policy can disrupt markets, leading to forceful revaluations of assets. Prof. Armon Rezai will spell out four risks of asset standing at various points of the transition to fossil-free energy. He will present a study on how the choice of policy instruments to achieve the same climate goal affects these risks. Finally, he will highlight how shifting investors’ sentiment can mitigate these risks.

Public policies are needed to crowd in private investments to achieve the zero-carbon transition. However, the characteristics of endogeneity and non-linearity of climate transition risk imply the possibility of agents' imperfect foresight and multiple equilibria, thus challenging traditional macroeconomic models' assumptions and optimal policy analyses. To fill this gap, Prof. Irene Monasterolo and co-authors develop a Stock-Flow Consistent behavioral model to analyse how an EU country could foster the decarbonization of real and financial investments with different financing instruments, i.e. a carbon tax and green sovereign bonds, considering non-linearity and path dependency. Prof. Monasterolo will present the results, which show that the type of green policy financing affects the timing and magnitude of the transition yet with potential unintended effects. In contrast, policy complementarities could help to tame potential trade-offs on macroeconomic performance, financial stability, and inequality.


Speakers: Lucas Bretschger (ETHZ), Armon Rezai (WU), Irene Monasterolo (WU)


Lucas Bretschger (ETHZ) Webpage

Lucas Bretschger is Professor at the Department of Management, Technology, and Economics and Managing Director of the Center of Economic Research (CER-ETH) at ETH Zurich. His research interests include climate economics and policy, energy economics and quantitative modeling, environmental pollution and growth, sustainable development, and empirical assessment of environmental impacts. Lucas was President of the European Association of Environmental and Resource Economists (EAERE) and received EAERE Fellow Award. Lucas has published numerous articles and books in resource economics. 



Armon Rezai (WU) Webpage

Armon Rezai is Professor at the Department of Socio-Economics at Vienna University of Economics and Business (WU Wien) and head of the Institute for Ecological Economics at WU Wien. His research focuses on macroeconomics, climate change economics, environmental policy, distribution and inequality, and political economy. Armon is Leader of Mistra Financial Systems - Green Macro Project. 


Irene Monasterolo (WU) Webpage 

Irene Monasterolo is an Assistant Professor of Climate Economics and Finance at the Institute for Ecological Economics, Vienna University of Economics and Business. She is research fellow at Boston University (USA) and Universita’ Milano Bicocca (Cefes) and was visiting scholar at Stanford University. Irene has been awarded the prestigious Dr. Maria Schaumeyer Habilitationstipendium funded by the Austrian National Bank, and the research prize “Econometric Models of Climate Change” 2019. Irene has a track record of projects funded on sustainable finance and climate financial risk assessment, including the EC FET-EU Innovation Launchpad CLIMEX; the Central Banks and Financial Regulators Network for Greening the Financial System (NGSF) INSPIRE; the Austrian Climate Research Program project GREENFIN.



11:15 - 12:30 Climate change and financial law. Several recent developments in financial law and regulation aim to address climate related financial risks, in particular in the EU. What are the implications for financial risk from a legal perspective? Are there “collective blind spots” regarding climate change?

Financial law plays a fundamental role in the relation between climate change and financial risk since it sets the regulatory framework within which firms operate in sectors that are key for energy transition and for investors. Important recent regulatory developments related to climate mitigation include the TCDF guidelines at the global level and, in the EU, the taxonomy of sustainable finance. 

The session will discuss, within the wider policy context, how financial regulation and supervision can help to direct, incentivize or encourage financial institutions to support sustainability. In particular, how they can address the financial risks associated with sustainability issues. The focus is mostly on climate change and environmental risks, but the analysis generally carries over to the broader sustainability agenda. The session will also discuss the existing global regime for financial regulation and whether it can play a larger role in developing harmonized standards for bank risk governance and business model assessment.

The speakers of this session will discuss some related topics including: the importance for parties entering a financial contract to have a shared and standardised classification of assets in relation to climate targets; the implications of the recent developments for financial firms from a legal perspective, in particular on the way they assess climate-related risks also in Switzerland; the debate of how climate risk could reflect in capital requirements.  

Speakers: Rolf H. Weber (UZH), Kern Alexander (UZH), Marco dell’Erba (UZH)


Rolf H. Weber (UZH)Webpage

Rolf H. Weber is a professor em. of civil, commercial and European law at the University of Zurich, Switzerland, and has been a permanent visiting professor at the University of Hong Kong. His main fields of research are Internet and information technology law, competition law, international business law, international financial law and international trade law. He has recently analysed the legal implications of climate change for institutional investors and the emission trading scheme in Switzerland, also looking more broadly at related international developments in financial regulation (eg, EU Action Plan on Sustainable Finance). 


Kern Alexander (UZH) Webpage

Kern Alexander holds the Professorial Chair in Law and Finance and is Professor of Banking Regulation at the University of Zurich. Professor Alexander is an internationally recognised expert who has authored books and articles on international financial regulation and European Union and British banking and securities regulation. His report, Stability and Sustainability in Banking Reform: Are Environmental Risks Missing in Basel III (Cambridge, 2014) read more was the first study of the interrelationship between banking regulation, environmental sustainability and climate change.  He is the Founder of the Research Network for Sustainable Finance,


Marco dell’Erba (UZH) Webpage

Marco Dell’Erba is Assistant Professor of Corporate & Financial Law at the University of Zurich, where he is also a member of the Blockchain Center and the Digital Society Initiative. He is a Fellow at the Institute for Corporate Governance & Finance at New York University School of Law, and a member of the Advisory Board of the Research Network for Sustainable Finance. His research interest include the relation between sustainability issues and financial law. 



14:00 - 15:15 Investor motives in climate finance. How do market participants react to information about climate policies and information about firms’ preparedness to the low-carbon transition? Addressing these questions is key to understand how climate-related risks can materialize in financial markets.

This session will discuss how different types of market participants respond to the release of climate-related information. In particular, the session will cover whether and why mutual fund investors like low-carbon mutual funds, how mutual funds adjust to the investors’ preferences, and what are the effects of the introduction of eco-labels for investment products. Moreover, it will be discussed how stock markets are pricing climate-related regulation, in particular, the Paris Agreement, and how it affects systematic risk and optimal portfolio allocation.  

Speakers: Alexander Wagner (UZH), Luca De Angelis (Univ. of Bologna)


Alexander Wagner (UZH) Webpage

Alexander Wagner is a Swiss Finance Institute Associate Professor of Finance at the University of Zurich. He obtained his PhD in Political Economy from Harvard University and studied economics and law in his hometown Linz, Austria. Alexander is Research Associate at European Corporate Governance Institute (ECGI) and Research Fellow at the Center for Economic Policy Research (CEPR). His research focuses on corporate governance, behavioral finance, communication, experimental economics, and political economy. He served as an independent counsel for PwC, and he has experience as the Chairman of the Board of Trustees at Swipra.


Luca De Angelis (Univ. of Bologna) Webpage

Luca De Angelis is Assistant Professor in Econometrics at the Department of Economics of the University of Bologna. His research interests include climate change econometrics and green finance, time series econometrics, financial econometrics, and dynamic latent variable models. Luca holds Ph.D in “Statistical methodology for scientific research” at the Statistical Sciences Department, University of Bologna, Italy.



15:45 - 17:15 Climate finance: risk versus ambiguity. How does financial risk and investment decisions change when the knowledge about probability distributions of gains and losses is lacking or incomplete?

Speakers: Markus Leippold (UZH), Silvia Romagnoli (Univ. of Bologna), Antoine Mandel (Paris School of Economics)


Markus Leippold (UZH) Webpage 

Markus Leippold is Professor at the University of Zurich, where holds the Chair in Financial Engineering and is part of the Board of Directors. Currently he is a visiting researcher in Google Zurich. He has been Associate Professor in Finance at Imperial College, Visiting Professor at the Federal Reserve Bank of New York and Member of the Risk Management Group at Zurich Cantonal Bank. He has published in several Journals such as Review of Financial Studies, Journal of Financial Economics, Management Science, Review of Finance, Annals of Statistics, and Journal of Banking and Finance. He is Associate Editor of the Journal of Financial Econometrics and of the Journal of Banking and Finance. 


Silvia Romagnoli (Univ. of Bologna) Webpage

Silvia Romagnoli is an Associate Professor at the University of Bologna, in the Department of Statistical Sciences, where she is also a member of the Research Commission. She is Director of the Master in Quantitative Finance. She was Project and Scientific Coordinator of the project Erasmus+ Knowledge Alliance "GrEnFIn: Greening Energy Market and Finance". She has also been actuarial consultant and consultant for technical reports for derivatives valuation. She has published in Journals such as the Journal of Computational and Applied Mathematics and the International Review of Computational and Applied Mathematics.


Antoine Mandel (Paris School of Economics) Webpage

Antoine Mandel is Associate Professor of Applied Mathematics at University Paris 1 Panthéon-Sorbonne and research fellow at the Paris School of Economics. He holds a Ph.D. in Applied Mathematics from University Panthéon-Sorbonne and has held a post-doctoral position at the Potsdam Institute for Climate impact research. His work focuses on the development of mathematical and computational models of economic and financial dynamics, using methods from game-theory, mathematical economics and agent-based modelling. His work has been applied among others to the assessment of green growth prospects in Europe, the analysis of carbon markets, the impact of financial instability on economic activity. He has participated in a number of transdisciplinary research projects. He was a team-leader in the FP7 projects SIMPOL where he developed network-based models for climate finance and IMPRESSIONS where he contributed to the assessment of the impacts of high-end scenario. He was part of the consortia of the projects GREEN-WIN and DOLFINS.