Climate Risk and Sustainability: Emerging Impacts Future Perspectives for the Financial Intermediaries

This book analyzes recent trends and upcoming challenges in corporate governance and risk management in financial institutions with a particular focus on their rule in promoting a sustainable economic growth model. What are the effects of climate change on financial intermediaries? The volume tries to answer this question through an interdisciplinary approach that allows to observe the phenomenon of climate change from multiple perspectives: managerial, legal and mathematical-statistical. The analysis have been conducted at an international level, with a particular focus on Europe. The first Part offers a theoretical framework of the issue, providing basic concepts and definitions that can guide the reader in understanding the multiple profiles involved. The aspects covered range from regulation to the evaluation criteria used to assess climate risks and the illustration of the quantitative methodologies currently in use, up to a focus on benefit companies. This is a new model of corporate governance aimed at generating a positive impact on society and the environment, in addition to financial profit, introduced in Italy with Law No. 208 of 2015. The second Part focus on the more practical implications of the climate issue for financial intermediaries. Specifically, it explores the link between climate risk and the financial sector, analyzing the transmission channels through which banks and insurance companies support the transition to a sustainable economy. It examines how banks and insurance companies can integrate climate change risks into their governance. The implications in terms of systemic risk for the entire financial system are analyzed, formulating interesting considerations to support governments and institutions in their decision-making process. Finally, an empirical analysis is conducted to investigate the state of the art of a sample of insurance companies, examining their performance and practices in terms of sustainability. The analysis goes as far as to detect the level of cyber security of the companies examined, to develop some initial considerations on the existence of a relationship between the degree of protection from cyber risks and the sustainable performance of intermediaries. This book analyzes recent trends and upcoming challenges in corporate governance and risk management in financial institutions with a particular focus on their rule in promoting a sustainable economic growth model. The impact of negative events caused by environmental and climate change can have significant consequences for the real economy and the financial system. This relevant impact has been affirmed several times by financial regulators and supervisors and has led to set objectives and encourage practices in line with Environmental, Social and Governance (ESG) issues in order to push both financial and nonfinancial firms towards a sustainable and circular economic model. The issue of climate risk change related to finance has launched a wide political debate at international and European level and was deepened investigated in literature. The analysis will be conducted at an international level, with a particular focus on Europe. The interdisciplinary will allow to address multiple issues under three, in our opinion, indispensable different profiles: i) managerial ii) mathematical (quantitative) and iii) legal. In this direction, the research aims to develop new knowledge and skills through the integration and cooperation between the different sectors and disciplines. In the scope of Marie Sklodowska-Curie Actions, the research would deepen the role of finance in accelerating the green transition towards a circular, climate-neutral and sustainable economy.