A research grant from Norges Bank Investment Management for Professor Harrison Hong of Columbia University has resulted in the publication of a special issue of The Review of Financial Studies dedicated exclusively to climate finance.
The issue includes contributions by the Nobel laureates Lars Peter Hansen and Robert Engle and shows how there is a place for finance research in understanding the implications of climate change.
As an investor with the mission to safeguard and build financial wealth for future generations, climate change is a central concern for us. It gives rise to risks and opportunities for companies.
“When we gathered researchers to evaluate current thinking on climate change in 2016, we realised that there was a lack of academic research looking directly at how climate change affects financial markets,” says Chief Corporate Governance Officer Carine Smith Ihenacho.
Therefore, Norges Bank Investment Management decided to launch a call for proposals through the Norwegian Finance Initiative for research projects on “financial economics of climate change”. A grant was awarded to Professor Hong for a research competition. After two research conferences with participants discussing their ideas, the results of our research support are manifested in this special issue, containing nine articles chosen from 106 submissions. Taken together, the articles highlight the importance of investor beliefs regarding climate change risks, the efficiency of capital markets and the roles of hedging and governance.
“We believe that the special issue will be a significant and early body of research amongst financial economists on climate finance and hope that the special issue will serve as source of reference for interested academics and practitioners”, says Ihenacho.
The editorial and abstracts of the papers are freely available on the website of The Review of Financial Studies.