Conference Agenda

Please note that all times are shown in the time zone of the conference. The current conference time is: 29th Mar 2024, 07:56:00am CET

 
 
Session Overview
Session
CL 04: Climate Finance: Firms
Time:
Friday, 18/Aug/2023:
10:30am - 12:00pm

Session Chair: Emilia Garcia-Appendini, Norges Bank and University of Zurich
Location: 6A-00 (floor 6)


Show help for 'Increase or decrease the abstract text size'
Presentations
ID: 1491

Reducing Carbon using Regulatory and Financial Market Tools

Franklin Allen1, Adelina Barbalau2, Federica Zeni3

1Imperial College London; 2University of Alberta; 3World Bank

Discussant: Magdalena Rola-Janicka (Tilburg University)

We study the conditions under which debt securities that make the cost of debt contingent on the issuer's carbon emissions, similar to sustainability-linked loans and bonds, can be equivalent to a carbon tax. We propose a model in which standard and environmentally-oriented agents can adopt polluting and non-polluting technologies, with the latter being less profitable than the former. A carbon tax can correct the laissez-faire economy in which the polluting technology is adopted by standard agents, but requires sufficient political support. Carbon-contingent securities provide an alternative price incentive for standard agents to adopt the non-polluting technology, but require sufficient funds to fully substitute the regulatory tool. Absent political support for the tax, carbon-contingent securities can only improve welfare, but the same is not true when some support for a carbon tax exists. Understanding the conditions under which the regulatory and capital market tool are substitutes or complements within one economy is an important stepping stone in thinking about carbon pricing globally. It sheds light, for instance, on how developed economies can deploy finance to curb carbon emissions in developing economies where support for a carbon tax does not exist.

EFA2023_1491_CL 04_1_Reducing Carbon using Regulatory and Financial Market Tools.pdf


ID: 1332

Fresh Start or Fresh Water: The Impact of Environmental Lender Liability

Aymeric Bellon

UNC Chapel Hill, United States of America

Discussant: Stefano Ramelli (University of St. Gallen)

This paper investigates how the environmental liability of lenders affects debtors’ behavior. I use U.S. Census Bureau micro-data and the passage of the Lender Liability Act as a novel identification strategy to answer this question. Firms increase on-site pollution, cut investment in abatement technology, and incur 17.54% more environmental regulatory violations when secured lenders become less responsible for the cleanup cost of their collateral. This lower environmental compliance slightly benefits employment, but does not change wages or production. Overall, reduced lender liability lessens banks’ incentives to influence the environmental practices of their debtors with limited benefit on economic growth.

EFA2023_1332_CL 04_2_Fresh Start or Fresh Water.pdf


ID: 1090

Beyond Climate: The impact of biodiversity, water, and pollution on the CDS term structure

Andreas Hoepner1, Johannes Klausmann2, Markus Leippold3, Jordy Rillaerts4

1University College Dublin; 2ESSEC Business School; 3University of Zurich and Swiss Finance Institute (SFI); 4University of Zurich and Swiss Finance Institute (SFI)

Discussant: Mascia Bedendo (University of Bologna)

We investigate the impact of three non-climate environmental criteria: biodiversity, water, and pollution prevention, on infrastructure firms' credit risk term structure from the perspective of double materiality. Our findings show that firms that effectively manage these three environmental risks to which they are materially exposed have up to 93bps better long-term refinancing conditions compared to the worst-performing firms. While the results are less significant for the firm's material impact on the environment, investors still reward the management of these criteria beyond climate with improved long-term financing conditions for infrastructure investments. Overall, we find that financial markets respond positively to the prospect of more stringent regulations related to these criteria, which are currently used by the EU Taxonomy to assess the sustainability of investments.

EFA2023_1090_CL 04_3_Beyond Climate.pdf


 
Contact and Legal Notice · Contact Address:
Privacy Statement · Conference: EFA 2023
Conference Software: ConfTool Pro 2.6.149+TC
© 2001–2024 by Dr. H. Weinreich, Hamburg, Germany