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As we rapidly approach the critical 1.5°C target set in the 2015 Paris Agreement, the urgency to address climate change and its multifaceted impacts cannot be overstated. Rising temperatures, sea level increases, biodiversity loss, and pervasive pollution of air, water, and soil continue to challenge the global community. Tackling these complex issues requires not only scientific understanding but also economic insights to devise and implement sustainable solutions. This was the focus of the 29th Annual Conference of the European Association of Environmental and Resource Economists (EAERE) conference in Leuven/Belgium, an annual gathering of dedicated environmental economists worldwide.
This year, the conference received a record number of approximately 1,500 paper submissions and numerous proposals for policy and thematic sessions, underscoring the growing importance of environmental economics in today’s world but also the increasingly fierce competition in the academia area of environmental economics. Among the attendees were three researchers from the FS-UNEP Centre at the Frankfurt School of Finance & Management selected, who contributed their scientific expertise and insights to the conference.
Addressing policy acceptance in a complex political landscape dominates. The current political environment, marked by a shift towards more right-wing governments and increased uncertainty regarding the prioritization of climate change on political agendas, adds another layer of complexity to environmental policy implementation. Perhaps recognizing this uncertainty, the EAERE conference this year also has focused on research that examines the acceptance of environmental policies among public. Researchers from diverse Universities explored this theme. They investigated, for instance, how information, per-capita refunds and revenue recycling affect public acceptability of carbon pricing, the acceptance of carbon taxes and regulatory standards in developed and low-and middle-income countries.
Among others, these studies emphasize the importance of understanding public attitudes towards environmental policies, particularly in contexts where political support for climate action may be wavering. Insights gained from these papers are crucial for designing policies that are not only effective but also publicly acceptable, thereby increasing their chances of successful implementation.
An important trend is the surge in sustainable finance research. Top researchers with heterogeneous backgrounds have increasingly turned their attention to sustainable finance, bringing their established methodologies to this emerging field. This influx has led to a more diverse research landscape, with abundant topics flourishing within the area of sustainable finance. However, this diversity also presents challenges. The broad range of sub-disciplines, ranging from corporate finance to international trade finance, quantitative methods to qualitative surveys, seem to create certain barriers to understanding and exchanges between researchers from different backgrounds. This complexity makes discussions particularly difficult, as each discipline operates with its own methodologies and research agendas. Despite these challenges, cross-pollination of ideas is crucial for advancement of sustainable finance and its integration into broader economic practices.
Conclusion. The contributions of the FS-UNEP researchers underscored the importance of interdisciplinary approaches, combining economic and financial insights with environmental science to develop effective and sustainable solutions. It exemplifies the vital role of academic research in addressing global environmental challenges. Their contributions, alongside those of their peers, provide valuable insights that can inform policy and drive sustainable solutions as we continue to grapple with the complexities of climate change and environmental degradation.
Michael König-Sykorova, Dr. Karol Kempa, and Menglu Neupert-Zhuang each presented significant research, addressing critical aspects of environmental economics and policy.
Karol’s research (with Ulf Moslener) examines the role of climate and environmental policies for the impact of firms’ carbon emissions on risk and pricing of debt. Using data on firm credit risk ratings and corporate bonds, the study finds that increases in stringency of adopted climate policies and expected stringency of future policies increase credit risk and costs of debt of high-carbon firms.
Menglu’s research explores impact of financial advice on retail investors’ decisions regarding sustainable investments. Through an online experiment, she finds that sustainable and conventional investors follow advice mismatching their sustainability preferences despite suggestive desires for consistency. In face of increased fund fees to market conditions in green funds, sustainable investors seem to tolerate fee change in the light-green fund but are fee-sensitive to dark-green fund. This highlights need for transparency and further considerations in consumer protection policies.
Michael’s research investigates the relationship between emission reduction policies (ERPs), board governance (BG), and emissions. His study confirms that ERPs improve GHG performance, especially when combined with good board governance practices. Strong governance reduces greenwashing and enhances the effectiveness of ERPs.
Co-author
Menglu Neupert-Zhuang
Sustainable Finance Researcher
Menglu Neupert-Zhuang is a member of the research group at the FS-UNEP Collaborating Centre for Climate and Sustainable Energy Finance. Her research interests are in behavioural and environmental economics. She is passionate about studying financial decision-making in the context of redirecting the economy and society towards sustainability. Her impact-oriented research contributes to the latest policy debates in sustainable finance.
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