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Open Access
Article
Publication date: 31 May 2019

Jakob Thomä and Kyra Gibhardt

The European Parliament and Commission are considering introducing a green supporting factor (GSF) or brown penalty (BP) for capital reserve requirements. This paper aims to…

6196

Abstract

Purpose

The European Parliament and Commission are considering introducing a green supporting factor (GSF) or brown penalty (BP) for capital reserve requirements. This paper aims to estimate the potential impact such a policy intervention may have on both capital reserves of European banks and the cost and availability of capital to “green” and “brown” investments.

Design/methodology/approach

The paper draws on the existing empirical and theoretical literature on the impacts of changes to capital reserve requirements on the real economy. It applies these estimates on the particular policy intervention currently being discussed at EU level to estimate the potential range of impacts on the cost of capital – measured in basis points – and the availability of capital – measured in per cent changes to lending.

Findings

A GSF would have a limited effect on overall capital requirements of banks compared to a BP – given the larger universe of assets on which such a penalty would be applied. The estimated effect is a reduction in capital requirements associated with a GSF of around €3-4bn based on baseline “green” definitions. In terms of cost of capital, the paper estimates a reduction of 5 to 26 basis points for green projects (with inverse expected effects for a BP). In terms of availability of capital, analysing a BP suggests a potential reduction in lending to brown assets of up to 8 per cent.

Originality/value

The paper provides direct evidence, with the first quantitative analysis of the potential impact of the current policy proposition discussed at EU-level.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Open Access
Article
Publication date: 22 November 2019

Jakob Thomä, Michael Hayne, Nikolaus Hagedorn, Clare Murray and Rebecca Grattage

To comply with the adopted Paris Agreement, global finance flows must be measured against climate scenarios consistent with possible pathways towards limiting global warming to…

1829

Abstract

Purpose

To comply with the adopted Paris Agreement, global finance flows must be measured against climate scenarios consistent with possible pathways towards limiting global warming to 2°C or less. For this, there must be proven and accepted accounting principles for assessing financial plans of climate relevant actors against climate models. As there are a variety of data sources describing the financial plans of relevant actors, these principles must accommodate a variety of reported information, while still yielding relevant metrics to different stakeholders. The paper aims to discuss these issues.

Design/methodology/approach

A set of accounting principles tested by governments, financial supervisory bodies and both institutional investors and mangers, covering global-listed equity and corporate bond investment is described.

Findings

The application illustrates that a common set of accounting principles can act across both asset classes and provide relevant metrics to multiple stakeholders.

Research limitations/implications

The principles require data of varying quality and are ultimately unverified. Thus, the definitive quality of the output metrics is uncertain and is yet to be characterized. The principles are yet to be applied to the credit market as the information is seldom publicly available, but it too plays an important role in the required market transition and therefore must be incorporated into these guiding principles of analysis.

Practical implications

The principles allow for standardised assessment of financial flows of equity and corporate debt with global climate scenarios.

Originality/value

It illustrates the acceptance of a common set of accounting principles that is relevant across different actors and asset classes and summarizes the principles underlying the first climate finance scenario analyses.

Details

Journal of Applied Accounting Research, vol. 20 no. 4
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 30 May 2023

Dario Aversa

Climate change has a direct impact on companies. Therefore, the scenario analysis is used to provide companies and stakeholders in this specific sector with forward-looking…

Abstract

Purpose

Climate change has a direct impact on companies. Therefore, the scenario analysis is used to provide companies and stakeholders in this specific sector with forward-looking measures and narratives of the world's future state. This work aims to provide an independent, wide and rigorous literature review on the topics of scenario analysis and climate change, analyzing a large set of referred papers included in economic journals on the Web of Science Clarivate Analytics data source. This review, by means of a mixed approach, can help address new policy strategies and business models.

Design/methodology/approach

The work employs 416 abstracts and relative titles in the field of economics, employing data mining for qualitative variables and performing descriptive statistics and lexicometric measures, similarity analysis and clustering with Reinert's hierarchical method in order to extract knowledge. Furthermore, qualitative content analysis allows for the return of a comprehensive and complete universe of meaning, as well as the analysis of co-occurences.

Findings

Content analysis reveals three main classification clusters and four unknown patterns: model area, risks, emissions and energy and carbon pricing, indicating research directions and limitations through an overview with an extensive reference bibliography. In the research, the prevalent use of quantitative instruments and their limitations emerge, while qualitative instruments are residual for climate change assessment; they also highlight the centrality of transition risk over adaptation measures and the combination of different types of instruments with reference to carbon pricing.

Originality/value

Scenario analysis is a relatively new topic in economics and finance research, and it is under-investigated by the academy. The analysis combines quantitative and qualitative research using text analytics.

Details

British Food Journal, vol. 126 no. 1
Type: Research Article
ISSN: 0007-070X

Keywords

Article
Publication date: 26 October 2021

Ina Eileen Peukes, Pomponi Francesco and Bernardino D'Amico

Operational energy use in buildings accounts for 28% of global energy demand. One method to reduce operational energy is upgrading old appliances to more efficient ones. In…

Abstract

Purpose

Operational energy use in buildings accounts for 28% of global energy demand. One method to reduce operational energy is upgrading old appliances to more efficient ones. In Australia, the most common residential heating type is reverse-cycle heating, followed by gas heating. This article aims to determine the energy balance resulting from a gas heating upgrade through a life cycle assessment (LCA).

Design/methodology/approach

Extensive primary data were collected for operational energy performance of 61 ducted gas heating upgrades. To address the scarcity of data on material composition, one ducted gas heater was deconstructed and assessed in terms of material composition (types and weights). The comparison between embodied energy and operational energy savings allows us to establish whether operational energy savings offset the embodied energy incurred with the upgrade. The end of life stage of the old appliance, as well as the production, construction and use stage of the new appliance were assessed.

Findings

The results show that the operational energy savings offset the following impact categories: global warming, ozone layer depletion, aquatic acidification, nonrenewable energy and carcinogens. Only the mineral extraction is not offset by the operational energy savings. The results clearly demonstrate that operational energy savings outweigh the embodied energy and therefore contribute positively to the environment.

Originality/value

This study is the first to focus on the LCA of building services through extensive primary data collection and a focus on a high number of appliances. This supports ongoing energy efficient upgrades in Australia and paves the way for further, similar studies to confirm or disprove these findings in other parts of the world.

Details

International Journal of Building Pathology and Adaptation, vol. 41 no. 1
Type: Research Article
ISSN: 2398-4708

Keywords

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