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Featured Papers in Climate Finance
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Featured Papers in Climate Finance

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: 30 November 2025 | Viewed by 8325

Special Issue Editors

Prof. Dr. Christopher Gan

E-Mail Website
Guest Editor
Department of Financial and Business Systems, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7467, New Zealand
Interests: commercial banking; micro-finance; rural finance; development economics; financial economics; Asian economy; banking; digital finance; cyber risk and cyber fraud
Special Issues, Collections and Topics in MDPI journals
Dr. Linh Ho

E-Mail Website
Guest Editor
Department of Financial and Business Systems, Faculty of Agribusiness & Commerce, Lincoln University, Christchurch 7647, New Zealand
Interests: green finance; FinTech; sustainable investment; AI adoption in firms
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

Countries are working hard to reduce global warming to meet the Paris Agreement’s temperature limit to 1.5 °C-aligned targets. However, the State of Climate Action 2023 (World Resources Institute, 2023) urgently alarmed that global efforts are falling behind the required pace to minimize climate risks. Governments have passed environmental legislations/regulations to protect the environment; however, this is not quick enough to achieve the 1.5 °C-aligned targets. The Task Force on Climate-Related Financial Disclosures (TCFD) proposed a framework for disclosing climate-related financial information in June 2017 (TCFD, 2017). Recently, a few countries such as New Zealand, Switzerland, and Japan have passed climate-related disclosure (CRD) regulations that mandate firms to disclose climate-related information in line with the TCFD recommendations. Following this lead, other countries are issuing consultation papers to make CRD mandatory (for example, Australia, Singapore, and the US). It is important to understand how the CRD regulations affect the socio-economic-environmental dynamics, investor and business sentiment, and other market factors.

Based on this sphere, this Special Issue highlights the “Climate-related Risks and Opportunities towards Zero-emission Economies”, focusing on how the socio-economic dynamics, including business and finance, are impacted by climate-related risks in the transition process towards a greener economy. This Special Issue targets all studies using theoretical, empirical, and case study approaches. The possible topics include, but are not limited to, the following:

  • Circular economy;
  • Climate-related disclosure/reporting;
  • Climate-related macroeconomic risks;
  • Climate-related transition risks;
  • Climate-related financial risks;
  • Climate and green investments;
  • Decarbonizing energy and industry;
  • Eco-tourism;
  • Energy, economy, and climate relations;
  • Environmental social governance;
  • Environmental risks;
  • Global greenhouse gas emissions;
  • Green finance;
  • Green transition;
  • Low-carbon energy.

Prof. Dr. Christopher Gan
Dr. Linh Ho
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • climate-related disclosure (CRD)
  • climate reporting
  • climate risk
  • low-emission economy

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Further information on MDPI's Special Issue policies can be found here.

Published Papers (7 papers)

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Research

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16 pages, 526 KiB  
Article
Greenhouse Gas Emissions and the Financial Stability of Insurance Companies
by Silvia Bressan
J. Risk Financial Manag. 2025, 18(8), 411; https://doi.org/10.3390/jrfm18080411 - 25 Jul 2025
Viewed by 447
Abstract
The recent losses and damages due to climate change have destabilized the insurance industry. As global warming is one of the most critical aspects of climate change, it is essential to investigate to what extent greenhouse gas emissions affect the financial stability of [...] Read more.
The recent losses and damages due to climate change have destabilized the insurance industry. As global warming is one of the most critical aspects of climate change, it is essential to investigate to what extent greenhouse gas emissions affect the financial stability of insurers. Insurers typically do not emit substantial greenhouse gases directly, while their underwriting and investment activities play a substantial role in enabling companies that do. This article uses panel data regressions to analyze companies in all insurance segments and in all geographic regions of the world from 2004 to 2023. The main finding is that insurers that increase their greenhouse gas emissions become financially unstable. This result is consistent in all three scopes (scope 1, scope 2, and scope 3) of emissions. Furthermore, the findings reveal that this impact is related to reserves and reinsurance. Specifically, reserves increase with greenhouse gas emissions, while premiums ceded to reinsurers decline. Thus, high-emissions insurers retain a significant share of carbon risk and eventually become financially weak. The results encourage several policy recommendations, highlighting the need for instruments that improve the assessment and disclosure of insurers’ carbon footprints. This is crucial to achieving environmental targets and improving the stability of both the insurance market and the economic system. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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31 pages, 6172 KiB  
Article
Shipping Decarbonisation: Financial and Business Strategies for UK Shipowners
by Eleni I. Avaritsioti
J. Risk Financial Manag. 2025, 18(7), 391; https://doi.org/10.3390/jrfm18070391 - 16 Jul 2025
Cited by 1 | Viewed by 514
Abstract
The maritime sector faces urgent decarbonisation pressures due to regulatory instruments, such as the International Maritime Organization’s (IMO) Carbon Intensity Indicator (CII), which mandates reductions in greenhouse gas emissions per transport work. This paper investigates the challenge of identifying CII-compliant strategies that are [...] Read more.
The maritime sector faces urgent decarbonisation pressures due to regulatory instruments, such as the International Maritime Organization’s (IMO) Carbon Intensity Indicator (CII), which mandates reductions in greenhouse gas emissions per transport work. This paper investigates the challenge of identifying CII-compliant strategies that are also financially viable for UK shipowners. To address this, operational and technical data from UK-flagged vessels over 5000 GT are analysed using a capital budgeting framework. This includes scenario-based evaluation of speed reduction, payload limitation, and retrofitting with dual-fuel LNG and methanol engines. The analysis integrates carbon taxation, and pilot fuel use to assess impacts on emissions and profitability. The findings reveal that while the short-term operational measures examined offer modest gains, long-term compliance and financial performance are best achieved through targeted retrofitting supported by carbon taxes and favourable market conditions. The study provides actionable insights for shipowners and policymakers seeking to align commercial viability with regulatory obligations under the evolving CII framework. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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18 pages, 296 KiB  
Article
How Does Climate Finance Affect the Ease of Doing Business in Recipient Countries?
by Monica Kabutey, Solomon Nborkan Nakouwo and John Taden
J. Risk Financial Manag. 2025, 18(5), 263; https://doi.org/10.3390/jrfm18050263 - 13 May 2025
Viewed by 911
Abstract
Developing countries face a disproportionate degree of threat from climate change. As such, they require and receive significant financial support to address the menace. However, little is known about the potential externalities of this form of external liquidity for the business sector. This [...] Read more.
Developing countries face a disproportionate degree of threat from climate change. As such, they require and receive significant financial support to address the menace. However, little is known about the potential externalities of this form of external liquidity for the business sector. This paper evaluates the impact of climate finance on the ease of doing business (EODB). On the one hand, climate finance might lead to an improved business environment as the funds facilitate infrastructure provision, technological innovation, and international collaboration for recipient countries. On the other hand, however, the business environment might be negatively impacted by complex new regulations, disruptive technological transitions, market distortions, and resource diversions. Countries receiving climate funds may also introduce new environmental and business regulations, implement new technologies, and divert resources to new programs to justify the receipt of aid or demonstrate a commitment to balancing economic development with environmental objectives. We theorize that given the expected disruptions to business, climate finance should negatively impact the EODB. We also argue that this negative impact will be more severe for resource-rich countries than for their resource-poor peers. Countries rich in natural resources might experience higher disruptions to business operations as they attempt to balance resource-dependent economic operations with environmental objectives mandated by climate finance. Utilizing panel data for 86 recipient countries for the 2002–2021 period, we test our hypotheses using the Generalized Methods of Moments (GMM) technique. The baseline results suggest that climate finance has a weak positive impact on the EODB. However, as argued, resource-dependence heterogeneity analysis reveals that climate finance significantly negatively disrupts the EODB in resource-rich countries. Furthermore, a sectoral comparative analysis shows that while climate finance has a significant positive impact on the growth of the service sector, it significantly slows the growth of the resource sector, affirming the argument that climate finance might attract higher disruptions to resource-dependent business operations. By implication, lowly diversified economies might realize more negative than positive effects of climate finance, and investors should consider providing support to ease the pains of transitioning from resource-intensive growth to clean energy-driven development strategies. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
19 pages, 5527 KiB  
Article
Economic Viability and Flexibility of the South Pasopati Coal Project, Indonesia: A Real Options Approach Under Market Volatility and Carbon Pricing
by Teguh Trijayanto and Dzikri Firmansyah Hakam
J. Risk Financial Manag. 2025, 18(5), 225; https://doi.org/10.3390/jrfm18050225 - 23 Apr 2025
Viewed by 785
Abstract
This study evaluates the economic viability of the South Pasopati Coal Project in Indonesia, addressing market volatility, carbon pricing policies, and the country’s energy transition towards Net Zero Emissions (NZE). Given Indonesia’s reliance on coal and the increasing global shift toward renewable energy, [...] Read more.
This study evaluates the economic viability of the South Pasopati Coal Project in Indonesia, addressing market volatility, carbon pricing policies, and the country’s energy transition towards Net Zero Emissions (NZE). Given Indonesia’s reliance on coal and the increasing global shift toward renewable energy, traditional valuation methods such as Discounted Cash Flow (DCF) may not adequately capture uncertainty and strategic flexibility. The study applies Real Options Valuation (ROV), integrating Monte Carlo Simulation (MCS) and Binomial Lattice Modeling, to assess project feasibility under various scenarios. The research compares three valuation scenarios: the base scenario (eastern route), an alternative scenario (western route), and a carbon pricing scenario. Results indicate that while the DCF method estimates a positive Net Present Value (NPV) for the base scenario, it fails to incorporate price volatility risks. The ROV method, however, captures managerial flexibility and provides a more robust valuation, showing an Expanded NPV (ENPV) that better reflects market uncertainties. Findings suggest that implementing ROV improves decision-making, particularly in volatile markets. The study underscores the necessity for Indonesia to adopt more flexible valuation frameworks to enhance investment decisions in the coal sector while aligning with international environmental standards. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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20 pages, 917 KiB  
Article
The Impact of Financial Development, Foreign Direct Investment, and Trade Openness on Carbon Dioxide Emissions in Jordan: An ARDL and VECM Analysis Approach
by Jamal Alnsour, Abdullah Radwan Arabeyyat, Ahmad Jamal Alnsour and Nashat Ali Almasria
J. Risk Financial Manag. 2024, 17(11), 490; https://doi.org/10.3390/jrfm17110490 - 31 Oct 2024
Cited by 4 | Viewed by 2294
Abstract
Jordan has made substantial strides in enhancing its economy by focusing on economic growth stimulants, which include financial development, foreign direct investment (FDI), and trade openness. However, these economic activities often lead to significant environmental risks. Despite their relevance, the existing literature has [...] Read more.
Jordan has made substantial strides in enhancing its economy by focusing on economic growth stimulants, which include financial development, foreign direct investment (FDI), and trade openness. However, these economic activities often lead to significant environmental risks. Despite their relevance, the existing literature has rarely examined the influence of these dynamics on environmental quality in the Middle East, particularly in Jordan. This study aims to investigate the influence of financial development, FDI, and trade openness on carbon dioxide (CO2) emissions in Jordan. To achieve this, the study employs the Autoregressive Distributed Lag (ARDL) technique and the Vector Error Correction Model (VECM) Granger causality approach, utilizing data sourced from the World Bank for the period from 1990 to 2022. The findings indicate that financial development, FDI, and trade openness positively impact CO2 emissions, thereby increasing environmental risks in both the short and long term. Additionally, there exists a bidirectional causal relationship between financial development and both FDI and trade openness, as well as between FDI and trade openness. It is imperative for Jordan to design strategies that balance economic growth with sustainable environmental practices. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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Review

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19 pages, 1451 KiB  
Review
Climate-Related Regulations and Financial Markets: A Meta-Analytic Literature Review
by Linh Tu Ho, Christopher Gan and Zhenzhen Zhao
J. Risk Financial Manag. 2024, 17(9), 398; https://doi.org/10.3390/jrfm17090398 - 5 Sep 2024
Viewed by 1787
Abstract
Countries are confronting climate change using climate-related regulations that require firms and investors to disclose their green strategies and activities. Using the Meta-Analysis Structural Equation Modeling (MASEM) technique, this study evaluates the relationship between climate-related regulations and financial markets. The meta-regression analysis is [...] Read more.
Countries are confronting climate change using climate-related regulations that require firms and investors to disclose their green strategies and activities. Using the Meta-Analysis Structural Equation Modeling (MASEM) technique, this study evaluates the relationship between climate-related regulations and financial markets. The meta-regression analysis is conducted based on the outcomes of 52 empirical studies screened from 143 relevant articles. The results show the predictive power of the climate-related disclosure (CRD) laws and environmental regulations (ERs) on financial performance across all studies. ERs create mixed impacts on the equity market and support the debt market. Firm value is affected by ERs either negatively or positively. Methodologies and risk-related factors (market, industry, and firm risks) are important in explaining the relationships between ER/CRD and financial performance. The more developed the market, the less the impact of ERs and CRD on the equity market. Considering industry risk is recommended because different industries are exposed to changes in policies differently. The ER/CRD–firm value relationship is affected by all market, industry, and firm risks. The downside effect of mandatory CRD on the equity market suggests that policy makers, firms, and investors should be cautious in passing a new CRD regulation for transformation towards a sustainable economy. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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Other

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22 pages, 1813 KiB  
Systematic Review
The Role of Financial Stability in Mitigating Climate Risk: A Bibliometric and Literature Analysis
by Ranila Suciati
J. Risk Financial Manag. 2025, 18(8), 428; https://doi.org/10.3390/jrfm18080428 - 1 Aug 2025
Viewed by 519
Abstract
This study provides a comprehensive synthesis of climate risk and financial stability literature through a systematic review and bibliometric analysis of 174 Scopus-indexed publications from 1988 to 2024. Publications increased by 500% from 1988 to 2019, indicating growing research interest following the 2015 [...] Read more.
This study provides a comprehensive synthesis of climate risk and financial stability literature through a systematic review and bibliometric analysis of 174 Scopus-indexed publications from 1988 to 2024. Publications increased by 500% from 1988 to 2019, indicating growing research interest following the 2015 Paris Agreement. It explores how physical and transition climate risks affect financial markets, asset pricing, financial regulation, and long-term sustainability. Common themes include macroprudential policy, climate disclosures, and environmental risk integration in financial management. Influential authors and key journals are identified, with keyword analysis showing strong links between “climate change”, “financial stability”, and “climate risk”. Various methodologies are used, including econometric modeling, panel data analysis, and policy review. The main finding indicates a shift toward integrated, risk-based financial frameworks and rising concern over systemic climate threats. Policy implications include the need for harmonized disclosures, ESG integration, and strengthened adaptation finance mechanisms. Full article
(This article belongs to the Special Issue Featured Papers in Climate Finance)
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