Mark Buchanan, Stefano Battiston, Science strengthened banks — but how long will stability last? , In: Nature, 19 April 2023. (Media Coverage)
|
|
Redaktion, Stefano Battiston, Al via «Road to Trento 2023», Italia e Svizzera a confronto, In: L'Adigetto, 2 February 2023. (Media Coverage)
|
|
Redaktion, Stefano Battiston, La transizione ecologica tra finanza digitale e sfida energetica: se ne discute a Lugano con Ambasciata e Sole 24 Ore, In: aise, 1 February 2023. (Media Coverage)
|
|
Lucia Alessi, Stefano Battiston, Two sides of the same coin: Green Taxonomy alignment versus transition risk in financial portfolios, International Review of Financial Analysis, Vol. 84, 2022. (Journal Article)
We develop the first top-down method to estimate the greenness of financial portfolios, in terms of alignment to the EU Taxonomy for sustainable activities. We also develop a method to estimate, at the same time, the portfolio exposure to climate transition risk. We provide sector-level, standardized and transparent coefficients for both estimates, based on definitions of greenness and transition risk that are applicable across countries. We analyse the portfolios of Euro Area investors in 2022, based on the confidential Securities Holdings Statistics of the European Central Bank. We find that, overall, the greenness of Euro Area investors’ portfolios is lower than their exposure to transition risk (2.8% vs. 11.7%).
Across financial institutions, we estimate greenness and exposure to transition risk, respectively, at 3.2% and 12% for investment funds, at 0.8% and 5% for banks and at 4.8% and 15.1% for insurers. Our analysis also shows that investors with large amounts invested in green activities can have at the same time large exposures to transition risk. |
|
Redaktion, Stefano Battiston, Les nominés des Swiss Sustainable Funds Awards 2022 sont désignés, In: Allnews, 9 May 2022. (Media Coverage)
|
|
Redaktion, Stefano Battiston, Die Nominierten für die Swiss Sustainable Funds Awards 2022 stehen fest, In: Moneycab, 9 May 2022. (Media Coverage)
|
|
Robert Krcmar, Stefano Battiston, IPCC: per evitare un disastro climatico è «ora o mai più», In: Tio 20 Minuti, 4 April 2022. (Media Coverage)
|
|
Sven Titz, Stefano Battiston, Uno-Klimabericht: Die Emissionen steigen langsamer, und die Kosten für emissionsarme Technologien sinken – das reicht aber noch lange nicht, In: NZZ, 4 April 2022. (Media Coverage)
|
|
Stefano Battiston, Giacomo Bressan, Irene Monasterolo, Sustainable investing and climate transition risk: a portfolio rebalancing approach, The Journal of Portfolio Management, Vol. 48 (10), 2022. (Journal Article)
The authors study how greenness can be combined with other investment criteria to construct sets of corporate bonds portfolios with decreasing exposure to climate transition risk. They apply the methodology to the European Central Bank’s asset purchase program. They define a weaker market neutrality principle as investing proportionally to the bonds’ amount outstanding within Climate Policy Relevant Sectors. The portfolio rebalancing leads to a 10% reduction of exposure to climate transition risk. Then, the authors study the relation between bonds’ rebalancing and issuers’ Environmental, Social and Governance (ESG) characteristics and Greenhouse Gas (GHG) emissions. Bonds issued by firms with low (high) ESG risk and GHG emissions are more likely to be bought (sold) in the rebalancing. Finally, they analyse implications of portfolio rebalancing on financial markets finding that changes in yields would be limited to less than 80 basis points on individual bonds. The approach can contribute to inform climate-aware portfolio rebalancing and sustainable investment strategies. |
|
Alan Roncoroni, Stefano Battiston, Marco D'Errico, Grzegorz Hałaj, Christoffer Kok, Interconnected banks and systemically important exposures, Journal of Economic Dynamics and Control, Vol. 133, 2021. (Journal Article)
We study the impact of the interplay between the structure of the financial network and market conditions on financial stability in the European banking system. We capture two channels of financial contagion. The first channel concerns direct interconnectedness, via a network of interbank loans, banks’ loans to other corporate and retail clients, and securities holdings. The second channel concerns indirect interconnectedness, via overlapping exposures to common asset classes. To assess the impact of contagion, we apply the structural valuation model NEVA, in which common shocks to banks’ external assets are reflected in a consistent way in the market value of banks’ mutual liabilities through the network of obligations. Applying the model to a unique supervisory data set collected by the European Central Bank that covers 26 large banks in the euro area we identify a strongly non-linear relationship between diversification of exposures, shock size, and losses due to interbank contagion. We also demonstrate the potential for contagion effects to amplify first-round stress test results due to interconnectedness. Finally, we provide insights into the potential impact of more diversified versus more domestic portfolio allocation strategies on the propagation of contagion, which are relevant to policy discussions about international risk sharing, for instance, in the context of the EU Capital Market Union. |
|
Emmanuel Garessus, Stefano Battiston, Nous devons changer notre style de vie, In: Le Temps, 27 September 2021. (Media Coverage)
Le professeur Stefano Battiston, membre du GIEC, dénonce une finance durable qui s'appuie sur des critères établis par l'industrie financière elle-même. Il avertit qu'il ne suffit pas de mettre des labels sur la couleur des produits financiers. |
|
Marco Bardoscia, Paolo Barucca, Stefano Battiston, Fabio Caccioli, Giulio Cimini, Diego Garlaschelli, Fabio Saracco, Tiziano Squartini, Guido Caldarelli, The Physics of Financial Networks, Nature Reviews. Physics, Vol. 3, 2021. (Journal Article)
As the total value of the global financial market outgrew the value of the real economy, financial institutions created a global web of interactions that embodies systemic risks. Understanding these networks requires new theoretical approaches and new tools for quantitative analysis. Statistical physics contributed significantly to this challenge by developing new metrics and models for the study of financial network structure, dynamics, and stability and instability. In this Review, we introduce network representations originating from different financial relationships, including direct interactions such as loans, similarities such as co-ownership and higher-order relations such as contracts involving several parties (for example, credit default swaps) or multilayer connections (possibly extending to the real economy). We then review models of financial contagion capturing the diffusion and impact of shocks across each of these systems. We also discuss different notions of ‘equilibrium’ in economics and statistical physics, and how they lead to maximum entropy ensembles of graphs, providing tools for financial network inference and the identification of early-warning signals of system-wide instabilities. |
|
Redaktion, Stefano Battiston, Not without the big money, In: archyde, 13 June 2021. (Media Coverage)
Dealing with the climate crisis also depends on players in the financial markets, says a new study.
In their future scenarios, climate researchers have so far underestimated the dynamic role of the financial system. That is the quintessence of a study recently published in the journal Science. The scenarios for climate change influenced the markets and the actions of investors – but also vice versa. |
|
Stefano Battiston, Luis O L Escobar-Farfán, Serafin Martinez-Jaramillo, Alan Roncoroni, Climate risk and financial stability in the network of banks and investment funds, Journal of Financial Stability, Vol. 54, 2021. (Journal Article)
We analyze the effects on financial stability of the interplay between climate transition risk and market conditions, such as recovery rate and asset price volatility. To this end, we extend the framework of the climate stress-test of the financial system by including an ex-ante network valuation of financial assets which accounts for asset price volatility as well as for endogenous recovery rate on interbank assets. Moreover, we also consider the dynamics of indirect contagion of banks and investment funds, which are key players in the low carbon transition, via exposures to the same asset classes. We derive some analytical results and we apply the model to a unique supervisory dataset in a range of climate policy scenarios and market conditions. In the event of a disorderly low-carbon transition, stronger market conditions allow to reach more ambitious climate policies at the same level of financial risk. |
|
Stefano Battiston, Irene Monasterolo, Keywan Riahi, Bas J van Ruijven, Accounting for finance is key for climate mitigation pathways, Science, Vol. 372 (6545), 2021. (Journal Article)
The financial system-the ecosystem of investors (e.g., banks, investment funds, insurance), markets, and instruments-is often considered to play an enabling role in climate mitigation pathways to a low-carbon transition (1). But it can also have a hampering role, e.g., if investors' perceptions of low risk from a missed transition and low opportunities from a transition fail to trigger a reallocation of capital into low-carbon investments. This increases the chance of the transition not occurring within the time window required to stabilize the climate or occurring in a disorderly fashion. Indeed investors, who can influence the realization of climate mitigation pathways, themselves rely on estimates of climate mitigation pathways from process-based integrated assessment models (IAMs) (2). And IAMs do not model the financial system or investors' decisions; thus, the feedback loop between the financial system and mitigation pathways is not taken into account, neither by the IAMs nor by the finance community. This limitation to our understanding of the dynamics and the feasibility of the low-carbon transition weakens the ability of IAMs to inform policy and investment decisions. We propose a framework to capture the interdependence between investors' perception of future climate risk, depending on the credibility of climate policies, and the allocation of investments in the economy. |
|
Redaktion, Stefano Battiston, Finanzsystem fehlt in bisherigen Klimaschutzszenarien, In: Solarify, 27 May 2021. (Media Coverage)
|
|
Stefano Battiston, Irene Monasterolo, Le système financier peut faire pencher la dynamique de la transition écologique d’un côté ou de l’autre, In: Le Monde, p. online, 26 May 2021. (Newspaper Article)
Les deux économistes Stefano Battiston et Irene Monasterolo observent, dans une tribune au « Monde », que les anticipations des investisseurs peuvent aussi aller contre l’objectif de limitation du réchauffement climatique |
|
Redaktion, Stefano Battiston, Missing Role Of Finance In Climate Mitigation Scenarios, In: eurasiareview, 26 May 2021. (Media Coverage)
Researchers at the University of Zurich show how climate mitigation scenarios can be improved by taking into account that the financial system can play both an enabling or a hampering role on the path to a sustainable economic system. |
|
Redaktion, Stefano Battiston, Finanzsystem fehlt in bisherigen Klimaschutzszenarien, In: alphagalileo.org, 26 May 2021. (Media Coverage)
Die bisher verwendeten Klimaschutzszenarien vernachlässigen die dynamische Rolle des Finanzsystems. Erst die Einbindung der Finanzmärkte zeigt laut Forschenden der Universität Zürich, dass das Finanzsystem sowohl eine ermächtigende als auch eine hemmende Rolle auf dem Weg zu einem nachhaltigen Wirtschaftssystem spielen kann. |
|
Stefano Battiston, Irene Monasterolo, Transizione ecologica e rischio finanziario: il ruolo chiave delle aspettative, In: Il Sole 24 Ore, p. online, 24 May 2021. (Newspaper Article)
|
|