Abstract
This study focuses on climate-related financial risks as a governance issue, which drives our attention to the quality of stakeholders’ interactions. The theoretical approach is undertaken through the institutional literature lens, along with the works of Rawls (1971, 2001) and Sen (1992, 2000, 2009), and contributions from the conceptions of co-creation and inclusive development. The applied analysis is carried out by connecting climate change to financial risks under a scenario of uncertainty (Bolton, Despres, Pereira da Silva, Samama, & Svartzman, 2020; TCFD, 2017; Daniel, Litterman, & Wagner, 2019; Carney, 2016; Maier et al., 2016; NGFS, 2018, 2019). The core objective of this study is to present a public policy proposal that aims to support effective international climate-related agreements, from a procedural perspective. To this end, we start by presenting an institution, which is broken down into three propositions. This process enables us to undertake a critical analysis from a technical and normative standpoint. The latter is based on Bush (1987). The main contribution of this study is the rationale underlying that the best set of policies to face climate change issues is that representing agents’ strong engagement and commitment. Finally, although the applied analysis focuses on climate change issues, the discussion conducted here can be reproduced in other areas.
Highlights
Discussions on climate-related financial risks have received increasing attention over the years
This study focuses on climate-related financial risks as a governance issue, which drives our attention to the quality of stakeholders‘ interactions
We argue that structural transformations in economic systems driven by climate change events, permeated with rapid technological innovations, should not be spurred by a top-down governance approach or through behavioural guidance established only by formal rules
Summary
Discussions on climate-related financial risks have received increasing attention over the years. In addition to the complexities related to combating climate change risks per se, there are reciprocal influences among technological, political, climate and economic arenas, which add a high level of uncertainty to future scenarios[1]. To address these issues from an international perspective, this study discusses climate-related financial risks through the lens of governance[3]. We consider the concepts of co-creation and inclusive development to support the applied approach. To this end, we retrieve the core theoretical approaches raised in this study from von Borowski Dodl (2020, 2021), in which the literature review was further developed. We undertake a similar methodology used by von Borowski Dodl (2021)
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