Interactions between financial and environmental networks in OECD countries

We analyse a multiplex of networks between OECD countries during the decade 2002-2010, which consists of five financial layers, given by foreign direct investment, equity securities, short-term, long-term and total debt securities, and five environmental layers, given by emissions of N O x, P M 10 SO 2, CO 2 equivalent and the water footprint associated with international trade. We present a new measure of cross-layer correlations between flows in different layers based on reciprocity. For the assessment of results, we implement a null model for this measure based on the exponential random graph theory. We find that short-term financial flows are more correlated with environmental flows than long-term investments. Moreover, the correlations between reverse financial and environmental flows (i.e. flows of different layers going in opposite directions) are generally stronger than correlations between synergic flows (flows going in the same direction). This suggests a trade-off between financial and environmental layers, where, more financialised countries display higher correlations between outgoing financial flows and incoming environmental flows from lower financialised countries, which could have important policy implications. Five countries are identified as hubs in this finance-environment multiplex: The United States, France, Germany, Belgium-Luxembourg and the United Kingdom.Comment: Supplementary Information provide

Energy and Environmental Flows:Do Most Financialised Countries within the Mediterranean Area Export Unsustainability?

The literature dedicated to the problems of transboundary pollution often aims to verify what the environmental and energy interactions between countries are. Little attention is paid to the financial relations of the phenomenon. We analyze how financial, environmental and energy flows have been redistributed within the main Mediterranean countries, with particular reference to pollution. Applying advanced methods of correlation, we verify the dynamics of transfer processes with the aim of assessing whether the link between economic and financial and environmental flows might support the hypothesis that rich countries export environmental emissions to poor ones. Our results show that richer countries have a significant propensity to export energy, financial flows and polluting emissions. The imbalance is even greater for emissions with local impact. This process is accompanied by a substantial increase in the financial activities of the North Mediterranean countries to the detriment of those of the South, which progressively increase their indebtedness. We find out that the economic and financial development of the North Med is accompanied by an increasing environmental impact measured by the various types of emissions covered by our study. The research shows how the most industrialized countries of the Mediterranean area are increasing the economic and financial gap with respect to the Southern Mediterranean countries

Corrigendum to “In the fight against climate change, did the financial sector cut secular ties with the oil industry or merely camouflage them?”

The authors regret &lt; To have inserted a wrong citation at page 5 for the report: Five Years Lost – How the Finance Industry is Blowing the Paris Carbonbudget. The correct source is Urgewald (2020). This mistake was signaled by the NGO Urgewald&gt;. The authors would like to apologise for any inconvenience caused. Correct reference: Urgewald, 2020. Five Years Lost Report: How Finance is Blowing the Pari Carbon Budget. Available at: https://www.urgewald.org/five-years-lost. Accessed on October 19, 2023.</p

In the fight against climate change, did the financial sector cut secular ties with the oil industry or merely camouflage them?

At a time when the links that bind the oil industry – both corporate and state-owned - to finance and governments seemed inextricable and unquestionable, some major changes have occurred that have prompted major financial players and governments to seek a separation strategy. From the Paris Agreement to the change of administration in the United States, the wind suddenly seems to be blowing in the opposite direction, and many banks change course. The UN-convened Net-Zero Banking Alliance (NZBA) is one prominent example of this new trend. However, banks are only one part of this complex and varied landscape of global finance, which, among institutional investors, includes investment funds, hedge funds, mutual funds, insurance funds, pension plans and ETFs (exchange-traded funds). Despite the promise to divest or reduce investments, global finance still holds profound ties with the fossil fuel sector. The high energy prices due to the war in the Ukraine and concerns over energy security are seemingly strengthening these ties. We provide an insight of the complexity of these interlinkages and explain to what extent the domain of public governance is trying to exert (still insufficient) control over the financial sector under the scope of climate mitigation policies.</p