• Energy Research
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The optimal response to a potential productivity shock which becomes more imminent with global warming is to have carbon taxes to curb the risk of a calamity and to accumulate precautionary capital to facilitate smoothing of consumption. This paper investigates how differences between regions in terms of their vulnerability to climate change and their stage of development affect the cooperative and non-cooperative responses to this aspect of climate change. It is shown that the cooperative response to these stochastic tipping points requires converging carbon taxes for developing and developed regions. The non-cooperative response leads to a bit more precautionary saving and diverging carbon taxes. We illustrate the various outcomes with a simple stylized North–South model of the global economy.

Environmental, Social and Governance (ESG) rating agencies have been instrumental in mainstreaming sustainability in the investment industry. Traditionally, they have relied on company disclosure and human analysis to produce their ratings. More recently however, technological innovation in data scraping and Artificial Intelligence (AI) have undercut the traditional approach. Tech-driven Alternative ESG ratings are becoming increasingly influential yet remain critically underexplored in sustainable finance scholarship. Grounded within financial geography and using mixed methods, this paper fills this gap by comparing a set of Traditional ratings, sourced from MSCI ESG, with an Alternative AI-based set of ESG ratings sourced from Truvalue Labs. Our results expand upon recent research on ESG ratings by shedding new light on low commensurability between Traditional and Alternative ESG ratings. Specifically, we show that differences in ratings are driven by four main factors: differences in ESG theorisation based on key issue selection, differences in data sources analysed, differences in weighting structures for rating aggregation, and finally differences in controversy analysis. Our findings are contextualised using participatory observations collected during fieldwork at a leading asset manager in the City of London. Overall, we show that the advantages of Alternative ESG ratings include higher levels of standardisation, a transparent ‘outside-in’ perspective on ratings, a more democratic aggregation process, and rigorous real-time analytics. We argue that these characteristics reflect a geographic reconfiguration of ESG rating construction, expanding from financial agglomerations to technological and digital spaces of innovation. While Alternative ESG ratings make major promises on how technology can reform sustainable investing, we recognise that risks remain.

Although sustainable responsible investing (SRI) has increasingly become popular on the financial markets, the potential of raising capital from private investors for sustainable development has not been efficiently seized thus far. The lack of knowledge and training about SRI by financial advisors has often been identified as one of the main reasons for this investment gap. In order to accelerate the role of financial advisors as change agents for SRI, this study proposes several strategic communication interventions that advisors could employ in their advisory talks to raise more attention and engagement among private investors for SRI. The interventions proposed are oriented on the 5A model of SRI decision making by Herwig Pilaj and drawn from an interdisciplinary literature review on sustainability, communication, and attitudinal and behavioral change. The results provide a perspective and practical guide for financial advisors on how to effectively communicate SRI to private investors. Limitations and areas future research are discussed.

AbstractGiven current limitations of global and national governance arrangements in redirecting economic globalisation towards a climate-safe and sustainable world, it is crucial to understand how organisations that aim to tackle social and environmental problems using market mechanisms can contribute to fostering sustainability transformations. This review identified 60 different terms or concepts for hybrid organisations aiming to solve social and ecological problems through market related activities, reflecting a high degree of discontinuity and inconsistency in the literature. To assess the contribution to societal transformations of this array of innovative ventures, we introduce and operationalise Sustainability-Oriented Hybrid Organisations (SOHOs) as an umbrella concept to carry out a comprehensive review of 126 scientific articles that discuss them. Unlike traditional enterprises who apply one logic (commercial) and social and environmental enterprises who combine two logics (social–commercial or environmental–commercial), SOHOs unite commercial, social, and environmental logics, beliefs, and practices simultaneously—thereby adopting a higher level of organisational hybridity. SOHOs are oriented towards achieving net-positive sustainability and consider future generations and global socio-ecological systems which makes transforming enterprises towards SOHO models a potentially significant intervention point for promoting sustainability transformations. However, the narratives and actions of SOHOs can perpetuate rather than ameliorate the underlying causes and differential impacts of complex problems like climate change, unless the organisations adopt systemic, global, long-term, and socio-ecologically embedded strategies.

In this paper, we present a simplistic dynamic model to analyze the tradeoff between the use of environment-friendly energy and the use of environment-polluting energy in a dynamic world characterized by players that have different interests. Our approach builds upon a neoclassical growth model, integrating different economies, and including pollution as a separate growth factor. The model is cast in a differential game framework with the open-loop information structure. In this setting, we analyze the impact of pollution over time on the fossil fuel/“green” energy ratio. Furthermore, based on a simulation study for the linearized model, we consider the question whether certain cooperative arrangements between countries having different interests can be expected in case pollution shocks occur.

A rapidly rising carbon tax leads to faster extraction of fossil fuels and accelerates global warming. We analyze how general equilibrium effects operating through the international capital market affect this Green Paradox. In a two-region, two-period world with identical homothetic preferences and without investment, the global interest rate falls and the Green Paradox weakens. With investment or a relatively more impatient oil-importing region, the Green Paradox may be strengthened because the future oil demand function shifts downward or because the interest rate rises. If the oil-importing region is very much more patient than the oil-exporting region, the Green Paradox may be reversed but in our calibrated model the effects are tiny. With exploration and endogenous initial oil reserves, a future carbon tax lowers cumulative oil extraction in partial equilibrium. If the boost to current oil extraction is weakened, strengthened or reversed in general equilibrium, so is the fall in cumulative extraction. A partial and general equilibrium welfare analysis of a future carbon tax, both for full and partial exhaustion, is given. The effects of stock-dependent extraction costs are separately discussed in an Appendix.

AbstractWe examine natural disasters and long‐run climatic factors as potential determinants of international migration, implementing a panel dataset of bilateral migration flows from 1960 to 2000. We find no direct effect of long‐run climatic factors on international migration across our entire sample. These results are robust when conditioning on origin‐country characteristics, when considering migrants returning home, and when accounting for the potential endogeneity of migrant networks. Rather, we find evidence of indirect effects of environmental factors operating through wages. We find that epidemics and miscellaneous incidents spur international migration, and there is strong evidence that natural disasters beget greater flows of migrants to urban environs.