Call for research projects for the NBB Conference 2020

Climate change and the required transition to more efficient and sustainable energy usage poses many challenges for society as a whole. Central bankers and Supervisors of the financial system should take their responsibility in this process within their mandate and with the instruments that are available to them. In order to contribute to this process, a good understanding of the potential impact of climate change on the macroeconomy and the financial markets in particular is a necessary starting point. There is still enormous uncertainty associated with this process and the associated changes in policy, technology and sentiment. This creates risks and opportunities that affect many economic decisions and outcomes such as real and financial investments as well as consumption patterns. Financial stability might also be concerned if there would occur a prompt reassessment of the value of a large range of assets that creates unexpected credit exposures. Both theoretical and empirical research can provide insights how these risks and opportunities are priced in financial markets and how they affect macroeconomic outcomes. In order to support a timely and smooth transition to a more sustainable economy, financial authorities can help by stimulating disclosure on the environmental and climate impact of firms and investors, by encouraging financial institutions to integrate this information in their decisions and by eliminating any barriers and imperfections that can hinder the financing of the transition process.

The issue of financing a sustainable economy can thus be viewed from many angles.
The following non-exhaustive list of questions can be addressed at the conference:

(1) Climate change, economic impact and financial risk:

  • What is the expected impact on potential output and the growth rate of the economy? How will costs, risks and opportunities affect aggregate demand and supply conditions?
  • How is climate risk priced in financial assets and how does it affect portfolio choices?
  • Which firms and sectors are losing/benefiting from climate change?
  • How are real estate markets affected by climate change?
  • How do natural disaster events impact on borrower risk and the stability of the banking and insurance sector?
  • How to quantify the physical risks and the transition risk? What are the cost and benefits of being slow for long?
  • Assess risk and default of green/brown loans/bonds for underpinning a risk differential between such investment?
  • How is climate risk priced in economic models: what is the role of uncertainty, risk aversion and prudence, and how is risk allocated and concentrated among sectors?

(2) Financing the transition to a low-carbon economy:

  • Implications of the transition for investment and productivity in the short and long-run, what are the magnitudes of the financial flows involved and the implications for sectoral or geographical credit reallocation?
  • Who issues/invests in green financial assets? Pros and cons of sustainable financial assets compared to classical ones from an issuer/investor point of view? Are green investments crowding out other investments?
  • How can cost and benefits related to externalities be integrated in private and public project evaluation?
  • How to finance Research and Development on new technologies related to the transition towards green energy, energy efficiency and CO2 reduction?

(3) What role for monetary and prudential policy?

  • Map and critically assess specific tools that have been deployed by central banks/ supervisors or other relevant authorities to better reflect the risks for green/brown investments, and understand their micro-prudential risk implications;
  • What is the best practice and impact of disclosure of environmental and climate information (risk) by enterprises and financial institutions?
  • Should central banks incorporate climate related considerations in the implementation of monetary policy instruments, collateral evaluation, reserve and risk management?
  • How should supervisors integrate these considerations in implementation of instruments and requirements?

Proposals for research projects will be accepted up to 26 May. Acceptance or rejection of the proposed projects will be notified by 10 July 2019. The projects will start in June 2019 and culminate with the October 2020 conference at which the research findings will be presented. The selected projects will receive a financial support of € 30 000. Proposals and requests for further information should be sent to


The organising committee,

Olivier De Jonghe

Hans Dewachter

Pelin Ilbas

Brenda Van Tendeloo

Raf Wouters