Climate Finance

There are two main approaches to climate finance: climate investment, which involves investing money in companies with low carbon footprint or those that actively address the climate crisis, both for reasons of societal benefit and because these are widely expected to be good investments in the long term, and climate analytics, which aims to quantify the expected financial impacts of climate change, thereby incentivizing investors and companies to act. ML can help on both of these fronts, on the one hand by in designing portfolios and in timing investments for positive reinforcement of climate-positive investment, and on the other, by helping forecast prices in carbon markets, identifying climate risks and investment opportunities, and quantifying the monetary impact of climate change on supply and demand by using data-based approaches.

Data

Datasets are fairly limited in terms of data quantity (i.e. no single dataset would be enough to implement an ML system), but merging different sources of data together can yield interesting insights. Some promising data sources include:

• United Nations Framework Convention on Climate Change (UNFCCC) Climate Finance Data Portal: this website aims to assemble data on the implementation of adaptation and mitigation projects and other activities under the United Nations Framework Convention on Climate Change.
• OECD Development finance data: includes high level overviews on developmental statistics, as well as country and sector specific data. Y
• Global Financial Development Database: an extensive dataset of financial system characteristics for 214 economies.
• Inter-American Development Bank Climate Finance 2017 Dataset: the IDB publishes its reported climate finance on a project-level, disaggregated basis for all public sector activity, and on an aggregated basis for all private sector activity.
• Electronic Data Gathering, Analysis and Retrieval (EDGAR): the electronic filing system created by the Securities and Exchange Commission for corporate filings, which can be queried by company, by year and by sector in PDF format.

Methods and Software

• ClimateScope: a country-by-country assessment that provides an interactive report and index indicating suitability for climate-related investment.
• Renewable Energy (RE) Data Explorer: a platform created to inform vital renewable energy investment and deployment decisions.

Recommended Readings

Readings

• Boissinot, J., et al., Finance and climate: The transition to a low-carbon and climate-resilient economy from a financial sector perspective. (2016)
• Battiston, B., et al., A climate stress-test of the financial system. (2017)
• Campiglio, E. Climate change challenges for central banks and financial regulators (2018)

Online courses

• World Bank Group - Climate Finance: Innovative Approaches in Supporting Climate Action: this online course summarizes the tested knowledge and practices in climate finance from different development partners.
• Imperial College London - Climate Change: Financial Risks and Opportunities: this course does a deep dive on the risks and opportunities that climate change presents to financial markets,
• UN Climate Change E-Learn - Introduction to Sustainable Finance: a high-level interactive and practice-oriented course that covers the basics of Sustainable Finance.

Community

Societies and organizations

• Task Force on Climate-related Financial Disclosures
• Climate Policy Initiative
• OECD Center on Green Finance and Investment