Andrew Karolyi, author and catalyst in climate finance, discusses the inspiration behind tackling the 'wickedest of wicked problems'. They discuss the lack of interest among financial economists and how they kickstarted research in the field. The chapter also explores the growth and demand for climate finance, preservation of natural capital, and future discussions on green finance instruments.
Climate finance research was initially underrepresented in top journals, prompting Andrew and his colleagues to issue a call for papers and hold a competition to stimulate research in the field.
The emerging field of biodiversity finance presents greater challenges than climate finance, requiring creative thinking, innovative financing structures, and interdisciplinary collaboration.
Deep dives
The Origins of Climate Finance Research
The podcast episode explores the early days of researching finance's role in addressing climate change. The guest, Andrew Corioli-Joynous, discusses his interest in the topic and the lack of attention it initially received in financial economics. As the executive editor of the Review of Financial Studies, he received an invitation from the Prince of Wales to discuss why climate finance research was underrepresented in top journals. This prompted Andrew and his colleagues to issue a call for papers and hold a competition to stimulate research in the field. The response was overwhelming, leading to the publication of a special issue that kickstarted the field of climate finance.
Why Climate Finance is a 'Wicked Problem'
Andrew explains why climate finance is considered one of the most challenging and urgent problems society faces. He highlights the global impact of climate change and the need for financial economists to contribute to addressing the issue. This, he argues, requires grappling with the multiplicity of risks, the complexity of integrating those risks into pricing models, and the imperative to mobilize action and private capital. He emphasizes that climate finance is a vital and honorable pursuit, calling on fellow academics to recognize their role in driving change.
Extending the Research Frontier: Biodiversity Finance
The podcast moves on to discuss the emerging field of biodiversity finance. Andrew describes how his interest grew from conversations with colleagues and ecologists. He believes that biodiversity finance presents even greater challenges than climate finance, given the complex and interconnected risks involved. The discussion touches on the need for creative thinking, innovative financing structures, and the importance of research. Andrew and his co-editor issued a call for papers on biodiversity finance, and the response has been promising, with new papers emerging in the field over the past year.
The Paradox of Biodiversity Finance
The podcast delves into the paradox of biodiversity finance, which stems from the inherent difficulty of valuing and monetizing the preservation of natural capital, such as forests. Andrew discusses the need for interdisciplinary collaboration between finance scholars and experts in ecology and climate science. He highlights the potential of innovative financial instruments, such as blue bonds and rhino bonds, to drive action and preserve biodiversity. The episode concludes with a call for further research on pricing biodiversity-related risks and mobilizing private capital for conservation efforts.
In the brief history of climate finance, Andrew Karolyi has been one of the pioneers, both as an author and a catalyst to encourage other finance experts to become involved. He talks to Alissa Kleinnijenhuis and Tim Phillips about what inspired him to take on what he calls “the wickedest of wicked problems”, how he kickstarted research on the topic, and the little-known involvement of King Charles III in the genesis of climate finance.
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