Addressing climate-related risks to the financial sector will require transparency requirements to combat greenwashing, clear policy guidance and data sharing, and rapid scaling of finance to the best low-carbon investments. Those were some of the takeaway messages at the first-ever “Global Climate Finance and Risks” conference, held October 25 at Cornell University and online. 

Over 1,200 people from 49 countries registered to participate in the virtual conference, jointly hosted by the Cornell Atkinson Center for Sustainability, the Cornell SC Johnson College of Business, and the U.S. Treasury’s Office of Financial Research (OFR). 

“This collaboration with OFR galvanizes our mutual dedication to advancing policies and strategies for scaling climate finance responsibly,” said Andrew Karolyi, the Charles Field Knight Dean of Cornell SC Johnson. “We envision these discussions as a catalyst for connecting groundbreaking ideas and establishing fruitful partnerships that transform research into tangible action.” 

“Climate finance at scale is not just equitable, but also in our economic interest,” said Alissa M. Kleinnijenhuis, visiting assistant professor of finance at Cornell SC Johnson, and conference co-chair. 

Keynote speakers included Treasury Secretary Janet Yellen; Johan Rockström, director of the Potsdam Institute for Climate Impact Research; Robert Litterman, founding partner of Kepos Capital LP; Eric Usher, head of the UN Environment Programme; and Mark Carney, UN Special Envoy for Climate Action and co-chair for the Glasgow Finance Alliance for Net Zero. 

Climate change breaking planetary boundaries, jeopardizing economies

Climate change is already jeopardizing financial stability, Yellen said. For example, the increase in frequency and severity of natural disasters has led private property insurers to raise rates or even leave high-risk areas entirely, with significant impacts on homeowners and prospective homeowners – most lenders will not offer mortgages without property insurance. 

“The impacts of climate change don't stop at national borders. It damages infrastructure around the world, affecting the availability and prices of energy and agricultural products, and poses challenges to peace and financial stability,” Yellen said. “Our global economic future depends on addressing climate change and all of those represented at this conference have a role to play.”

Rockström, an internationally recognized expert in global sustainability issues, is perhaps best known for his work developing the planetary boundaries framework. That framework describes the limits of human pressure on processes like ocean acidification and land-system change, within which Earth systems can remain stable and resilient. As of 2023, six of nine planetary boundaries have been breached. 

“We now have unequivocal scientific evidence that we are moving faster than expected toward unsustainable climate impacts,” Rockström said. “Up until 2014, we had a linear rise in temperature, which has led all the policymaking on climate change. But we’re starting to see the first signs of an increased rate of warming. From 2014 on, we see the first trend of earth losing resilience.”

Seeking collaborative, effective solutions

Throughout the day-long conference, panels of experts from academia, finance, non-profit organizations and government discussed strategies to support climate mitigation finance. 

Litterman retired from a career at Goldman Sachs 15 years ago to focus on the problem of accurately pricing climate-related financial risks. He referenced a 2022 International Monetary Fund report which found that globally, governments provide $7 trillion in fossil fuel subsidies – 40% as explicit subsidy and 60% from not requiring fossil fuel companies to account for externalities (harm they cause but don’t pay to correct). 

“Expected damages today are exploding because of one simple reason: our delay in pricing carbon,” he said. “Investors don’t expect carbon to be priced and this limits innovation on clean energy and technology. The consequences for our progeny will be catastrophic if we don’t quickly slam the brakes on fossil fuel emissions.” 

Usher described progress among governments and financial institutions around adopting Environmental, Social and Governance (ESG) frameworks, which encourage institutions to invest with sustainability and other public goods in mind. The United Nations launched its Principles for Responsible Investment five years ago, and so far banks representing 54% of global assets have signed on, he said. 

“It’s not simply about reducing emissions, but about shifting capital investments toward renewable solutions,” Usher said. “Net zero is a global phenomena and global markets increasingly want to be part of the solution.”

Markets and partnerships are powerful climate tools

Carney is also chair of Brookfield Asset Management and previously served as the governor of the Bank of England and governor of the Bank of Canada. He emphasized the importance of public policy in driving “a virtuous investment cycle”: Credible and predictable climate policies provide certainty for investors, which drives innovation, spurs growth and accelerates the net-zero transition. 

“Markets are the most powerful instrument we’ve created, but markets can also be blind to what societies need,” Carney said. “When society sets a clear goal, such as the transition to net zero, it becomes profitable to become part of the solution and costly to be part of the problem. Finance is a catalyst, but it has to be led by citizens and governments.”

Alan Martinez, lead for Climate and Nature Finance on the Strategic Partnerships team at Cornell Atkinson, said one of the primary goals of the conference was to identify and nurture research-to-action collaborations among diverse stakeholders. The upcoming UN Conference of the Parties (COP) 29 in Baku is being called the “finance COP” because of its expected emphasis on global climate finance policy. Leadership by Cornell and the U.S. Treasury in bringing together stakeholders across 49 countries before COP 29 will support those efforts, he said. 

“The conversations at this conference have set the stage for what must be an active, sustained effort in global climate finance,” Martinez said. “We encourage every participant to join us, as this work demands collaboration across sectors and borders. Together, we can choose to push forward, innovate, and ultimately secure a more sustainable future.”

Watch session videos, explore conference insights, and learn about future events by visiting Cornell Global Climate Finance and Risks.

Krisy Gashler is a freelance writer for Cornell Atkinson.