International Economics

<< N°169

  N°169  
Issue Q2 2022  
Mapping the emergence and diffusion of climate-related financial policies: Evidence from a cluster analysis on G20 countries  
Paola D'Orazio
 

Although the awareness about the climate-related financial risks and the need to scale up green finance is widespread globally, engagement in “active” climate-related financial policymaking varies across countries. Despite the progress in understanding the types of policies available at the country level, our knowledge of which factors influence the decision to adopt climate-related financial policies remains limited. This paper proposes an empirical analysis of the climate-related financial policy experiences of G20 countries as they are responsible for roughly 80 percent of global energy use and CO2 emissions. The cluster analysis considering the period from 2000 to 2018 shows some interesting results. First, the economy's carbon intensity and exposure to climate change matter, but the policy response to these factors is heterogeneous across clusters. Second, climate strategies and fiscal instruments are relevant only for first-wave adopters in high-income countries. Third, political characteristics, particularly the presence of an autocratic regime, are relevant for the Chinese case, calling to mind the “authoritarian environmentalism”. Fourth, the bandwagon, or geographical learning effect, plays a relevant role in all clusters.

 
 
Abstract

   
Climate policy ; Climate-related financial policy ; Climate risks ; Green finance Policy adoption ; Cluster analysis ; Keywords
C38 ; E44 ; E50 ; E58 ; Q58 ; JEL classification
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