Dafermos, Yannis, Nikolaidi, Maria ORCID: https://orcid.org/0000-0002-8188-5482, Colesanti Senni, Chiara and von Jagow, Adrian (2024) Macrofinancial causes and risks of deforestation, land conversion and water stress: analysing the role of central banks and financial supervisors through a stock-flow double materiality lens. Technical Report. SOAS University of London; University of Greenwich; University of Zurich; Vienna University of Economics and Business, London.

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Abstract

This report analyses how central banks and financial supervisors can use stock-flow consistent approaches to analyse the double materiality of the financial system related to climate change, land conversion and water stress. From an environmental materiality perspective, stock-flow consistent approaches can evaluate how the provision of credit by the financial system contributes to the generation of physical flows that harm the ecosystem. From a financial materiality perspective, stock-flow consistent approaches can assess physical and transition risks related to the environmental crisis within a dynamic setting that pays attention to non-linearities and path-dependent macrofinancial feedback loops. Moreover, the report argues that central banks and financial supervisors should introduce environmental materiality into their monetary and financial policy tools without further delay. To do so, they need to collaborate with other public authorities to co-design environmental policy mixes, develop metrics that capture the environmental materiality of finance and take concrete action to penalise the financing of environmentally harmful activities. The report provides practical recommendations in this direction focusing on the use of data, the classification of metrics and the design of tools.

Item Type:	Monograph (Technical Report)
Uncontrolled Keywords:	climate change, monetary policy, collateral framework
Subjects:	G Geography. Anthropology. Recreation > GE Environmental Sciences H Social Sciences > H Social Sciences (General) H Social Sciences > HD Industries. Land use. Labor
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics
Last Modified:	23 Mar 2026 12:59
URI:	https://gala.gre.ac.uk/id/eprint/51060

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