First comprehensive analysis of carbon risks in the Austrian financial market
Key role of the financial sector for a climate-neutral Austria in 2040
Climate-related risks are highly relevant to the economy and financial markets and the Austrian financial market is also affected. This is because emissions of greenhouse gases are increasingly becoming a risk and cost factor. Over the past two years, an independent research project led by the Umweltbundesamt (Environment Agency Austria) has been investigating risks that the climate crisis poses to the Austrian financial market and how the financial market is dealing with these risks. RiskFinPorto has provided the first comprehensive analysis of carbon risks in the Austrian financial market.
More than 200 stakeholders from banks, insurance companies, capital investment groups, pension funds, supervisory authorities, science, NGOs, politics and administration were interviewed. Research results were discussed and solutions developed in workshops and focus groups.
RiskFinPorto – the results at a glance:
- The financial sector is a key player in tackling the climate crisis.
- The funds of Austrian asset managers have the largest carbon footprint and a relatively high proportion of their investments is in greenhouse gas intensive sectors.
- The ATX from 2025 is set on a +6°C pathway and much more exposed to climate risks resulting from a transformation of the economic system.
A comparison of sustainable funds with conventional funds shows that
- sustainable funds are significantly less exposed to climate risks,
- the economic performance of sustainable funds is, at any rate, comparable,
- funds with a particularly high greenhouse gas intensity have a significantly less favourable risk/return profile than sustainable funds,
- ecologically sustainable funds are still niche products that are not free from fossil fuel investments.
The proportion of financial institutions managing climate risks systematically or incorporating them into their core business is low.
- Although 100 % of the stakeholders who were interviewed consider it necessary to take a forward-looking approach in managing climate-change related risks and opportunities, less than 35 % stated that they had done so. Looking at the different stakeholder groups, it appears that about 40 % of the investors but only 28 % of the banks manage climate risks systematically.
RiskFinPorto project partners
The results were obtained by GreenAlpha, Vienna University of Economics and Business, ISS ESG, Günsberg Politics and Strategy Consulting, Sattler & Schanda law firm and SouthPole working together under the leadership of the Environment Agency Austria.
The results of the research project, which was funded by the Austrian Climate Research Programme (ACRP) within the Climate and Energy Fund framework, are an important element in the development of the Green Finance Agenda of the Austrian Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology, and the Austrian Finance Ministry. The agenda aims to mobilise capital for climate-friendly investments and to reduce climate risks, while also promoting transparency and a long-term perspective for the finance sector.
Links
Details about the project RiskFinPorto (category outcomes/publications: working papers 1-4, policy brief)
