EEIO in Sustainable Finance - Challenges and Opportunities. This is a Presentation given given at the 15th I-O Workshop, March 1st 2024, Osnabruck, Germany.
EEIO in Sustainable Finance: Challenges and Opportunities EEIO in Sustainable Finance: Challenges and Opportunities.
Presentation given at the 15th I-O Workshop, March 1st 2024, Osnabrueck, Germany
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Citation @ARTICLE{OpenRiskPresentation01, author = {P. Papadopoulos}, year = {2024}, note = {\href{https://www.openriskmanagement.com/wp-content/uploads/2024/06/IO2024_Presentation.pdf}{Download URL}}, title = {{EEIO in Sustainable Finance: Challenges and Opportunities}}, journal = {Open Risk Presentations} }
In this post we are after a flexible financial services taxonomy that can help us understand both existing and evolving financial system developments. To this end we examine a range of existing classification systems and synthesize the salient requirements.
Who Needs a New Financial Services Taxonomy? Our age is increasingly dominated by the dual challenges and opportunities of the sustainability transition on the one hand, and digital transformation on the other. We witness emerging new financial domains with novel names such as Fintech , or TechFin, or various combinations and hues of Green and Sustainable in Sustainable Finance and we see forces that are reshaping the direction of travel for the financial industry.
An Awesome List for Sustainable Finance. Awesome Sustainable Finance is a curated list of sustainable finance resources. The focus of the list is on code (tools, libraries, frameworks etc.) that fairly directly support any type of sustainable finance effort but also open data that are useful in a sustainable finance context.
Image Credit: StarwallOfRadical.town, CC BY-SA 4.0, via Wikimedia Commons
How to Contribute The list is maintained on github so the easiest way to contribute is to open a Pull Request in our repository.
The Climate Dictionary Quiz is now accessible as a course at the Open Risk Academy. The Quiz is based on the UN Climate Dictionary and provides an interactive educational tool to enable deeper understanding of the essential terminology.
The Climate Dictionary is an initiative of the United Nations Development Programme (UNDP) aimed at providing people worldwide with a simplified guide to understand climate change. The Dictionary (first published Aug 2023) seeks to bridge the gap between complex scientific jargon such as present in the IPCC publications and other scientific bodies and the public.
Image: NASA Temperature Anomaly
The Dictionary selects several dozen important climate concepts that are currently actively discussed worldwide with the aim to make them more accessible and relatable to individuals from various backgrounds and levels of expertise.
June 21 2023 marks the sixth annual #ShowYourStripes Day - a time when meteorologists and other climate communicators around the world raise awareness of our warming planet by displaying colorful visuals of climate change. The warming stripe graphics are representations of the change in temperature over the past 100+ years (here we use the global average). Each stripe represents the temperature averaged over a year. The stripes typically start around the year 1900 and finish in 2022.
New data models introduced in this release of Equinox cater to the requirement of integrating energy attribute certificate information into the portfolio database.
GHG Accounting offers a means of measuring the direct and indirect emissions to the Earth’s Biosphere of CO2 and its equivalent gases from industrial and other activities. GHG Accounting is a rapidly developing area that has come to receive increased focus in the context of accelerating Climate Change. Given that the generation of electricity and heat accounts for around a third of global GHG emissions electricity consumers have incentives to proactively reduce those emissions by reducing electricity demand, or by shifting energy supply by procuring alternative lower-carbon or renewable resources.
Open Risk White Paper 14: Integrated energy accounting using relational databases In this Open Risk White Paper we demonstrate a concrete implementation of an integrated energy accounting framework using relational database technologies. The framework enables accounting of non-financial disclosures (such as the physical and embodied energy footprints of economic transactions) while enforcing the familiar double-entry balance constraints used to produce conventional (monetary) accounts and financial statements. In addition, it allows enforcing constraints associated with the flow and transformations of energy that can happen inside the organizational perimeter.
We develop a conceptual framework for integrated accounting that imposes on certain non-financial disclosures the same double-entry balance constraints that apply to conventional financial statements. We identify the key ingredients required for a rigorous multidimensional accounting framework in terms of concepts, postulates and design choices, and we illustrate these ideas with a worked-out example of linking financial and energy accounts.
Integrated Energy Accounting is keeping track and reporting on an entity’s detailed energy footprint (primary inputs, transformations and waste generation) not as an addendum to financial accounting and reporting but as a deeply-linked extension that is subject to the same level of rigor.
The central design is the use of multidimensional double-entry bookkeeping which tracks additional quantitative information characterizing economic objects beyond their monetary values. This choice ensures the enforcement of both classic balance sheet constraints and the applicable energy conservation laws.
Open Risk White Paper 12: Deep-Linking Financial and Energy Accounting We develop a conceptual framework for integrated accounting that produces (where possible) non-financial disclosures subject to the same double-entry balance constraints as those used to produce conventional financial statements and automatically ensures any additional conservation laws are satisfied. We identify the key ingredients required for such a rigorous integrated accounting framework, in terms of concepts, postulates and design choices. Our focus and concrete use case is built around energy accounting, keeping track on an entity’s detailed energy footprint (primary inputs, transformations and waste generation) as an extension of its standard financial accounting and reporting.
In the fourth part of this series we approach Green Public Procurement as a Sustainable Portfolio Management task and explore how open data can support this mission
Introduction In this fourth and final installment we will discuss how the data framework we have developed thus far can be mapped into classic portfolio management concepts and categories, and thus, how one can articulate the concept of sustainable procurement management on a portfolio basis. The concepts and analytic methodologies of financial portfolio management1 can significantly enhance the toolkit available to practitioners and, in sense, connects the domain of Green Public Procurement to other ongoing initiatives in broader Sustainable Finance.
In the third part of this series we illustrate how one may assign greenhouse gas emissions to public procurement using environmentally extended input-output models
Introduction This is the third in a series of posts where we explore the role of Open Data and Open Source in enabling and accelerating the broad based effort towards Green Public Procurement (GPP). In this third installment we will link procurement entities to private sector sellers and, through the sectoral profile of the procurement contract, (CPV category) we will infer the amount of CO2 emissions that can be attributed to these activities.
Introduction This is the second in a series of posts where we explore the role of Open Data and Open Source in enabling and accelerating the broad based effort towards Green Public Procurement (GPP).
Recap of the Previous Post Part 1 - Overview In the first part of this series we motivated and defined the scope of a study that explores Public Procurement data. We discussed the meaning of the main relevant terms (Open Data, Open Source, Green Public Procurement) and briefly reviewed the current state and challenges of the latter in EU context.
In the first part of this series we survey the TED procurement data landscape to build the context in which we will explore the relevance of this open data set for green public procurement
Introduction In a series of posts we will explore the role of Open Data and Open Source in enabling and accelerating the broad based effort towards Green Public Procurement (GPP). There are several important (and possibly obscure) terms in this sentence, so our first order of business will be to unpack them.
What is Public Procurement Let us start with the term Public Procurement which will be the main domain of interest in this study.
We are very happy to announce that our EU Datathon 2022 proposal based on the equinox platform has been pre-selected to enter the formal stage of the competition
What is the EU Datathon? The EU Datathon is an annual Open Data competition organised by the Publications Office of the European Union since 2017. The competitions are organised to create new value for citizens through innovation and promoting the use of open data, in particular the datasets available on the official portal for European data.
Every year, EU Datathon calls for innovators from around the world to come up with new ways of using open data to address important societal and environmental challenges, with the condition that they use at least one of the thousands of data sets published on data.
Equinox 0.4 Release Equinox is an open source platform that supports holistic risk management and reporting in the context of Sustainable Portfolio Management. The platform integrates geospatial information with applicable regulatory and industry standards, for example the GHG Protocol (accounting for Project based, Corporate and City-Wide greenhouse gas emissions), the IPCC Emissions Factor database and further reference data, the PCAF attribution methodologies (and more) to provide a holistic view of the footprint of both individual projects and portfolios.
The Role of Open Risk Manual Taxonomies A taxonomy is the categorization of concepts. It can be a very useful tool in supporting effective knowledge management. Fundamentally a taxonomy is a scheme of classification, typically a hierarchical classification, in which things or concepts are organized into groups or types of increasing specificity.
Mathematically, a hierarchical taxonomy is a tree structure of classifications for a given set of objects. It is sometimes also named a containment hierarchy.
Course Objective The objective of the course is to discuss the relation of economic input-output models with graph theory and networks.
The course is now live at the Academy.
Pre-requisites Basic knowledge of input-output models and graph theory would help to get the most out of the course but is not strictly required.
Summary of the Course What we cover in this course:
Step 1. In this step we discuss in more detail the motivation for the course and provide a very brief introduction to the graph theory to establish the notation.
What are Input-Output Models? Environmentally Extended Multi-Regional Input-Output (EE-MRIO) tables describe economic relationships of economic actors (e.g. industrial sectors) operating within and between regions and their environmental repercussions.
An EE MRIO augments the more basic and historically first proposed Input-Output Models (IO) with additional datasets and/or modeling assumptions in order to provide insights into the environmental foorprint of economic activity. Presently, the emphasis on negative externalities of economic activity (e.g., climate change, biodiversity loss) turns EE MRIO models into a useful conceptual and analytic tool.
In the latest update of the Equinox Project we discuss the integration of reference data an in particular greenhouse gas emissions factors as catalogued in the IPCC Emissions Factors database (EFDB).
Equinox is an open source platform that supports the holistic risk management and reporting of major sustainable finance projects (the financing of projects with material physical footprint) such as project finance. Equinox aims to integrate in the database a number reference databases that facilitate tasks of sustainable portfolio management. In the current focus such reference material concerns the emissions factors for various processes and activities. In the latest (Solstice Day!
We develop an analytic framework that synthesizes current approaches to sustainable portfolio management in the context of addressing climate change. We discuss the different required information layers, approaches to emissions accounting, attribution and forward-looking limit frameworks implementing carbon budget constraints.
The frontpage graphic is adapted from Steffen et al. “Planetary Boundaries: Guiding human development on a changing planet”. Science (2015). The Planetary Boundaries concept was proposed in 2009 by this group of Earth system and environmental scientists. The group suggested that finding a “safe operating space for humanity” is a precondition for sustainable development. The framework is based on scientific evidence that human actions since the Industrial Revolution have become the main driver of global environmental change.
