Working Group on Finance, Climate Change and Sustainability

The Finance, Climate Change and Sustainability Working Group of the European Banking Institute (EBI) gathers academics, regulators and practitioners to promote dialogue for a better understanding of the financial implications of climate change from a multi-disciplinary perspective. More generally, it aims to provide a platform for a frank exchange of views to assess the current framework’s ability (and limitations) to deal with the financial system’s complex (networked) structure, its exposure to high uncertainty and large shocks, in a context of changing social norms, and to find facilitate the assimilation of the analytical tools to expand financial institutions and policymakers’ focus.

The academic leader of this Working Group is Prof. David Ramos Muñoz, from Universidad Carlos III de Madrid.

Prof. Dr. David Ramos Muñoz

University Carlos III of Madrid

Terms of Reference


In 2010, Jean Claude Trichet, opened the ECB flagship annual conference arguing for the need of complementary tools to improve the robustness of the ECB’s framework coming from disciplines like physics, engineering, psychology, or biology, to analyse complex dynamic systems in a rigorous way. Ever since, a great effort has been put to develop the science of complex systems and networks. The vision that emerges often leads to conclusions, and policy proposals, which may radically differ from traditional approaches. Complex systems have “critical/tipping points”, “regime shifts”, which can easily cause a system to malfunction through cascades across the network, including epidemics, congestion, or the collapse of the interbank (and banking) system. Yet, they can also cause the emergence of social norms, which can foster new rules and policy frameworks to deal with the problem.


This working group will focus on the insights complexity science offers for tackling climate change and its financial implications, as well as for improving financial regulation and financial law more generally.

Despite climate change’s looming importance for humanity, climate risk was not perceived as “financial risk” until very recently. Even now, evidence suggests that policymakers and financial institutions alike still think about climate-related risk as something to be compartmentalized and allocated across individual institutions depending on their direct exposure; that they struggle to grasp, and think in terms of remote risks, and to grasp how social norms evolve and interact with financial regulation. The resulting policy recommendations will be predictable, and probably ineffective due to a lack of tools to think in different terms. Thus, this research group will undertake a multi-layered effort to bridge this knowledge gap and work with regulators and market players to expand the focus of analysis.


  1. Complexity, financial structure, and climate-related shocks. First, we need to understand financial markets’ network structure as a source of contagion, and its interplay with the nature of market shocks, to determine the optimal allocation of responsibilities among financial authorities, and address implementation problems under their actual legal frameworks.
  2. Large, but remote shocks, and decision-making under uncertainty. Second, decision-making processes are based on frames of mind that do not work under conditions of highly uncertain but large shocks. Alternative models (e.g. those with multiple priors) are more descriptive and can lead to inaction when individuals are averse to ambiguity. New frames that help to address those risks are necessary.
  3. Financial law and regulation and evolving social norms. In third place, regulators and the public don’t make decisions in a social void. They are affected by shared understandings and social norms. The evolution of social norms is a complex process, and the transmission between social groups is complicated, especially in light of risk ambiguity. We need to understand how norms change and diffuse between groups, and, second, how they interact with the decision-making frames of financial institutions, regulators and sovereigns, including their legal norms.
  4. Finally, the new insights offered by disciplines like complexity science, finance and economics need to be combined, and reconciled with the basic (legal) foundations of the current regulatory system, which is strongly focused on transparency requirements and microprudential rules. The necessary changes to analytical frames need to be implemented in a way that helps the system deal with disruptive change, but does not, itself, disrupt the system.


A. Information exchange.
  1. Compile a list of topics relating to the interplay between finance and climate change, as well as on the contributions of complexity science to financial regulation, including issues such as financial stability, macro- and micro-prudential policies, or resolution.
  2. Facilitate the dissemination of draft working papers or contribute information and early stage research among interested EBI members on individual topics relating to finance and climate change, including, but not limited to the networked structure of the financial system, and its suitability to absorb large, climate-related shocks, the interplay between transparency-based, micro-prudential and macro-prudential policies, the preparedness of financial and regulatory models to deal with large, but remote shocks, or the adaptation of law and regulation on the face of changing social norms.
  3. The goal of this information exchange should be to open the EBI activities to academics from other disciplines, including economics or social sciences, but also mathematics, physics, or natural sciences.
B. Promotion of research

Encourage members of the EBI Academic Board, Associate Researchers Group and Young Researchers Group, as well as other scholars with an interest in Finance and Climate Change to lead research in the individual topics identified with a view to producing working papers for the EBI Working Paper Series and/or other publishing outlets.

C. Internal cooperation

Schedule a conference call, at least twice per year, in order to report to the members of the Working Group on its work, including its research priorities and research outputs and facilitate the updating of the list of topics relating to finance and climate change.

D. Cooperation with central banks and supervisors, as well as financial institutions.
  1. Aim to establish a regular contact with institutions entrusted with the implementation of policies that can be affected by climate change, such as central banks, micro-and-micro-prudential supervisors, or resolution authorities, including, but not limited to the European central Bank (ECB), European Systemic Risk Board (ESRB), European Supervisory Authorities (ESAs) or Single Resolution Board (SRB) in order to find topics of common interest, to produce high-quality research, with an interdisciplinary basis.
  2. Closely cooperate with private sector partners to understand their approach to climate change risks, as well as to climate change and sustainability phenomena, and seek topics of common interest to promote interdisciplinary (including legal, economic and scientific (including empirical) research.
  3. Organize an Annual Conference, in cooperation with the monetary and regulatory authorities, as well as private stakeholders.
  4. Find stable cooperative structures with academic partners, but also private sector partners to undertake research projects and seek research funding, and explore other possibilities arising from close cooperation.
E. Broader dissemination of work – organisation of events

Encourage the organization of workshops, seminars, and conferences to present the research produced to a wider audience.

List of Relevant Topics

  • Climate change and central bank mandates
  • Climate change and prudential regulation and supervision
  • Sustainable investments: Taxonomies and beyond
  • Sustainable disclosures
  • Sustainability and gatekeepers (including ‘infomediaries’, such as rating providers and benchmark administrators)
  • Climate change, complexity and networks
  • Climate change, sustainability, and the role of social norms in shaping change
  • Transition investments and transition planning

Publications from EBI Academic Members


Sustainable Finance in Europe, 2024

Corporate Governance, Financial Stability and Financial Markets
Danny Busch, Guido Ferrarini, Seraina Grunewald (eds.)

Digitalisation, Sustainability, and the Banking and Capital Markets Union, 2023

Thoughts on Current Issues of EU Financial Regulation
Lukas Böffel, Jonas Schurger (eds.) 2023

Greening the Bond Market, 2023

A European Perspective
David Ramos MuñozAgnieszka Smoleńska (eds.)


Presentations and other Activities

Teaching activities:

The members of the WG on Finance, Climate Change and Sustainability conduct Module 5 of the EBI LLM on Financial Regulation, titled “ESG in the Financial System”, discussing general frameworks on sustainability, and the impact of ESG considerations in central bank mandates, prudential supervision, corporate disclosures, intermediaries and capital markets, the role of ESG ‘infomediaries’ or gatekeepers, as well as corporate governance.

Policy fora:
  • The EBI WG on Finance, Climate Change and Sustainability has a fluid collaboration with the eAxes forum, having jointly organized seminars on Climate Stress Tests.
  • The EBI is a participant in the Global Research Network on Public Development Banks (PDBs), in its Working Groups on Private Sector Mobilisation and Sustainable and Solidary Investments.
  • Members of the EBI WG on Finance, Climate Change and Sustainability participated in the ECB Legal Research Program 2021, winning the grant for Topic 1 “Hierarchy among the ECB’s secondary objectives, what about environmental protection?”
  • Members of the EBI WG on Finance, Climate Change and Sustainability direct and participate in the Jean Monnet Centre of Excellence in EU Sustainable Finance and Law (EUSFiL)
  • Members of the EBI WG on Finance, Climate Change and Sustainability received the grant TED2021-130293B-100 Climate Change and Sustainable Finance, from NextGeneratioMembers of the EBI WG on Finance, Climate Change and Sustainability received the grant nEU.
  • The WG on Finance, Climate Change and Sustainability liaises with EBI’s policy arm through Mr. Nejc Smole, to ensure a balance of academic and policy events, and a presence in policy fora.

Seminars / Conferences


“The Banking Union at Ten – European Banking and Capital Markets Law between 2014 and 2024”
on 15 & 16 February 2024 (panel on developments in sustainable finance)

The papers received for the conference were published as the book “Greening the Bond Market: A European Perspective”, by David Ramos and Agnieszka Smolenska (eds.), 2023, which is part of the EBI Book Series of Studies in Banking and Capiotal Markets Law.

4th EBI Sustainable Finance (on 28 June 2021):

(to be uploaded soon)

3rd EBI Sustainable Finance (on 15 June 2021):
the “political economy perspective”

2nd EBI Sustainable Finance (on 9 June 2021):
The “central banking perspective”

1st EBI Sustainable Finance (on 31 May 2021):
“Turning Gold into Green: Green Finance in the Mandate of European Financial Supervision”