The Case of Green Derivatives
from Part V - Financial Innovation and Sustainability
Published online by Cambridge University Press: 30 January 2025
The European financial markets have been placed on the path to a sustainable and green transition. The European Commission embraced with the EU Green Deal a new growth strategy built on a sustainable economic model that aims at making the EU the first carbon neutral continent by 2050. This generational economic and industrial transition set by the EU Green Deal will require at least 1 trillion euro in public and private sustainable investments. This chapter analyzes how derivatives markets can contribute to support the green transition, enable private markets to raise capital towards sustainable goals, and help market participants to manage the market and transition risk to a sustainable economy. “Green derivatives” like ESG- linked swaps, emission allowance futures, extreme weather events derivatives, are examples of financial innovation is dealing with climate-related risk. This chapter focuses on the EU Strategy for Financing the Transition to a Sustainable Economy in the EU and offers a looks at what the Commodities Futures Trading Commission is doing in the US on climate-related risk and derivatives markets. The chapter offers some early critical considerations on the private-public synergies and opportunities that might result from the growth and expansion of sustainable derivatives markets and the possible risks that policymakers should consider in the evolution process of such markets.
To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.