Sustainable finance for a smooth low-carbon transition



The threat of climate change calls for a rapid transition to a low-carbon society. Aligning the financial system with climate stability is a crucial prerequisite for achieving decarbonisation while preserving economic prosperity and societal welfare. However, we currently lack a comprehensive understanding of how the institutional and behavioural features of financial systems may affect the speed and shape of the low-carbon transition. Additionally, the coevolving socioeconomic, financial and environmental repercussions of such a large-scale societal transformation have not yet been systematically analysed. The SMOOTH project will lay the foundations of an innovative macro-financial analytical framework to provide essential insights on the links between financial systems and decarbonisation dynamics. Methodologically, I will introduce a breakthrough by linking macroeconomic analysis with an original evidencebased representation of investment decisions based on forward-looking expectations of transition pathways. In the course of five years, this integrated modelling framework will enable the first comprehensive assessment of the transition financial drivers and obstacles, and their implications for growth, financial stability, employment, private/public debt and functional distribution, with a focus on Europe. Building on this knowledge, a harmonised set of policies aimed at achieving a rapid and smooth transition can be designed. I will go beyond the current state of the art by integrating the analysis of fiscal policies with monetary policies and financial regulation, and investigating their institutional requirements and implications. SMOOTH will create a new interdisciplinary field of research integrating elements from macroeconomic modelling, climate economics, behavioural finance, socio-technical transition theory and political science, lifting the analytical power of transition modelling to a new level and opening up novel avenues for future research.

Project details

Unibo Team Leader: Emanuele Campiglio

Unibo involved Department/s:
Dipartimento di Scienze Economiche

ALMA MATER STUDIORUM - Università di Bologna(Italy)

Other Participants:
Fondazione CMCC - Centro Euro Mediterraneo per i Cambiamentii Climatici (Italy)

Total Eu Contribution: Euro (EUR) 1.499.956,00
Project Duration in months: 60
Start Date: 01/09/2020
End Date: 31/08/2025

Cordis webpage
Project website

Climate Action This project contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

UE flag This project has received funding from the European Union's Horizon 2020 research and innovation programme under grant agreement No 853050