Irene Monasterolo is Professor of Climate Finance at EDHEC Business School and EDHEC-Risk Institute in Nice (FR).
Irene’s research is contributing to understand the role of finance in the low-carbon transition, and the implications of climate change on investment decisions and financial stability. In the context of climate-related financial risks, Irene has co-developed the Climate Policy Relevant Sectors (CPRS), a science-based classification of assets into classes of climate transition risk, and the climate stress-test of the financial system, which embeds climate scenarios in asset pricing, financial risk metrics and portfolio risk assessment. The CPRS and climate stress-test methodologies were published on Nature Climate Change and have been applied by several financial supervisors and institutions in the EU (including European Central Bank (ECB), European Banking Authority, European Insurance and Occupational Pension Authority (EIOPA), the European Securities and Markets Authority (ESMA)) and extra EU countries (e.g. Swiss National Bank, Banco de Mexico, the World Bank (WB)). In addition, Irene’s research has contributed to understand under which conditions green financial policies, and investors’ climate sentiments can foster the low-carbon transition while mitigating trade-offs on financial instability and inequality. In this regard, she co-developed the EIRIN macro-financial model, which has been applied by the WB to the assessment of compound climate and COVID-19 risks, and by the ECB to assess the double materiality of climate risks in the EU economy and banking sector.
Irene’s research is currently focusing on the development of (i) asset-level approaches to dynamic climate financial valuation, applied to the analysis of cascading climate risks; (ii) enhanced scenarios and dynamic balance sheet models for climate stress testing; (iii) analysis of tail risk of climate change in financial risk metrics (iv) enhanced greenness measures to inform portfolio rebalancing strategies.
Irene’s research has been published in top and high-ranked journals in the field, including Science, Nature Climate Change, and Journal of Banking and Finance, as well as Brookings and UN PRI. She is editorial board member of Ecological Economics Journal, and she has served as guest editor for Journal of Financial Stability’s special issue on “Climate risk and financial stability”. Her research has been highly cited and covered by main newspapers (e.g. Le Monde).
She has also co-authored several reports with financial supervisors and institutions, including chapters in the EIOPA (2019) and the Austrian National Bank (2020)’s Financial Stability Reports, the World Bank working paper series, the Network For Greening the Financial System (NGFS 2020)’s handbook and the G20 T20 Task force (2020).
She has been invited to deliver invited talks at prestigious international financial institutions, including the San Francisco FED, the International Monetary Fund, the ECB, the Bundesbank, and at leading universities, e.g. Stanford University and Oxford University, and international events (e.g. UNFCCC COP conferences). She is part of the scientific committee of the annual CREDIT conference, and co-leader of the research area Environment-Economy Interactions of the EAEPE.
Irene has been involved either as Project Leader or Project Partner in leading European funded projects on sustainable finance.