Institutional Quality, Climate Risks, and Environmental Transition in International Business and Finance
This special issue invites papers that advance our understanding of sustainable practices in the global business and finance landscape.
Sami Ben Jabeur, UCLy (Lyon Catholic University), ESDES, Lyon, France
Hela Nammouri, UCLy (Lyon Catholic University), ESDES, Lyon, France
Anis Omri, College of Business and Economics, Qssim University, Saudi Arabia
Special issue information:
In recent years, there has been growing recognition among policymakers, firms, and investors that climate change poses significant risks to the global economy and financial system. Heightened climate impacts like rising sea levels, extreme weather events, water scarcity, and collapse of ecosystems threaten long-term economic growth and development goals worldwide. Meanwhile, the transition to a low-carbon economy brings both risks and opportunities for businesses and governments (Haas et al., 2023). In this context, institutional quality and policy stability have taken on new importance for international organizations operating across borders (Heavilin and Songur, 2020).
Effective national and multilateral policy frameworks are needed to minimize physical climate risks, facilitate an orderly environmental transition, and channel private capital towards green investments. However, there are concerns that weak institutions, fragmented regulation, and unstable policy environments in some regions may hamper climate adaptation and mitigation efforts.
Navigating these challenges requires strong, coherent and adaptive policy frameworks at national and international levels. However, institutional conditions vary greatly across countries in their capacity to minimize climate risks, facilitate low-carbon transitions and mobilize private finance towards sustainable development. Weak institutions may exacerbate vulnerabilities or slow necessary economic transformations. This has led to the recognition that institutional quality, which encompasses the strength and effectiveness of governance structures, plays a vital role in addressing climate risks and facilitating the transition to a more sustainable and environmentally friendly economy (Omri and Belhadj, 2020; Stef and Ben Jabeur, 2020; Stef and Ben Jabeur, 2023). By examining the role of institutions, the impact of climate risks, and the pathways towards environmental transition, this special issue seeks to advance our understanding of sustainable practices in the global business and finance landscape.
Despite extensive research exploring the connections between institutions, climate action, and cross-border business/finance, there remain five compelling reasons for the need for novel research in this area. First, countries/cities are experimenting with diverse policy mixes (e.g., carbon taxes, innovation programs) with varying institutional supports. Comparative analysis of outcomes and flexibility/scalability can guide future design. Second, as climate risks materialize, strategies like supply chain management, carbon pricing, disclosure practices are adjusting. Novel research can identify adaptations linked to stronger institutional voice/collaboration and inform future-proofing. Third, low-carbon transitions unfold through generations of policies/technologies with different institutional/regulatory demands. Novel research is warranted to discern pathways compatible with diverse economic/political conditions. Fourth, new conceptual issues, experiences from climate events/transitions, and increasingly available data sources open avenues for exploring questions not yet addressed. This includes long-term stranded asset risks, complex linkages across scales of rules/actors, and localized risk-return analyses. Finally, while research has explored particular country cases, more cross-country and cross-regional analyses can provide novel insights into how impacts differ depending on institutional qualities/deficiencies in diverse settings.
The above-mentioned reasons demonstrate why novel research is still needed to better understand the dynamic linkages between institutions, climate risks/transitions, and cross-border business/finance. Much of the existing research has tended to examine the relationships between these elements independently, without fully exploring their intricate interactions. However, a key perspective that remains relatively underexplored is how various institutions and actors interact with each other across levels and domains to collectively enable or hinder progress towards environmental and sustainable development goals. Novel research with a focus on these multi-directional interactions, rather than isolated influences, could provide valuable new insights into sustainable value creation in an increasingly volatile and carbon-constrained global landscape. Investigating the co-evolution of institutions, policies, private sector strategies and international arrangements over time may shine new light on pathways towards climate-resilient, inclusive growth amid complex adaptation and mitigation challenges worldwide.
Thus, given the timeliness and importance to address the sustainability challenge, this Call for Papers invites research that aims to bring together cutting-edge research that explores the multifaceted relationship between institutional quality, climate risks, and the transition to a more environmentally sustainable global economy.
This call seeks to address the following research questions and topics, but is not limited to them:
The impact of institutional quality on climate risk assessment in international business and finance.
Methodological advancements in incorporating institutional factors into climate risk models.
The role of governance structures, legal frameworks, and regulatory environments in mitigating climate risks for international businesses.
Green finance and investment in the context of climate risks and environmental transition
How international firms adapt their strategies to navigate climate risks.
Policy frameworks and regulatory mechanisms for mitigating climate risks and promoting sustainable practices.
The effectiveness of corporate governance mechanisms in promoting environmental sustainability.
The role of institutional quality in attracting green investments and fostering sustainable finance.
Cross-country analysis of the impact of environmental policies on international capital flows.
The role of financial institutions in promoting climate-conscious investments and the associated risks.
Technological innovations and their role in addressing climate risks and supporting environmental transition.
Comparative studies of policy frameworks that facilitate or hinder environmental transition in different countries.
The influence of institutional quality on the effectiveness of climate policies and regulations.
Long-term transition pathways for countries with varying levels of institutional quality.
The integration of ESG factors into international investment decisions.
The link between ESG performance and institutional quality.
The role of international institutions and agreements in shaping ESG standards.