On 9 November 2021, EU40 and the European Parliament Panel for the Future of Science and Technology (STOA) organised an online debate entitled, “Sustainable finance: How AI can help account for climate risks”.
The event featured various policymakers, as well as representatives from civil society and academia. Speakers discussed how machine learning help markets identify and price climate risks, and what are the risks of delegating sustainable finance decisions to autonomous systems. Linda Zeilina, CEO & Founder of the International Sustainable Finance Centre (ISFC), moderated the session.
Our host, Member of the European Parliament Eva Kaili (S&D, Greece) opened the discussion by introducing the topic at large. Her points were how digitalisation can be used to rethink our financial system and bring it in line with our climate change goals. Moreover, digitalisation and AI can help us translate uncertainty into tangible risks that we can understand more easily, measure, track, and tackle.
Our distinguished keynote speaker Mairead McGuinness, European Commissioner for Financial Services, Financial Stability & Capital Markets Union, highlighted important points via video message. The commissioner pointed out that technology brings us together, but we must shape the changes and not be overwhelmed by them. Acting early is key to tackling climate change, and the advantages will be felt by all when our financial systems go green.
Dimitris Zafeiris, Head of Risks & Financial Stability at The European Insurance and Occupational Pensions Authority (EIOPA), highlighted that AI can help account for climate risks but cannot be seen as a silver bullet or develop into a black-box with little explainability. Insurers, as managers of large parts of society’s risks and important long term investors, can contribute to promoting climate change mitigation and adaptation.
Dr. Kirsten Dunlop, CEO at the EIT Climate-KIC, mentioned that satellites are used to see where environmental degradation is happening, or to track agriculture. She pointed out that open data systems are a key element of innovation, helping us break out of silos & think systemically. ‘Radical collaboration’ is being repeated by many, and understood as a way to unlock rapid change across formerly siloed sectors.
George Skiadopoulos, Professor of Finance at the Queen Mary University & University of Piraeus, presented his research, which highlighted the short-termism of our economic system. Policymakers have an important role to play in tackling climate risks, and investors likewise must take them into account, not just look towards government intervention. AI has a role to play in identifying and measuring real intentions by investors, as it has enabled superior climate modeling to use for decision-making.
Typhaine Beaupérin, CEO and Secretary General at the Federation of European Risk Management Associations (FERMA), stated that companies must be more resilient, and we need public-private partnerships to assist the transition. Risk managers must look at how AI can make climate-related risk assessment more efficient, but AI needs reliable data of a certain quality & quantity, and there is massive data sharing potential within the EU.
Member of the European Parliament Mikuláš Peksa (Greens/EFA, Czechia) additionally mentioned that decentralisation is a key approach that frames the whole digital revolution.
Watch the full recording of the discussion here!