This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.
Dates of the project: 2018-2027
The Challenge
Macrofinancial policy – monetary policy, financial regulation and supervision, and fiscal policy – concerns the rules that govern finance and money. These policies are fundamental to delivering a green transition since they have allocative and signaling effects on the price and directionality of financing flows, affecting the sustainability of future investment pathways.
However, current policy frameworks and tools are not aligned with - and may even run counter to - achieving environmental objectives such as mitigating climate change and halting biodiversity loss. Financial policymakers rely on narrow rules-based frameworks and models that allow for incremental change but are poorly suited to the fundamental uncertainty and non-linear dynamics characterising environmental breakdown or the structural economic change required to avert it.
The urgent challenge in this era of environmental crisis is creating the macroeconomic frameworks, coordination mechanisms, models and other decision-making tools that allow these policymakers to shift their approaches to instead support a rapid, green, and just transition.
Our Approach
We conduct academic, policy-oriented research on the macroeconomics and political economy of environmental degradation and the green transition, while building the case for central banks, financial supervisors, and ministries of finance to shift their approaches. We work with a range of partners including the Network for Greening the Financial System, the European Central Bank, the Swiss Council on Economic Policies, the World Bank, and experts at the Universities of Exeter, Oxford and LSE amongst others to achieve this. Our work is funded by UK and European philanthropies, including Partners for a New Economy, the World Wide Fund for Nature and the Laudes Foundation.
Key areas include:
- Developing a ‘precautionary approach’ to macrofinancial policy based on the systemic risks posed by climate change and nature loss.
- Creating new datasets to explore where the financial system currently undermines national and global climate and biodiversity goals.
- Evaluating integrated assessment models used by policymakers to explore the implications of nature loss and the green transition.
- Developing credible alternative approaches to modelling the macroeconomic implications of nature loss and transition policies.
- Rethinking approaches to inflation management to better support the green transition and deal with environment-related supply-side shocks.
We publish working papers, peer-reviewed journal articles, policy reports and consultation responses. Alongside this, we engage with policymakers bilaterally, through research collaboration, and at conferences, as well support civil society organisations to advocate for ambitious policy changes.
Why This Matters
Macrofinancial policy is an essential pillar of a mission-led government strategy to tackle the twin crises of climate change and biodiversity loss. Central banks, financial regulators, and ministries of finance need rigorous research if they are to shift their approaches in line with the transformative changes required to meet this challenge.
Our focus on policy-relevant, academic research has already garnered significant impact – our work on nature-related economic and financial risks has been cited in speeches by senior policymakers at the European Central Bank, in the Dasgupta Review on the Economics of Biodiversity Loss, and in reports by the International Monetary Fund, the Network for Greening the Financial System, and national central banks. IIPP researchers have also been seconded directly to work on these topics at the NGFS and the World Bank.
Resources
Video: Does Green Finance Actually Reduce Emissions?
Speaker: Dirk Bezemer
Description: This seminar presents a global analysis of green bond issuance across 147 firms, showing limited impact on emissions and energy intensity. It highlights industry-level differences and discusses how green finance can be made more effective.
Video: Financing the ecological transition
Speakers: Prof. Josh Ryan-Collins, Sarah Bloom Raskin, Steffen Murau, Vera Songwe
Description:
This panel critiques the private-sector-led approach to the green transition and explores how macroeconomic institutions can better coordinate financial flows to support structural ecological change.
Video: Governing finance for People and Planet
Speakers: Prof. Josh Ryan-Collins, Anne Pettifor, Brett Christophers, and Ingrid Holmes
Description: This panel discussion explores why post-crisis financial policy has failed to deliver a more resilient and equitable financial system. The speakers examine how finance can be governed more effectively to address pressing global challenges, including climate change, biodiversity loss, and inclusive economic development.
Kedward, K., Gabor, D. and Ryan-Collins, J. (2024) ‘Carrots with(out) sticks: credit policy and the limits of green central banking’, Review of International Political Economy.
Read the article
Kedward, K. et al. (2023) ‘Heavy reliance on private finance alone will not deliver conservation goals’, Nature Ecology & Evolution, pp. 1–4.
Read the article
Kedward, K., Ryan-Collins, J. and Chenet, H. (2022) ‘Biodiversity loss and climate change interactions: financial stability implications for central banks and financial supervisors’, Climate Policy, 23(6), pp. 763–781.
Read the article
Marsden, L. et al. (2025) ‘Financial system interactions with ecosystem tipping points: Evidence from mangroves and boreal forests’. (UCL Institute for Innovation and Public Purpose, Working Paper Series).
Read the working paper
Althouse, J, B Bedossa, E Espagne, L Faucher, M Gonon, K Kedward, A Modica Scala, A Poupard and R Svartzman (2025), ‘DP19987 From Climate to Nature Macro-Criticality: Exploring New Scenarios and Modeling Frameworks‘, CEPR Discussion Paper No. 19987. CEPR Press, Paris & London.
Kedward, K. and Gonon, M. (2025) ‘Avenues for Exploring Nature Scenarios in Ecological Macroeconomic Models’. Rochester, NY: Social Science Research Network.
Read the working paper
Gonon, M., Svartzman, R. and Althouse, J. (2024) ‘Bridging the Gap in Biodiversity Financing’. (UCL Institute for Innovation and Public Purpose (IIPP) Working Paper Series, IIPP WP 2024- 14).
Read the working paper
Kedward, K. and Poupard, A. (2024) ‘The economic and financial risks of implementing the “30x30” Global Biodiversity Framework targets’. (UCL Institute for Innovation and Public Purpose, Working Paper Series, IIPP WP 2024-13).
Read the working paper
Marsden, L. et al. (2024) ‘Financial system interactions with ecosystem tipping points: Evidence from the Brazilian Amazon and Indonesian peatlands’. UCL Institute for Innovation and Public Purpose (UCL Institute for Innovation and Public Purpose, Working Paper Series, IIPP WP 2024-11).
Read the working paper
Salin, M., Kedward, K. and Dunz, N. (2024) ‘Assessing Integrated Assessment Models for Building Global Nature-Economy Scenarios’. Banque de France (Banque de France Working Paper Series, #959).
Read the working paper
Ryan-Collins, J., Kedward, K. and Chenet, H. (2023) ‘Monetary-fiscal policy coordination: Lessons from Covid-19 for the climate and biodiversity emergencies’. Rochester, NY.
Read the working paper
Kedward, K. et al. (2022) ‘Nature as an Asset Class or Public Good? The Economic Case for Increased Public Investment to Achieve Biodiversity Targets’. Rochester, NY.
Read the working paper
Kedward, K., Gabor, D. and Ryan-Collins, J. (2022) ‘Aligning finance with the green transition: From a risk-based to an allocative green credit policy regime.’ Rochester, NY.
Read the working paper
Kedward, K. and Ryan-Collins, J. (2022) From financial risk to financial harm: Exploring the agri-finance nexus and drivers of biodiversity loss. UCL Institute for Innovation and Public Purpose.
Read the working paper
Ford, G. et al. (2022) ‘Fat Tails, Tipping Points and Asymmetric Time Horizons: Dealing With Systemic Climate-Related Uncertainty in the Prudential Regime’. Rochester, NY.
Read the working paper
Kedward, K., Ryan-Collins, J. and Chenet, H. (2020) ‘Managing Nature-Related Financial Risks: A Precautionary Policy Approach for Central Banks and Financial Supervisors’. Rochester, NY.
Read the working paper
Marsden, L. et al. (2025) Policy options for financial flows contributing to ecosystem tipping points. UCL Institute for Innovation and Public Purpose and World Wide Fund for Nature. Available at: https://wwfint.awsassets.panda.org/downloads/wwf_gfri_ucl-iipp-tipping-point-2025.pdf
Marsden, L (2025) Response to EIOPA Consultation paper on the Report on biodiversity risk management by insurers. UCL Institute for Innovation and Public Purpose. Available at: https://www.ucl.ac.uk/bartlett/sites/bartlett/files/iipp_eiopa_biodiversity_response.pdf
Marsden, L. et al. (2024) Mapping financial flows linked to critical ecosystems. SUERF - The European Money & Finance Forum. Available at: https://www.suerf.org/publications/suerf-policy-notes-and-briefs/mapping-financial-flows-linked-to-critical-ecosystems/
Marsden, L. et al. (2024) Ecosystem tipping points: Understanding risks to the economy and financial system. Institute of Innovation and Public Purpose: University College London. Available at: https://www.ucl.ac.uk/bartlett/public-purpose/publications/2024/apr/ecosystem-tipping-points-understanding-risks-economy-and-financial-system.
Kedward, K., Gabor, D. and Ryan-Collins, J. (2022) ‘A modern credit guidance regime for the green transition’, in The European Money and Finance Forum. SUERF Policy Note Issue. Available at: https://www.suerf.org/publications/suerf-policy-notes-and-briefs/a-modern-credit-guidance-regime-for-the-green-transition/
Chenet, H., Kedward, K. and Ryan-Collins, J. (2022) Developing a precautionary approach to financial policy – from climate to biodiversity. LSE, SOAS Centre for Sustainable Finance, Grantham Research Institute on Climate Change and the Environment. Available at: https://www.lse.ac.uk/granthaminstitute/publication/developing-a-precautionary-approach-to-financial-policy-from-climate-to-biodiversity/
Chenet, H., Kedward, K. and Ryan-Collins, J. (2022) Developing a precautionary approach to financial policy – from climate to biodiversity. LSE, SOAS Centre for Sustainable Finance, Grantham Research Institute on Climate Change and the Environment. Available at: https://www.lse.ac.uk/granthaminstitute/publication/developing-a-precautionary-approach-to-financial-policy-from-climate-to-biodiversity/
Kedward, K., Ryan-Collins, J., and Chenet, H. (2021) Understanding the financial risks of nature loss: exploring policy options for financial authorities. SUERF – The European Money & Finance Forum. Available at: https://www.suerf.org/wp-content/uploads/2023/11/f_fe18b4fe37333a388473988576c744ee_27301_suerf.pdf
Kedward, K., Ryan-Collins, J. and Buller, A. (2021) Quantitative easing and nature loss | UCL Institute for Innovation and Public Purpose - UCL – University College London. Policy Report. UCL Institute for Innovation and Public Purpose. Available at: https://www.ucl.ac.uk/bartlett/public-purpose/publications/2021/jul/quantitative-easing-and-nature-loss
Ryan-Collins, J. (2019) Beyond voluntary disclosure: why a ‘market-shaping’ approach to financial regulation is needed to meet the challenge of climate change. SUERF - The European Money & Finance Forum. Available at: https://www.suerf.org/policynotes/4805/beyond-voluntary-disclosure-why-a-market-shaping-approach-to-financial-regulation-is-needed-to-meet-the-challenge-of-climate-change
Ryan-Collins, J. (2022). Financial regulation, uncertainty and the transition to a net-zero-carbon economy. In Central Banking, Monetary Policy and the Environment. Elgaronline.
Read the book chapter
Kedward, K. and Ryan-Collins, J. (2022) ‘A Green New Deal: Opportunities and Constraints’, in P. Arestis and M. Sawyer (eds) Economic Policies for Sustainability and Resilience. Cham: Springer International Publishing, pp. 269–317.
Read the book chapter
Transitioning to Net Zero requires a strategic state
By Katie Kedwar
Read the blog
How quantitative easing is contributing to nature loss
By Katie Kedward and Josh Ryan-Collins
Read the blog
Unpacking systemic risk in a brave new world
By Katie Kedward, Martha McPherson and Ria Sen
Read the blog
Nature loss is approaching a tipping point – it’s time for financial authorities to act
By Katie Kedward
Read the blog
We need transformative change at the biodiversity COP16 - what role should green finance play?
Read the news article
Marsden, L. (2025) Firing up financial and monetary policy tools to lean against ecosystem collapse. Green Central Banking. Available at: https://greencentralbanking.com/2025/09/15/firing-up-central-bank-tools-to-guard-against-ecosystem-collapse/
Marsden, L. (2025) Ecosystem collapse and the rising threat of systemic risk. OMFIF Sustainable Policy Institute Journal. Available at: https://www.omfif.org/spi-journal_july25_wwf/
Marsden, L., Qaisar, M. (2024). ‘Greening’ central banks. Alliance Magazine. Available at: https://www.alliancemagazine.org/feature/greening%CA%BC-the-central-banks/
Marsden, L. (2024) Ecosystem tipping points: the role financial authorities should play in preventing them. Green Central Banking. Available at: https://greencentralbanking.com/2024/05/02/ecosystem-tipping-points-financial-authorities/
Kedward, K. (2023) Forget greenflation, central banks need to tackle fossilflation. Green Central Banking. Available at: https://greencentralbanking.com/2022/05/19/greenflation-central-banks-fossilflation-inflation/
Ryan-Collins, J. (2022) Fossil fuel financing will only end with capital regulation. Green Central Banking. Available at: https://greencentralbanking.com/2022/12/13/fossil-fuel-financing-capital-regulation/
Funders
This project is funded by UK and European Philanthropies, including Partners for a New Economy, the World Wide Fund for Nature and the Laudes Foundation.
Contacts
