In September 2025, the laureates were recognized at the WAIFC Annual Meeting and had the opportunity to present their findings to members.
In parallel for the past year, WAIFC has been publishing opinions that highlight the work of member IFCs with an overview of green and blue finance offerings in their marketplaces. The idea is to salute them for this work while also sharing ideas across the world.
This note presents the work of the 2025 laureates as part of their contribution to how financial services can do their part – and more – as the world figures out how to get to carbon neutral. The note presents the Abstracts only, followed by links to the complete research papers. WAIFC again thanks these scholars for helping illuminate our paths forward.
“Adaptation Finance for Emerging Markets,” Keith Jin Deng Chan, Vivi Yuwei Liao, Division of Environment and Sustainability, Academy of Interdisciplinary Studies, The Hong Kong University of Science and Technology, Hong Kong SAR, China
A substantial investment gap exists in financing climate change adaptation in emerging markets. Governments could mobilize private capital through the green bond market to help close the gap. However, the relative cost of adaptation capital facing emerging markets remains unclear. To understand this, we analyze the green premium (Greenium) of 444 green bonds issued by governments and public agencies across 35 countries globally, spanning 17 currencies.
Our results indicate that, among green bonds from emerging markets, the Greenium of adaptation bonds (green bonds whose use of proceeds includes climate change adaptation) is larger than that of non-adaptation bonds. The former is even larger if these adaptation bonds are from countries with higher physical risk exposure or stronger governance capacity. Notably, even among countries with above-median physical risk exposure, the Greenium of adaptation bonds from emerging markets is still larger than that from developed markets. Our results show the potential for emerging markets to mobilize more private capital in the green bond market to supplement public finance in supporting climate change adaptation.
The full paper can be accessed via this link.
“Greenwashing Risks in the Corporate Climate Bond Markets: Expenditure-based Measurement, and its Implications for Financial Market Stability,” Keith Jin Deng Chan, Wilson Tsz Shing Wan.
Greenwashing, which occurs when a company makes unsubstantiated or misleading claims about its environmental commitment, undermines the credibility of green financial instruments that contribute to positive climate outcomes. This presents one of the most significant barriers to the development of climate finance. However, there is limited understanding of how to accurately measure firm-level greenwashing risk and its associated financial market implications.
In our paper, we introduce a novel and easily applicable method for assessing greenwashing risk by evaluating the extent to which a firm’s environmental expenditure deviates from its expected level. Unlike existing measures in the literature, which focus on the change in a firm’s final environmental performance - a metric influenced by both the firm’s efforts and external factors - our expenditure-based approach provides a more direct reflexion of firms’ efforts to improve their environmental performance.
Additionally, our measure, constructed using a representative sample of climate bonds with explicitly stated greenhouse gas abatement targets, demonstrates superior predictive power regarding firms’ decarbonisation outcomes compared to alternative measures in the literature. Based on our greenwashing measure, we find that institutional investors may paradoxically incentivize greenwashing climate bond issuers if the latter are inefficient in decarbonisation, leading to the misallocation of climate capital. When constrained in the climate bond market, some of these issuers turn to green loans, thereby exposing creditor banks to greenwashing risk. Our findings suggest that policymakers can encourage institutional investors to penalise greenwashing by promoting the diffusion of low-carbon technologies. Furthermore, to prevent the misallocation of loan credit and the accumulation of climate risk in the financial market, our greenwashing measure can serve as a valuable policy tool for monitoring assets in banks’ corporate loan portfolios. Finally, policymakers can collaborate with international financial centres, which have a more advanced sustainability disclosure ecosystem, to monitor firm-level environmental expenditure and effectively implement our proposed greenwashing risk measure.
The full paper can be accessed via this link.
“Do International Financial Centres Enable Circular Economy Investment? Firm-Level Evidence from BRICS Economies,” Prakriti Chahar, Neha Parashar, Deepa Pillai, Apoorva Joshi, Symbiosis School of Banking and Finance, Symbiosis International (Deemed University), Pune, India
As the global economy transitions towards more sustainable and circular production systems, the financial sector plays a pivotal role in mobilizing and directing investments aligned with environmental goals. However, the enabling role of spatial financial ecosystems like International Financial Centres (IFCs) in shaping firm-level circular economy investment remains empirically underexplored. This study investigates whether firms headquartered in IFCs exhibit greater commitment to circular economy practices, as reflected in resource and energy efficiency performance.
Focusing on a matched panel of 30 listed firms across five BRICS economies (Brazil, Russia, India, China, and South Africa) from 2018 to 2024, the study spans three CE-relevant sectors: manufacturing, utilities, and materials. We introduce the Circular Energy Transition Index (CETI) as a novel composite proxy to capture firm-level circular economy investment using Bloomberg-reported ESG data, which includes energy consumption, electricity use, and renewable energy integration. Grounded in institutional theory and the resource-based view, we hypothesize that IFCs, by virtue of their advanced regulatory infrastructure, ESG norms, and sustainability-oriented investors, act as institutional enablers that amplify firm-level capabilities for circular transition. A diagnostics-driven methodology is adopted. Ordinary Least Squares (OLS) regression is used for baseline estimation, followed by permutation testing for robustness, and Random Forest regression for interpretability and predictive strength.
Findings reveal that while IFC location alone is not a dominant predictor, it consistently ranks among the top variables explaining CETI variation, after profitability and firm size. This suggests that IFCs enhance circular investment only when firms possess adequate internal resources. The study contributes to financial geography, sustainable finance, and ESG measurement literature by providing empirical evidence of how IFCs can function as strategic catalysts for green industrial transformation. Policy implications include the need to strengthen institutional infrastructure within IFCs and to build absorptive capacities within firms to unlock circular economy investments.
The full paper can be accessed via this link.