Temporality and systemic risk: the case of green bonds

Catherine Mei Ling Wong

Journal of Risk Research, 2020, vol. 24, issue 1, 110-120

Abstract: This paper initiates the discussion on the temporal dimensions of systemic risk, building on the pioneering work of Ortwin Renn and colleagues. Temporality is implicit in the key characterisations of systemic risk, but never addressed specifically as a concept or a framing devise in risk research. This paper, therefore, explores what a temporal approach to systemic risk might constitute at the conceptual level. An initial attempt at operationalising a temporal lens is applied to the example of green bonds, bringing to light how the processes of creating a bond structure and securitisation bundles together multiple temporalities into the network of the bond on the one hand, and multiples other temporalities on the other. This leads to higher levels of inter-dependencies and co-movements within and across systems, with greater risk that failure in one part of the network can quickly lead to systemic failure. This is not to dismiss the many strengths of green bonds in dealing with climate change but calls for a deeper reflection on synchroneity and better techniques and processes to improve time coordination among the different financial and non-financial actors. This opens up new avenues for future research.

Date: 2020
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DOI: 10.1080/13669877.2020.1843067

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