The Environmental Footprint and Risk Exposure of a National Financial System

Eric Jondeau and Lou-Salomé Vallée
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Eric Jondeau: University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute
Lou-Salomé Vallée: University of Lausanne - Faculty of Business and Economics (HEC Lausanne)

No 26-04, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper develops a macroeconomic framework to measure the environmental footprint of a national financial system. By combining the national financial accounts with an environmentally extended multi-regional input–output (EE-MRIO) model, we estimate the greenhouse gas (GHG) emissions and other environmental pressures indirectly financed by domestic financial institutions. The framework allows us to reconstruct “from-where-to-where” exposures across institutional sectors and asset classes, while accounting for the full chain of financial intermediation and avoiding double counting. Applying this methodology to the Swiss financial system, we find that financed emissions amount to 120 million tons of CO2e in 2022, around 2.9 times Switzerland’s territorial emissions. Although emissions per unit of assets have declined, the overall footprint remains large due to asset growth and substantial foreign exposures. Extending the analysis beyond GHGs, we show that financed pressures on land use, water use, and material resource extraction are of similar magnitude to Switzerland’s consumption-based environmental footprint.

Keywords: Financed emissions; Environmental footprint; Financial accounts; Input-output analysis (search for similar items in EconPapers)
JEL-codes: C67 E44 G20 Q54 Q56 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2604

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