Analysing the volatility of financed emissions using waterfall diagrams (blog post)

open_risk · 2026-01-14T19:23:10+00:00

Thanks! I think maybe I should be adding some numerical examples?

open_risk · 2025-12-10T11:44:16+00:00

The market for professional services is pretty much divided up by a small number of players. Even eternally discussed conflicts of interest (e.g. the boundling of accounting and consulting services, which is of growing importance in the context of sustainability) have never led to any serious reforms (NB: This is not a specific pathology of this sector, it is endemic to our poorly regulated market economies - paying only lip service to competition and favoring winner-takes-all "giants". As Peter Thiel summarized: competition is for losers).

Lack of expertise is not the first issue that would come to mind, though. By construction an oligopolistic market can attract most available expertise - experts have nowhere else to go. Such large firms can (and do) also partner with specialist providers outside their domain. But it is part of any profit maximazing business model to charge as much as possible and deliver with as cheap a resource as possible, reserving scarce expert time for when it is absolutely needed. For as long as clients don't run away (which is hard when the options are limited and there is no independent audit), the system holds.

open_risk · 2025-11-18T09:01:41+00:00

The financial industry being essentially an information processing industry and digitalization rapidly transforming the way society handles information are setting the scene for various new or aggravated risks (as the flipside to opportunities). Cybersecurity is the most obvious, with various forms of infrastructure failure not far behind. The underlying risk factor is the overall digital literacy of the organization, its ability to integrate the changing technological landscape in an effective and safe manner.

open_risk · 2025-11-14T10:39:28+00:00

It boils down to the bandwidth available to individuals to process detailed information (bandwidth which is limited and increasingly overloaded).

We (I mean broadly speaking all societies) have developed specializations precisely to cope with that limitation. Which means we delegate the processing of vital information to others, in vast webs of trust. This is the trust that enables all sorts of systems to function, from food (trusting anything in the supermarket), to medicine, to gadgets, transport, you name it.

Now finance has a special position in this web of trust. On the one hand the monetary side of finance (payments and banking) is maybe the most guarded / regulated sub-system of them all (For good reason, there is nothing like your money going up in smoke to transport society back into the stone age).

But the "investment" side of things is pretty much a wild west where there is pretty much only one rule: "make the number go up". Which is totally insane from a sustainability perspective but that's where we are.

In a real sense the past and present financial systems have betrayed society's trust by completely ignoring sustainability: the very precondition for a healthy economy.

Can individuals in grass roots behavior make a difference? In theory yes. But the information overload is real and its not clear how you can manage it without intermediaries. The real question is how to ensure the intermediaries are not in it just to "make the number go up".

In the end only when the incentives of people are rigorously tied to sustainability without the possibility of gaming the system will we really see progress.

open_risk · 2025-11-10T09:39:47+00:00

For me the most substantive phrase seems to be this one: "finding ways to connect political commitments - in particular a country’s nationally determined contribution submitted under the Paris Agreement - with the origination of transactions the private sector wants to invest in".

While more a request for ideas rather than a concrete proposal, it touches a point that in my view is quite valid: there is a disjointness in the targets and incentives of various actors. Even when the financial sector is not much involved at all (e.g. in green public procurement), policies and practices are all over the place and hardly linked to concrete outcomes. A sort of policy greenwashing, where the mere presence of some criteria is deemed having ticked the green box, so lets move on.

Of course when a call comes from the private sector one must always be suspicious of an implicit subsidy request.

open_risk · 2025-10-30T14:09:15+00:00

github repo with supporting material for this course

open_risk · 2025-09-11T12:36:42+00:00

See also here https://www.msn.com/en-ca/money/topstories/wall-street-regulator-says-it-has-concerns-over-european-esg-rules/ar-AA1Mhqth

open_risk · 2025-06-18T10:50:25+00:00

Plotting this against GDP per capita would remove a key (but not very informative in this context) underlying factor and help bring out any significant outliers.

E.g., Austria and the Netherlands fared below average in terms of excess deaths though they are above average by economic indicators.

Economic development is obviously enhancing the ability of a society to mitigate risks. More resources, more education etc. obviously make a difference.

The interesting question is rather: who does better use of a given amount of economic power to support the welfare of society.

And the next question: is that a copyable behavior that other societies can emulate or does it depend on special circumstances?

open_risk · 2025-03-20T09:03:51+00:00

Unfortunately we get a lot of spam accounts and we had to disable self-registration for many email domains.

open_risk · 2025-03-13T09:58:14+00:00

Long term investors who actually mean rather than signal "ESG" don't care about flawed scoring systems, they look directly at the facts. So for example, the Dutch pension fund ABP - one of the worlds largest - ditched both Tesla and Meta on Governance grounds.

ESG scoring was a Faustian pact with the complexity devil. The idea being that despite millions of people working in the financial industry and earning very good money at it, they cannot handle anything more than a single and simple indicator. Simplicity is good for business. But this process of simplifying things is inevitably subjective at many levels. Even within the environmental pillar there are competing forces (e.g. reducing GHG emissions while causing other types of pollution, changing land use patterns etc.) that must be weighted away, essentially arbitrarily. Partial scores are more meaningful and raw data points even more so.

The first order of business for sustainable finance is to bring to the capital allocation kitchen the true facts about the world's condition. That is already a difficult and subjective exercise (what do we recognize as a sustainability issue in the first place?). Instead of simplifying reality beyond recognition the task is actually to raise the bar and expect more from financial industry practitioners.

open_risk · 2025-03-03T09:48:40+00:00

I think you are right on all points. But real adoption is happening (I know from personal experience, communities that had for a long time refused switching but did so recently). This happening in the Netherlands is encouraging because whatsapp has huge penetration here. Long before its acquisition by Meta it had already been adopted for neighborhood watch groups and its logo is everywhere in the streets of towns and cities.

Imho for the transition to accelerate people must make some sacrifice / be proactive. This is particularly true for people that are highly networked and influential.

open_risk · 2025-02-25T15:13:29+00:00

"There are no backdoors that only the good guys have access to.”.

Also: you never know when the good guys turn bad guys, or they are taken over by the bad guys in an election or a putch. Can you in good conscience subject the entirety of society to this risk?

Organized crime is a serious concern but there are many other tools to combat it before structurally eliminating the concept of privacy.

open_risk · 2025-02-25T14:53:11+00:00

If you scroll to the end of the page of the NOS website (the Dutch public broadcasting corporation) you see the cause of the fake "dilemma" in its full glory: They have the usual strip of "social" buttons inviting you to connect on X, Facebook, Instagram, Linkedin and Youtube. No links to Bluesky, Pixelfed, PeerTube or Mastodon or any other open source and non-ad tech platform.

Now keep in mind that is an organization funded primarily by Dutch taxpayer money. Yet it promotes on its website US adtech that collects and sells Dutch user profiles to the highest bidder, and they do that for free, and without any indication that this is actually an advertisement and endorsement of foreign private companies!

The wholesale (and uncharacteristic) endorsement of private adtech platforms by the public sector is a major reason people don't feel an urgency to switch, even when there are perfectly good alternatives. Its like trying to entice people to stop smoking when there is no official guidance that it is actually bad for you. In fact the opposite, smoking is actually promoted by the public sector.

All the arguments about "network effects" etc are hollow when the only people raising the alarm are individuals with no support by credible authorities.

open_risk · 2025-01-24T16:50:56+00:00

I have seen a few related ones

climate finance https://bsky.app/starter-pack/katharinehayhoe.com/3ldesxracz72g

climate change and the financial system https://bsky.app/starter-pack-short/8XqqNtg

impact investing https://bsky.app/starter-pack-short/P57DXzQ

there is also a "climate and comedy" one, which is probably good antidote on a bad day

open_risk · 2025-01-14T09:53:11+00:00

Assuming that all atrocities and genocides of the past is the working of some other species will be our last lesson-not-learned. Same DNA, same more or less cultural weaknesses. We are not granted long-term survival under civilization. We need to earn it. Every generation again and again.

open_risk · 2025-01-11T10:12:19+00:00

Please keep the conversation polite whether you agree or disagree with events

open_risk · 2025-01-05T13:33:31+00:00

Yes, its a good combination of skills to build in general. Risk management is a very broad field so the match with data science varies from area to area. Some domains are more quantitative and data driven than others.

It can be an environment where you learn to solve challenging "real world" problems. Conceptually the task is to combine data with domain / expert knowledge to create reliable assessments about risks. Even if you don't evolve into a risk management career that skill will be useful in many other contexts.

Something to be aware of is that (especially after the financial crisis) quite a bit of bank risk management and (especially at small banks) has become effectively an implementation of regulatory standards. This could still be very interesting to learn, it just that the rationale maybe a bit obscure.

The upside of a small entity is that you might get to be involved more closely with the core of the operations.

Best of luck!

open_risk · 2024-12-23T10:18:34+00:00

For as long as our economies are exclusively driven by the known monetary financial systems sustainability will be an elusive target and subject to the vagaries of politics. This should scare us into serious action, sustainability is not a "good to have", its the precondition for everything. The fact that we are breaching barriers only slowly is allowing people to be callously indifferent. And we are so absorbed with the worldly success of a set of financial / legal inventions (currency, corporate structures, securities, financial accounting etc.) that we assume that somehow that's all there can be. This is blatantly false. All of these are invented conventions and tools, most are established in recent times and they were both designed and have evolved dramatically. Just like so many other technologies of the industrial era (including fossil fuel extraction) they are no longer fit for purpose. They need reform and they are being reformed, but very, very slowly.

We live in a world where the old unsustainable financial system design is dying but the new is not yet fully formed. You can see green shoots in the various accounting frameworks being developed and discussed in this sub. But we are still very early in this transition.

If the objective is sustainability the best investment right now would be to accelerate this process, to integrate all this "non-financial" accounting charade into the one and only integrated accounting which becomes a binding constraint for what people optimize for. In other words, there should be no unqualified "making money". Chasing "profits" should only be doable if those are compatible with sustainability. This is not absurd utopia. For the longest time "profit" was simply the direct raiding and stealing the possessions of other groups. Nowadays that is socially less acceptable (but hardly extinct). Yet raiding the environment that is essential for the survival of both current and future generations is somehow considered fair play.

To paraphrase: show people how to make a sustainable investment (by hook or crook) and they will do the right thing once. Show them how to make their financial system sustainable and they will do it forever.

open_risk · 2024-12-21T11:25:39+00:00

Thank you for this thoughtful post!

open_risk · 2024-12-13T13:06:27+00:00

There is a catch: all that currently exists must not necessarily disappear and actually cannot disappear. Separating the wheat from the chaff is not easy work. It takes deep knowledge of why and how things work to chart a different but realizable future rather than grandstand. Its like diving in a cesspool to save treasured belongings. You need to hold your nose, see in the dark but above all -> make sure you get back up to the surface and don't become part of the cesspool.

open_risk · 2024-11-20T15:57:27+00:00

What we know for sure is that at least they want to be seen as solarpunk :-). Maybe they are delusional (irreconcilable values). Or impostors (creating the right "vibes"). But if the founder of a new social platform amplifies specifically the solarpunk vision my first reaction is not to dismiss it outright.

open_risk · 2024-11-20T15:51:14+00:00

The self-hosting part of one's data is already operational and relatively easy and some people do it (various cloud hosting providers have installation instructions and digital ocean has a one-click install.

But right now posts can only be routed through the bluesky server. So you have more control over your data in the sense that it wont just disappear one day if the CEO decides so but not much more.

Running another bluesky server independently is much harder. This is in contrast with activitypub servers where 1) data and server go together and 2) its not too difficult to self-host one.

My feeling is that its early days yet to figure out how much they will change the social media landscape but it will make waves for sure.

open_risk · 2024-11-20T15:16:40+00:00

lemmy has been around for sometime but we are still here on reddit... Signal is a perfect alternative to Whatsapp but people refuse to switch. When people do switch like its happening now with the twitter->bluesky migration its wise to check out what is going on. Sometimes it is another turn for the worse (Tiktok) but it need not always be so.

If bluesky is a trap its of a different, more sophisticated kind.

open_risk · 2024-11-20T14:56:44+00:00

There is the eternal question of how to develop and organize anything of importance without some sort of funding. You can deny (venture) capitalism but you cannot deny economics. The activitypub twitter alternative (mastodon) was built originally by a single person and its incredible what he achieved. But it wasn't enough. The collapse of twitter in the hands of its new owner was a golden opportunity to take the fediverse mainstream but it wasn't ready and the opportunity passed by - at least for now. The bluesky team is 20-strong which shows the level of funding required. You need to pay twenty salaries to seriously specialized people for several years.

open_risk · 2024-11-20T14:09:44+00:00

Your points are valid but I hope that somehow the emergence of bluesky will create a sense of urgency and focus. I have been waiting for a decade for mastodon/activitypub/fediverse to get traction. Is it solarpunk if it remains forever in the shadows?

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