We are pleased to announce the publication of a new Working Paper by SEACEN Senior Economist Nur Ain Shahrier, and her co-authors Zaheer Anwar and Milena Migliavacca:
(WP4/2025) Horizon Dynamics of Systemic Risk in Global Energy Firms
Could the firms driving the clean-energy transition also hold untapped influence over financial interconnectedness?
In this paper we find that climate transition isn’t just an environmental issue. It’s a financial network story. By tracking the daily default-risk behaviour of more than 60 top global energy firms, we uncover connections showing how stress moves across the energy sector, and why central banks should pay attention.
Three things stand out:
Crises don’t hit all firms equally. During COVID-19, long-term relationships between firms broke down but short-term contagion exploded, spreading risk rapidly across the sector.
Green energy leaders are more interconnected than people think. Their strong environmental performance doesn’t make them isolated or insulated. In fact, they are often more tightly woven into global financial networks, meaning a transition shock to one major green firm can ripple across markets.
Developed and developing countries live in different risk worlds. In developed economies, both green and brown energy leaders tend to show stronger and more persistent long-run linkages, meaning shocks can travel more broadly and endure over time. In developing economies, however, connectedness is typically concentrated in the short and medium term, with long-run linkages emerging mainly during major events before receding again. This suggests that developing markets are shaped more by event-driven dynamics rather than by structural long-term interdependencies.
Why does this matter?
Click here to read the paper in full!
