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Filling the climate finance gap: holistic approaches to mobilise private finance in developing economies

Transitioning to a low-carbon economy requires over $8.4 trillion annually for the rest of this decade, but current efforts are insufficient, especially in emerging markets and developing economies (EMDEs). Using a theoretical model of the climate finance gap, we identify key factors needed to close this gap and examine how adjustments in carbon pricing could effectively mobilise the required investment. Our findings highlight the importance of strengthening two core elements: (1) Reframing ‘international carbon markets’ to focus on supporting comprehensive, equitable transitions in EMDEs and fostering large-scale systemic cooperation, and delivering real mitigation impacts. (2) Implementing holistic transition plans and cohesive packages of public, private, and market support to create economic, social, and political environments that enable credible and effective policy implementation, while providing the critical technology and skilled labour needed to make private financial flows more responsive to carbon price signals.

The risk effects of corporate digitalization: exacerbate or mitigate?

This study elaborates on the risk effects of corporate digital transformation (CDT). Using the ratio of added value of digital assets to total intangible assets as a measure of CDT, this study overall reveals an inverse relationship between CDT and revenue volatility, even after employing a range of technical techniques to address potential endogeneity. Heterogeneity analysis highlights that the firms with small size, high capital intensity, and high agency costs benefit more from CDT. It also reveals that advancing information infrastructure, intellectual property protection, and digital taxation enhances the effectiveness of CDT. Mechanism analysis uncovers that CDT not only enhances financial advantages such as bolstering core business and mitigating non-business risks but also fosters non-financial advantages like improving corporate governance and ESG performance. Further inquiries into the side effects of CDT and the dynamics of revenue volatility indicate that CDT might compromise cash flow availability. Excessive digital investments exacerbate operating risks. Importantly, the reduction in operating risk associated with CDT does not sacrifice the potential for enhanced company performance; rather, it appears to augment the value of real options.

When the customers comes to you: mobile apps and corporate investment efficiency

Firms are increasingly shifting towards digital channels, yet the implications of this shift remain underexplored. Using a unique database of customer behaviors extracted from the top 2000 mobile apps developed by companies in China, this study investigates the impact of mobile apps on inefficient corporate investments. The results indicate that metrics such as active user count, usage duration, and app launch frequency can mitigate inefficient investments, notably by curtailing overinvestment. These findings survive a series of robustness checks such as altering the measures of inefficient investment, extending the analysis to include the top five apps, incorporating H-share listed firms, and employing instrumental variables regression. Moreover, the mechanism analysis indicates that mobile apps help reduce inefficient investments by lowering agency costs and relaxing financial constraints. Further analysis examines the business models of these apps (paid vs. free) as well as their reputation mechanisms, revealing that the pricing strategies of apps and the reputation of corporate brands also play a role in how the adoption of mobile apps affects inefficient investment.

Climate change threatens crop diversity at low latitudes

Climate change alters the climatic suitability of croplands, likely shifting the spatial distribution and diversity of global food crop production. Analyses of future potential food crop diversity have been limited to a small number of crops. Here we project geographical shifts in the climatic niches of 30 major food crops under 1.5–4 °C global warming and assess their impact on current crop production and potential food crop diversity across global croplands. We found that in low-latitude regions, 10–31% of current production would shift outside the climatic niche even under 2 °C global warming, increasing to 20–48% under 3 °C warming. Concurrently, potential food crop diversity would decline on 52% (+2 °C) and 56% (+3 °C) of global cropland. However, potential diversity would increase in mid to high latitudes, offering opportunities for climate change adaptation. These results highlight substantial latitudinal differences in the adaptation potential and vulnerability of the global food system under global warming.

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