ABSTRACT
Climate change, financial instability and social inequality are viewed as the major systemic risks in modern times. But not only will those three systemic risks have a chain effect on society, the carbon bubble and stranded assets issues imply an interlinkage between climate change and financial instability: the regressive effect of key economic instruments such as the carbon tax is highlighted. As far as climate change is concerned, Taiwan is facing the challenges of high climate vulnerability and high carbon intensity. In addition, a significant share of pension funds is invested in energy-intensive industries, therefore there is a likelihood that stranded assets will diminish the expected returns of the fund. Therefore, this chapter attempts to analyze the drivers and interlinkage of the above systemic risks and apply the risk governance framework to establish the resilience of the Taiwanese people.
