Climate-related risks, both physical and transition risks, have been shown to harm a wide range of individual and institution investors. Central banks and financial regulators (e.g., BoE, ECB, and FRB) are increasingly worried about these types of financial risks and trying to regulate them. Unfortunately, there is a lack of econometric models and tools to monitor, access, and manage them.

On the other hand, climate change is the ultimate challenge for economics. Recently, financial practitioners (e.g., analysts) have realized corresponding risks and priced them in financial assets. However, the climate-related risks have been insufficiently reflected in extant financial engineering theories or models. More importantly, financial engineering and innovations (e.g., green finance) can be a force that is of great importance to achieve the goal of carbon neutrality. There are extensive questions that are worthy to be studied.

This Special Issue welcomes contributions from scholars engaged in various fields to close the gaps and to shed more light on the problems of financial engineering during low carbon transition and implementation of carbon markets. Original research, theoretical studies, reviews, and empirical studies are welcomed.

Potential topics include but are not limited to the following:

• Pricing climate-related risk factors
• Forecasting and modeling carbon prices
• Climate-related risk hedging and portfolio management
• Carbon derivative design and trading
• The relation between low- and high-carbon assets
• Financial engineering issues in green financing (e.g., loans or bonds)
• The application of Fintech in climate-financial engineering
• Climate uncertainty and commodity prices
• Green finance and green innovation
• Mathematical programming for green financing applications
• Data mining and machine learning for green financing applications