Along with a Working Group of 16 international banks convened by the UN Environmental Finance Initiative (UNEP FI), we developed a methodology for assessing risks and opportunities associated with the transition to a low-carbon economy (the “transition-related” impacts associated with climate change). The methodology addresses the Strategy element of the TCFD recommendations around the use of scenario analysis for forward-looking assessments of transition-related impacts.
Through this highly collaborative effort of scientists, risk practitioners, and sustainability experts we have set forth an innovative methodology that will serve to underpin enhanced climate-risk aware decision making and resource allocation.John Colas, Partner and Vice Chairman, Financial Services Americas
The key aim of the methodology is to help banks assess the transition-related exposures in their corporate loan portfolios where they may have concerns about the potential policy and technology-related impacts of a low-carbon transition, as well as an appetite to explore and capture associated opportunities.
We combine leading climate and economic modeling, leading credit stress testing approaches, and traditional credit analysis into a much more fit-for-purpose tool for climate scenario analysis.Ilya Khaykin, Partner, Financial Services
See the UN press release here.