Virtual Event

Beyond Carbon Price: The Quantification of Climate Transition Risks

About this event

Climate-transition risk quantification is a crucial (and often under-addressed) dimension of financial risk management. In order to effectively assess how portfolios may gain or lose value under climate transition scenarios, it is crucial to look beyond emissions-based metrics. Find out more as we examine the methodological foundations of Conditional Transition Loss (CTL) analysis for listed equity portfolios.

Thursday, December 04, 2025

Access the On-Demand Replay

60 Minutes

Key Insights for Investors:

Climate transition risks, driven by shifts in policy, technology, and consumer preferences, present significant challenges for portfolio management. Existing short-term climate stress tests focus predominantly on carbon pricing and its impact on operational costs, often neglecting longer-term transmission channels related to demand-driven changes in firm revenue dynamics.
This paper introduces a model that integrates firm-specific ’green’ revenues, aligned with the European taxonomy, with economic and energy variables derived from adverse transition scenarios. By capturing the interplay between revenue and operational cost transmission channels, the model derives a conditional transition loss metric
Applied to the 1,287 constituents of the MSCI World Index, the analysis highlights three main results: revenue impacts are as influential as carbon pricing in shaping transition risks; heterogeneous effects within sectors show some firms benefiting under ambitious transition scenarios; and uncertainty around socio-economic pathways significantly affects conditional transition loss estimates.