What Are Climate Transition Risks?

by | Jul 30, 2020

Climate Transition Risks

What are climate transitions risks? Climate transitions are the efforts undertaken to tackle climate change (directly or indirectly) through policies, commitments and changing consumer preferences and that directly or indirectly affect a company’s GHG emissions. These transitions create risks that companies or investors face from a shift to a low-carbon economy, which could manifest across different risk categories (e.g. operational risks, financial risks, reputational risks, etc.)

Why do they matter? Climate transition risks are affecting multiple industries across the global economy and altering the fundamental practices of the financial sector.

How do I understand and respond to them? At Orbitas our mission is to quantify and communicate the financial risks tied to climate transitions in the tropical commodities sector that are often overlooked. One reason for this is that the tropical commodities sector is complex and no one has ventured to provide the necessary analytical framework to answer them clearly.

These questions have increasing numbers of financial, business, and political leaders searching for clarity. To aid your understanding, we have created a handy guide to the key terms we use to define our work. Click below to examine the terms Orbitas uses, the actors involved, and tropical commodities themselves so you can better understand the full portrait of climate transition risks.

 

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