Climate Tango: Principles for integrating physical and transition climate-risk assessment with sectoral examples
13 January 2022 – The University of Cambridge Institute for Sustainability Leadership’s (CISL) ClimateWise leads paper on integrating climate-related risk assessment.
Click here to download the report.
About
A systemic approach to understanding and addressing sustainability is critical to the financial sector tackling the complex network of interconnected issues. Despite growing awareness of the interrelation of challenges that face people, nature and climate, we must recognise that integrated assessments of sustainability issues remain at an infant stage. To address this will require significant attention in the coming years to bring disparate areas of research together in the same dance.
ClimateWise has long focused on climate-related risk assessment research. In this report produced with the UNEP FI TCFD programme, we step further toward the required systemic approach by exploring the combined financial impact of physical and transition risks. The report has developed theoretical principles and practical steps for implementation of an integrated assessment of physical and transition risks with examples of sectoral analysis. The research builds on the existing methodology and tools from the ClimateWise and the wider market, as well as workshops and interviews with financial practitioners.
Principles for integrated assessment of physical and transition risk
- Approach: Conduct transition and physical risk analysis simultaneously
- Level of analysis: Be sector-specific as well as location-specific
- Quantification: Capture climate risk impacts via forward-looking metrics
- Scenario-based analysis: Take into account feedback loops between physical and transition risk
- Relevance: Align to TCFD pillars
Citing this report
University of Cambridge Institute for Sustainability Leadership (CISL). (2022). Climate Tango: Principles for integrating physical and transition climate-risk assessment with sectoral examples. Cambridge, UK: University of Cambridge Institute for Sustainability Leadership.