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ClimateWise transition risk framework: Managing the impacts of the low carbon transition on infrastructure investments

The ClimateWise Insurance Advisory council has launched an open-source framework to support investors and regulators assess how the transition to a low carbon economy will impact the financial performance of infrastructure investments. The framework and accompanying step-by-step guide align with the G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and inform practical actions – for asset managers, owners and regulators – on capturing emerging opportunities from the low carbon transition.

Download the ‘Step-by-step Guide’ and Infrastructure Risk Exposure Matrix.

 


"The ClimateWise Transition risk framework introduces a compelling methodology, and accompanying tools, to help asset owners and managers gain a better understanding of transition risk, and integrate into their own financial decision-making"

Geoff Summerhayes, Chair, UNEP Sustainable Insurance Forum and Executive Board Member, Australian Prudential Regulation Authority

 

Why transition risk?

A sudden and disorderly transition to a low carbon economy will financially impact investment portfolios. Transition risks include policy changes, carbon taxes, reputational impacts, and shifts in markets and technology. These will vary across geographies, sectors, time horizons and according to commitments to limit global temperature rises.

Why infrastructure?

In today’s low interest rate environment, infrastructure offers stable income and portfolio diversification. However some infrastructure assets are exposed to transition risk that could impact their financial returns. With a better understanding of transition risks investors could better manage portfolio risk.

About the project

This project was co-funded by the ClimateWise Insurance Advisory Council and The Finance Dialogue.

It was produced in partnership between the University of Cambridge Institute for Sustainability Leadership (CISL) and global sustainability consultancy ERM, with input from The ClimateWise Insurance Advisory Council and the projects Advisory Panel.

Published: June 2018

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