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.
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.