A crucial business risk with too many analysis methodologies
“Climate” risk is urgent, global, systemic and irreversible in nature, closely linked to the use of fossil fuels, a determining factor in economic development. It can be broken down into a “physical risk” (increase in abnormal natural phenomena) and a “transition risk” (arising from the requirement for businesses and government to limit greenhouse gas emissions).
As an issue, climate has picked up momentum since the signing of the Paris Agreement in December 2015. The finance sector in particular is continually exerting pressure on companies to prepare for “climate” risk, develop their strategies and their reporting accordingly.
This background encourages a proliferation of “climate” risk analysis methods and the emergence of new company assessment standards, which until now have been mainly based on financial indicators alone.
Companies are increasingly questioning the maturity, relevance and diversity of these analysis methods.
Study goals and approach
AFEP asked The Shift Project think tank to carry out an analysis of the key players in “climate” risk assessment, their methodological choices and the main directions of this market. The purpose is to give companies a better insight into the environment they operate in, in terms of “climate” risk analysis.
In particular, The Shift Project team held:
The 5 lessons of the study
The issue of climate is becoming ever more central, and there is a notable consensus in French political and financial circles on the gravity of the situation. Out of this, a long-term national ambition should emerge. France has already almost completely decarbonised its electricity production and passed proactive legislation, and has many other assets that will allow it to face up to the climate challenge and become a leader in the future low carbon economy in Europe and the world.