Smart Innovators: Transition Risk Data And Analytics
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Executive Summary
Transition risk has traditionally taken a backseat to physical climate risk in financial assessments. However, as the policy environment evolves and expectations for climate accountability grow, understanding and managing transition risk is becoming increasingly critical. Unlike physical risks, transition risks are more challenging to quantify, given the uncertainty around future regulatory, market, reputational and technological developments. This report provides a benchmark analysis of 13 vendors, evaluated across five themes and 13 key capability categories that define best-in-class transition risk assessments for financial institutions. Vendors can use this report to understand their competitive positioning and identify potential gaps in their solutions. Buyers of transition risk data solutions can leverage this analysis to guide software selection and purchasing decisions, ensuring alignment with strategic, regulatory and portfolio resilience objectives.
Table of contents
Summary for decision-makersFinancial firms must prioritize transition risk – even when it’s hard to measure
Regulatory pressure and investor demands are making transition risk unavoidable
Effectively managing transition risk requires better data, scenario analysis and adaptive investment strategies
The emerging market for transition risk data and analytics
Transition risk data and analytics providers offer 13 key capabilities across five core themes
Leading vendors clarify and quantify transition risks to portfolios in scenarios that span social, economic and environmental factors
AI, geospatial insights and asset-specific intelligence are distinctive innovations for vendors
Buyers must start with vendors’ data depth, then evaluate team and product fit
Firms should create a checklist to assess how vendors map to their systems, processes and scope
Table of figures
Figure 1. Transition risks defined from an investor perspectiveFigure 2. Challenges in managing transition risk accumulate through fragmented data, inadequate models and misaligned systems, making portfolio optimization difficult
Figure 3. Vendor background information
Figure 4. Transition risk data and analytics capabilities and definitions
Figure 5. Transition risk data and analytics providers: capabilities assessment
Organisations mentioned
Baringa, BlackRock, Bloomberg, Capgemini, Carbon Disclosure Project, Chevron, Clarity AI, Dartmouth College, Deepki, Deloitte, EDHEC Climate Institute, Emmi, EY, FactSet, GRESB, IAM Consortium (IAMC), ICE (Intercontinental Exchange), International Energy Agency (IEA), International Sustainability Standards Board (ISSB), IPCC (Intergovernmental Panel on Climate Change), ISS STOXX, KPMG, LSEG, McKinsey & Company, Moody’s, Morningstar, MSCI, NGFS, Oliver Wyman, Ortec Finance, PwC, Risilience, S&P Global, Stanford University, Sustainalytics, Task Force on Climate-related Financial Disclosures (TCFD), Transition Pathway Initiative (TPI), UNAbout the authors
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