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-makers
Financial 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 perspective
Figure 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

About the authors

Felicity Laird

Principal Analyst

Felicity is a Principal Analyst in the Net Zero and Energy Transition practice at Verdantix. Her research focuses on climate financial data and analytics, with a particular interest in how financial firms integrate this data into portfolio monitoring for net zero goals and the development of sustainable financial products. Prior to joining Verdantix, Felicity worked at BlackRock on the Product Oversight and Governance team, where she oversaw US retail mutual funds, including ESG and sustainable funds. She also previously managed the Energy Efficiency Investment Fund for Delaware’s Division of Energy and Climate. Felicity holds an MBA in Finance from the University of Delaware, an MS in Environmental Science and Policy from Johns Hopkins University, and a BS/BA in Natural Resource Management and Environmental Studies from the University of Delaware.

Ryan Skinner

Research Director, Net Zero & Climate Risk
Ryan is the Research Director for the Verdantix Net Zero & Climate Risk practice. He guides the research team to develop compelling research at the intersection of net zero strategies, carbon management, climate risk and technology. Prior to joining Verdantix, Ryan was a principal analyst at Forrester Research, where he initiated the research into ESG data and analytics offerings. He also has extensive experience of helping software companies with their messaging, positioning, market and technology strategies. Ryan studied at Duke University, the University of Manchester and the University of Oslo, and speaks Norwegian fluently.

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