Strategic Focus: Transition Risk Primer

Transition risks – that is, risks that emerge from the global transition to a low-carbon economy – are already having material impacts on corporates. However, many firms lack the skills and knowledge to assess and address them. This report provides an overview of these threats and opportunities – specifically, changing markets, new technologies, lawsuits, climate policies and reputational damage – as well as the impacts of a disorderly transition. We also discuss the varied ways these risks materialize, for example, via carbon prices, consumer behaviour and stranded assets. Finally, we outline strategies to plan for and mitigate these risks, such as transition planning based on scenario analysis and partnering with external stakeholders.