Strategic Focus: Transition Risk Primer

Published 20 November 2023 by Emma Cutler & Ryan Skinner &

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Executive Summary

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.

Table of contents

Transition risk is a current and worsening threat
Transition risks already affect firms
Future risks will stem from disorderly, delayed or disjointed transitions to a low-carbon economy
Firms should also explore upsides to the transition
Taking action on transition risk
Scenario analysis provides an informed view of transition risk
Materiality assessments rely on monetizing transition impacts
Transition plans support climate action
Climate-specific indicators track progress and identify weaknesses
Partnerships are critical to a successful transition

Table of figures

Figure 1. A disorderly transition results in multiple direct and indirect disruptions
Figure 2. Transition plans are key for outlining actions to reduce risk
Figure 3. Sources of transition risk exposure determine the need for external collaboration

About the authors

Emma Cutler

Senior Analyst

Emma is a Senior Analyst in the Verdantix Net Zero & Climate Risk research practice. Her current research agenda focuses on climate risk and resilience. She has a background in simulation and statistical modelling applied to climate adaptation, coastal management, and international development. She holds a PhD in systems engineering from Dartmouth College and a BA from Bowdoin College.

Ryan Skinner

Research Director, Net Zero & Climate Risk
Ryan leads the Verdantix Net Zero & Climate Risk research practice. The team’s current research focus encompasses net zero drivers and strategies, and climate risk, emissions reduction, and carbon management technologies. Ryan has 10 years of experience in the research business, previously working at Forrester, where he led research on ESG. Ryan speaks English natively, Norwegian, and French conversationally. He holds a BA from Duke University. 

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