Deloitte Climate & Sustainability Competency Lab

About the speaker

Irene Monasterolo is a full professor of climate finance at EDHEC Business School and research program director of the EDHEC-Risk Climate Impact Institute. Her research concerns the role of finance in achieving climate goals. She has contributed to the development of climate stress test methodologies that incorporate scenario analysis into financial valuation and risk assessment models, and which have been used by several financial institutions to measure exposure to physical and transition risks.

Interview with Irene Monasterolo

C-TAKEAWAYS: Fast facts for the C-level

• Climate is a financial risk, intrinsic to business.
• Transition risks emerge according to how changes, such as climate policies and regulations, are enforced.
• Climate-related financial risk disclosure aims to assess what is the exposure of a financial institution to climate risk, either physical or transition, and their main drivers.
• Climate-related financial risk assessment aims to quantify the financial loss for a financial institution having a certain level of exposure to climate risk.
• Climate stress test is the main tool of climate-related financial risk assessment.
• There are opportunities in embedding climate into investment decisions, such as first-mover advantage.
• Not being able to address climate risk could become a reputation risk and prevent firms from exploiting new market opportunities, emerging in the transition to a low carbon or net zero economy.

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Interview with Irene Monasterelo

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