Deloitte Climate & Sustainability Competency Lab
The lecture of the DCS Competency Lab held by Professor Irene Monasterolo and focused on the analysis of climate change risks and opportunities for businesses, a topic of importance both on the strategic front and for growing reporting requirements.
It also provided an account of the methodologies needed for calculating economic and financial impacts related to climate risks through approaches based on scenario analysis.
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.
Download the full interview
