Climate Risk Assessment and Corporate Valuation Framework

This document is a research report that outlines the dual climate risks investors face, stemming from both the transition to a sustainable economy and the increasing severity of physical climate events. It details how transition risks, arising from rapid policy changes and technological innovations, alongside physical risks such as extreme weather, can lead to asset devaluation and stranded assets. The report emphasizes that sectors beyond fossil fuels, including real estate, automotive, and agriculture, are also vulnerable. It presents a climate-adjusted valuation risk framework integrating three scenarios from the Network for Greening the Financial System (NGFS) to assess these risks. The findings indicate that sectors like technology and healthcare show resilience, while energy faces heightened vulnerability. The report underscores the necessity for proactive risk management and adaptive strategies to safeguard portfolio value in an era of rapid climate change, highlighting the importance of reassessing exposure across various sectors to mitigate potential losses and capitalize on opportunities in the green economy.