The economic transition towards a low–carbon economy introduces opportunities and risks that can have a significant impact on the performance of companies, with larger potential ramifications for financial stability.
This transition represents significant challenges for financial institutions that can directly translate to real values, behaviours, planning, and strategy.
Central banks have cautioned the potential destabilising effects of climate change risk on financial stability, and policymakers have underscored the potential of climate transition as a source of systemic risk.
Such concerns have motivated central banks and regulatory authorities to consider the extent to which climate–related risks might undermine financial stability by implementing transition–based stress testing exercises.
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