According to the FSB Task Force on Climate-related Financial Disclosures (FSB TCFD) recommendations, we put a greater emphasis on scenario analysis to assess the opportunities and risks from measures taken to limit temperature change. Given the uncertain nature, probability and magnitude of these issues, scenario analysis is a particularly well-suited method to complement traditional financial analysis. We build on pilot models developed by The CO-Firm, KECH climate research and a growing body of literature to suggest ideas as to how scenario analysis could be performed and included in company valuations and investment decision-making. A series of reports will examine these insights on a select number of sectors and companies, starting with utilities. You can read the report here.
Since the FSB Task Force on Climate-related Financial Disclosures (FSB TCFD) published its recommendations, there has been a greater emphasis on scenario analysis to assess the opportunities and risks from measures taken to limit global warming. Building on our Investor primer to scenario analysis, this report has two climate scenarios for the utilities sector, and specifically for Engie, ENEL, and EDF. We demonstrate the implications for these companies’ valuations in using two examplary strategic choices. We provide insights in company engagement and financial performance with their regional and technology contributors as well as sensitivities. You can read the report here.
Berlin, Hamburg, January 2018
Referring to the renewal, CDP Managing Director Steven Tebbe commented that “CDP is pleased to renew the consultancy partnership with The CO-Firm GmbH for a further year. The CO-Firm GmbH has a strong track record, working with companies responding to CDP and helping them to implement both good carbon management practices and sustainability into their organizations. We hope our partnership will continue to be a valuable resource to our responding companies.”
The conference on climate scenarios, financial risk and strategic planning was held in London from 31st until 01st November 2017. We introduced climate scenarios for improved strategic and financial risk analysis. You can find our presentation here.
The CO-Firm develops free toolbox for profitable investments in climate protection for commercial properties
For a joint project of owners of commercial properties, financial services providers and companies from the energy efficiency sector (“Financial Forum Energy Efficiency in Buildings), The CO- Firm developed a free toolbox with five tools. With these tools, you can identify climate protection measures and put them into practice. You can get the tools here shortly.
The CO-Firm introduces new approaches for climate reporting according to the requirements of G20 and the Task Force Climate-Related Disclosures at the “40 days till COP23” conference organised by thyssenkrupp, Bosch and ICC in Essen.
The GFSG asked a group of experts to review nine case studies, among them our climateXcellence model. The results suggest that if financial firms do not effectively take environmental factors into account, they may underrate short- and long-term environmental related financial risks.
You can read the report here. For further reading, we recommend the GFSG’s background paper “Enhancing Environmental Risk Assessment in Financial Decision-making”.
The CO-Firm publishes report: Changing Colors; Adaptive Capacity of Companies in the Context to a Transition to a Low Carbon Economy
In this report, co-authored with 2° Investing Initiative with the support of Allianz Global Investors and Allianz Climate Solutions, we developed a framework for understanding adaptive capacity of companies and the external and internal drivers that may contribute or detract from this capacity. It demonstrates the challenges around anticipating the winners and losers of this game both in the short- and long-run and how adaptive capacity is a zero-sum game.
The CO-Firm, on behalf of the German enterprise’s initiative for energy efficiency (DENEFF), supported by the Federal Ministry of Environment, Nature Conservation, Building and Nuclear Safety uncovered why investments in climate protection measures take place (or why they do not) and what property owners need to be able to make better decisions in the future regarding climate protection. We developed a toolset of innovative projects that targets the needs of property owners and enables moving towards a sustainable building stock.
The Federal Government aims at reaching a virtually climate neutral building stock until 2050. Commercial properties – although the number is comparatively small – are responsible for almost half of building related emissions in Germany. At the same time, climate protection measures do not play an important role for this sector. In order to move towards a climate neutral transition pathway and meet the Federal Government’s targets in the Paris agreement, billions of investments in the building sector and in commercial properties are necessary. This opens up great opportunities for the commercial property sector, energy efficiency sector and Financial service providers. Property owners, on the other hand, who do not invest, face great risks.
You can read the Study (German) “Climate friendly commercial properties: property owners, investment processes and new tools for more investments in climate protection” here.
The CO-Firm and 2ii release “Transition-risk-o-meter”
An increasing number of actors demand (voluntary) disclosure of climate transition related risks. These comprise national governments, as in the case of France, and organizations such as the Task-force on Climate-related Financial Disclosures (TCFD).
Within the Energy Transition (ET) Risk project funded by the Horizon 2020 research and innovation programme The CO-Firm models financial climate transition-related risk for a number of selected sectors and companies, in a consortium with 2° investing initiative, Carbon Tracker, Kepler Chevreux, Institute for Climate Economics (I4CE), University of Oxford and S&P Global.
Building on the TCFD’s recommendations, The CO-Firm and 2° investing initiative developed a „Limited Climate Transition“- and a „Ambitious Climate Transition“-scenario. These scenarios complement and detail assumptions taken by IEA with additional parameters and country-level assumptions, so that the scenarios can lend themselves to climate risk analysis. Key risk drivers comprise production and technology, commodity and market prices, policies and cost incentives up to 2050.
You can read the report here.