A risk value pathway ensures your business remains robust by assessing physical and transition risks and opportunities in your supply chain, operations and market. We use this model to inform our work.
Understanding the risk posed to investments by climate change is now a mainstream issue and subject to increasingly stringent investor and regulatory and quasi-regulatory requirements. Investors must consider how both the physical effects of climate change and the market and regulatory drivers behind the move to a low carbon economy will impact individual investments.
Increasingly, investors must also publicly disclose that information, following formal frameworks such as the Task Force on Climate-related Disclosures (TCFD). Risks to value and ultimately of stranded assets are thus increasing.
Despite uncertainties around the precise effects of climate change at a local level, impacts can still be modelled with sufficient confidence to provide valuable input to business planning and enterprise risk management.
Anthesis helps clients understand climate risks and opportunities using our three-step approach. We use frameworks such as the TCFD to help understand the resilience of a business’ strategy and therefore help them, and their investors, lenders and insurers to assess and price climate-related risks and opportunities.
Our analysis involves undertaking both a materiality assessment and deeper scenario analysis and modelling, to identify the key issues prior to working to develop solutions to them:
- Identify priority business issues – establish focus by identifying which aspects of the business are most vulnerable to changes in climate or a transition to a low carbon economy, or present opportunities. Apply our proprietary business climate impact questionnaire, the financial analysis literature and workshops to prioritise key business issues and risk pathways for analysis in step two.
- Evaluate the impact – evaluate the likelihood and financial magnitude of the most important climate-related business risks and opportunities.
- Optimise the response plan – model the net cost savings from adaptation measures. Model strategic responses to the opportunities and risks of economic transition and conduct workshops to explore practical implementation, including disclosure.
At a fund level, where investment may be spread across tens or even hundreds of businesses or assets, Anthesis is skilled at undertaking cost-efficient, high-level portfolio assessments that seek to map climate change risks, identifying the key assets and issues of concern upon which to focus future mitigation and resilience strategies. This can involve reviewing client data and building assessments based on sector and geographic reviews, often using the Anthesis designed RiskHorizon software.
I have worked with Anthesis for many years. They have a depth of ESG understanding and expertise, allowing real analysis and advice on the emerging issues that are becoming increasingly material to our clients. What sets them apart is their willingness and ability to apply this, together with technology solutions, to enhance the quality and speed of their reporting.
We wanted the ESG screen as we were keen to understand the definition of ESG and to see the criteria you would be using. We were also interested to see how others would view us through this lens. The Anthesis screen provided us a with a “mirror”. The value to Neste was that it confirmed we are on a right track to addressing ESG issues. It also helped us to identify some potential improvement opportunities, several of which we are working on, and others that warrant further evaluation.
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Anthesis has offices in the U.S., Canada, UK, France, Ireland, Italy, Germany, Sweden, Spain, Portugal, Andorra, Finland, Colombia, Brazil, China, the Philippines and the Middle East.