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.
The Business Response to Climate Change
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.
As such, organisations must now define clear climate change strategies in their response. For investors, this must include a clear approach to identifying both current and potential investments that are at risk of material impact to value or potentially ultimately becoming stranded assets, by changes in government policy and consumer demand, and/or advances in rival technologies, such as hydrocarbon based fuels and energy generation.
Similarly, investors and company management teams, must also have clear strategies for ensuring the continued identification of the climate change risks that their core day-to-day operations will face, such as extreme weather or sea level rise, and their proactive and effective mitigation. Such strategies will also acknowledge that decarbonisation is a when, and not an if, and need to plan for this transition.
Our Climate Change and Business Strategy services
Anthesis helps clients understand the practical realities of climate change, both in terms of the physical implications and the likely future policy responses and can map these across their businesses or investments. We also help clients understand the current ecosystem of regulatory drivers and voluntary initiatives and its vocabulary, for instance putting Net Zero and the role of Science Based Targets in context. From this basis we can assist with the development of leading climate change strategies.
Prior to helping clients form a climate change strategy, our team helps to analyse risks and opportunities in order the help understand the resilience of a business.
|Physical Risk||Transition Risk|
|Hazard||Increased severity and frequency of flooding at the supply chain choke point||Carbon tax increases cost of energy and changes relative value of renewable energy|
|Impact||Financial Costs of supply chain disruption, less resiliency and business continuity||Direct energy cost increase reduces margins and increases ROI for renewables|
|Response||Diversify supply chain and distribution, incentives for climate readiness for suppliers||Revaluate investments in energy efficiency and renewables for optimum ROI|
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, the Netherlands, Belgium, South Africa, Ireland, Italy, Germany, Sweden, Spain, Portugal, Andorra, Finland, Colombia, Brazil, China, the Philippines and the Middle East.