{"id":54,"date":"2021-04-12T01:18:48","date_gmt":"2021-04-12T05:18:48","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/financialimpactclimatechange\/?post_type=part&p=54"},"modified":"2021-07-05T00:39:22","modified_gmt":"2021-07-05T04:39:22","slug":"module-2-transition-risks","status":"publish","type":"part","link":"https:\/\/pressbooks.bccampus.ca\/financialimpactclimatechange\/part\/module-2-transition-risks\/","title":{"raw":"Module 2: Transition Risks","rendered":"Module 2: Transition Risks"},"content":{"raw":"

Module Overview<\/h3>\r\nModule 2 focuses on so-called \u201ctransition risks\u201d\u2014risks arising from the process of transitioning (possibly rapidly) to a low-carbon economy in response to climate change. Transition risks can arise from changes in policy, technology, and market conditions. The financial risks of transition include increased input prices and operating costs, abrupt changes to asset values, and deterioration of competitiveness and market share.\r\n\r\nIn this module, we\u2019ll apply a range of policy, technology and market scenarios to uncover the transition risk exposure of some sample organizations.\r\n
\r\n

Module Objectives<\/p>\r\n\r\n<\/header>\r\n

\r\n\r\nBy the end of this module, you will:\r\n
    \r\n \t
  1. Understand the financial and economic risks that arise from transitions to low-carbon economies and identify the transition risk pathways;<\/li>\r\n \t
  2. Identify climate policy relevant sectors<\/i> and predict the impact on these sectors of a variety of climate policies;<\/li>\r\n \t
  3. Understand how transition risks can be indirectly transmitted through the economy by way of financial assets and debt;<\/li>\r\n \t
  4. Predict the impact of various policy scenarios, ranging from gradual, orderly transition to rapid, reactive and disorderly transition;<\/li>\r\n \t
  5. Understand the role of climate-related financial disclosure in promoting orderly transition through adequate risk pricing of financial assets.<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n \r\n
    \r\n

    Readings & Resources<\/p>\r\n\r\n<\/header>\r\n

    \r\n\r\nBank of England. (2015, October 1).\u00a0Breaking the tragedy of the horizon \u2013 climate change and financial stability \u2013 speech by Mark Carney [Video]<\/a><\/i>. YouTube.\r\n\r\nCarney, M. (2015, October 1).\u00a0Breaking the tragedy of the horizon \u2013 climate change and financial stability [Speech transcript]<\/a><\/i>.\u00a0Bank of England. <\/i>\r\n\r\nHausfather, Z. (2018, April 19).\u00a0Explainer: How \u2018Shared socioeconomic pathways\u2019 explore future climate change<\/a>.<\/i>\u00a0Carbon Brief.\r\n\r\nSemieniuk, G., Campiglio, E., Cercurre, J., Volz, U., & Edwards, N.R. (2021).\u00a0Low-carbon transition risks for finance<\/a>.\u00a0WIREs Climate Change, 12<\/i>(1).\r\n\r\nData sources<\/i><\/b>\r\n\r\nInternational Institute for Applied Systems Analysis. (2018).\u00a0SSP Public Database (v. 2.0) <\/i>[Database].\u00a0https:\/\/tntcat.iiasa.ac.at\/SspDb\/dsd?Action=htmlpage&page=30<\/a>\r\n\r\n<\/div>\r\n<\/div>\r\n ","rendered":"

    Module Overview<\/h3>\n

    Module 2 focuses on so-called \u201ctransition risks\u201d\u2014risks arising from the process of transitioning (possibly rapidly) to a low-carbon economy in response to climate change. Transition risks can arise from changes in policy, technology, and market conditions. The financial risks of transition include increased input prices and operating costs, abrupt changes to asset values, and deterioration of competitiveness and market share.<\/p>\n

    In this module, we\u2019ll apply a range of policy, technology and market scenarios to uncover the transition risk exposure of some sample organizations.<\/p>\n

    \n
    \n

    Module Objectives<\/p>\n<\/header>\n

    \n

    By the end of this module, you will:<\/p>\n

      \n
    1. Understand the financial and economic risks that arise from transitions to low-carbon economies and identify the transition risk pathways;<\/li>\n
    2. Identify climate policy relevant sectors<\/i> and predict the impact on these sectors of a variety of climate policies;<\/li>\n
    3. Understand how transition risks can be indirectly transmitted through the economy by way of financial assets and debt;<\/li>\n
    4. Predict the impact of various policy scenarios, ranging from gradual, orderly transition to rapid, reactive and disorderly transition;<\/li>\n
    5. Understand the role of climate-related financial disclosure in promoting orderly transition through adequate risk pricing of financial assets.<\/li>\n<\/ol>\n<\/div>\n<\/div>\n

       <\/p>\n

      \n
      \n

      Readings & Resources<\/p>\n<\/header>\n

      \n

      Bank of England. (2015, October 1).\u00a0Breaking the tragedy of the horizon \u2013 climate change and financial stability \u2013 speech by Mark Carney [Video]<\/a><\/i>. YouTube.<\/p>\n

      Carney, M. (2015, October 1).\u00a0Breaking the tragedy of the horizon \u2013 climate change and financial stability [Speech transcript]<\/a><\/i>.\u00a0Bank of England. <\/i><\/p>\n

      Hausfather, Z. (2018, April 19).\u00a0Explainer: How \u2018Shared socioeconomic pathways\u2019 explore future climate change<\/a>.<\/i>\u00a0Carbon Brief.<\/p>\n

      Semieniuk, G., Campiglio, E., Cercurre, J., Volz, U., & Edwards, N.R. (2021).\u00a0Low-carbon transition risks for finance<\/a>.\u00a0WIREs Climate Change, 12<\/i>(1).<\/p>\n

      Data sources<\/i><\/b><\/p>\n

      International Institute for Applied Systems Analysis. (2018).\u00a0SSP Public Database (v. 2.0) <\/i>[Database].\u00a0https:\/\/tntcat.iiasa.ac.at\/SspDb\/dsd?Action=htmlpage&page=30<\/a><\/p>\n<\/div>\n<\/div>\n

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