The Centre for Climate Finance & Investment at Imperial College Business School has developed what it believes to be a first-of-its-kind toolkit to help investors, lenders and regulators identify and assess the potential scope and impact of a wide range of climate risks.
The report outlines a model for classifying potential climate risks at the firm level - a climate risk taxonomy - that captures a broad range of physical and transition risks that may affect a firm’s financial profile. This granular taxonomy encapsulates climate risks in terms of the three traditional climate risk categories and also includes an additional category, natural capital.
The taxonomy should not be treated as simply supplemental; rather, this sort of assessment is increasingly integral, as the financial impacts of climate change become less idiosyncratic and increasingly systemic.