Conducting a climate scenario analysis for one of the world’s largest multinational consumer goods companies
Our client engaged us to conduct a scenario analysis to identify the potential financial impacts on its business in 2030. We mapped out pathways for global warming of 2°C and 4°C from both transition and physical risk perspectives. We then applied these pathways across the client’s different business divisions and geographies. Our analysis identified potential impacts on demand for our client’s products, supply and production costs, resource availability and price volatility. Our client is now considering the implications for its business and how to incorporate these findings.
Assessing the impact of climate policy risk on the lending portfolio of a global investment and corporate bank
Our client sought to understand the implications of emerging climate policy globally on their energy lending portfolio given the emerging issue of “stranded assets”. This client engaged us to analyse their loan book for the energy sector and identify which countries, sectors and borrowers were most vulnerable to climate policy. We used multiple indicators to flag risk, including PwC’s Low Carbon Economy Index. Our results showed which parts of the client’s loan book were more exposed to climate policy risk and therefore needed managing. We are now exploring how to take this further by identifying credit impacts and integrating them within stress testing.
Performing a “readiness assessment” on TCFD disclosure and identifying the next steps for a major international bank
Recognising the benefits of taking a leadership position amongst banks, this client has decided to adopt the TCFD recommendations and has requested our support in helping them preparing for it. The first phase of our work involved an assessment of their readiness to report in line with the TCFD’s recommendations based on current public disclosure and interviews with key stakeholders. This client also requested that we conduct a review of their peers to gain an understanding of what “being a leader” looks like. Our findings will be used to help senior management make decisions on what actions they need to take next.