CONTENTS
Transition risk refers to the potential financial and operational impacts of moving to a low-carbon economy. It includes risks related to policy, regulation, market shifts, and technological change.
Example in context
A real estate fund faces new energy-efficiency regulations in two countries. While physical risk remains low, transition risk is high prompting them to reassess retrofit timelines and financial planning.
Why it matters
Disclosure frameworks like CSRD and IFRS S2 require organisations to report on both physical and transition risks. Ignoring transition risk can lead to stranded assets or compliance issues.
Start using climate risk insights to drive better decisions today
