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Sustainability Stress Testing: Confluence’s View

 

Sustainability Stress Testing: Confluence’s View

The integration of climate risk (or more generally sustainability risk) stress testing into long-term business strategy and governance is key, as it will incorporate sustainability assessments into the risk appetite framework of institutions. The complexity of such monitoring poses tremendous challenges for all industries and building projections using plausible trajectories is essential to correctly size investment opportunities.

Building a sustainable framework

Current standard risk assessment practices are not enough for the integration of climate modelling to adhere to upcoming governance. To successfully add a climate component to the standard monitoring activities, existing risk assessment tools need to be transformed and enhanced, not only to apply climate quantification, but also to introduce additional climate stress test methodologies throughout the decision-making processes.

Download this eGuide to learn:

  • How a good data partner forms the foundation of a successful sustainability risk strategy

  • How predictive stress testing enables firms to understand how portfolios may be affected by significant market movements

  • How to build a sustainable predictive stress testing framework