Management of Corporate Climate and Transition risks

This dissertation investigates the management of corporate climate and transition risks, addressing the growing demand from regulators, investors, and stakeholders for reliable methodologies to evaluate the disruptive consequences of the shift towards a low-carbon economy. Transition risks -stemming from regulatory change, technological innovation, market dynamics, and stakeholder pressure - pose critical challenges for firms across high-emission and capital-intensive sectors, with potential implications for financial stability and systemic risk. While physical climate risks have been extensively studied, the literature on transition risks remains underdeveloped and fragmented. The research contributes to this gap by developing an integrated framework for classifying, assessing, and quantifying corporate exposure to transition risks through three complementary studies. The first paper provides a comparative analysis of twenty-six transition risk evaluation tools developed by financial service providers, think tanks, academia, and research institutes. A Multiple Correspondence Analysis combined with Agglomerative Hierarchical Clustering identifies methodological patterns, sectoral clusters, and limitations in disclosure practices. Findings show that financial service providers’ tools tend to align more closely with international recommendations, such as those of the Task Force on Climate-Related Financial Disclosures (TCFD). However, the analysis highlights persistent gaps in standardization, underscoring the need for more consistent and harmonized approaches to transition risk assessment. Building on this evidence, the second paper introduces a systematic risk-matrix methodology for project-level transition risk assessment, tested through a case study of an iron ore mine in Mauritania. Grounded in ISO 31000, the Equator Principles, and the TCFD framework, the methodology combines project-specific data with national and international transition scenarios. The resulting matrix enables a structured evaluation of risks related to regulation, market shifts, and technological change, providing a replicable framework for companies across different sectors. The third paper addresses the quantification of financial impacts by applying the European Central Bank’s climate stress test to Aeroporti di Roma, under both Net Zero 2050 and Nationally Determined Contributions (NDCs) scenarios. Key indicators - including revenues, operating earnings, and probability of default - are modelled against macroeconomic variables such as GDP, inflation, energy prices, and emissions trajectories. Results highlight how emission-reduction strategies can mitigate vulnerabilities, offering actionable insights for corporate strategic planning. Collectively, the three studies contribute to advancing methodological approaches for climate transition risk management. The dissertation underscores the systemic nature of transition risks, their heterogeneity across sectors and geographies, and the urgent need for transparent, harmonized, and forward-looking evaluation frameworks. It provides regulators with guidance on existing methodologies, supports firms in identifying suitable tools, and assists investors and banks in assessing financial resilience under alternative climate pathways. Ultimately, the work enhances understanding of how businesses can adapt to the low-carbon transition while safeguarding long-term value creation and contributing to sustainable development goals.