Sustainable Investing

Transition Risk

Definition

What is Transition Risk?

Financial risk arising from policy, technology, legal, or demand changes during the shift to a lower-carbon economy.

Example in practice

A carbon tax reduces the value of a high-emission plant.

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Incorporating environmental, social, and governance factors into investment analysis or ownership.

An issue involving a company's effect on or exposure to the natural environment.

An issue involving employees, customers, communities, human rights, or social impact.

A digitally represented asset that uses cryptographic and distributed-ledger systems for issuance or transfer.

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