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  • December 2022
  • Technical Note
  • HBS Case Collection

Risks and Opportunities from the Transition to a Low Carbon Economy: A Business Analysis Framework

By: George Serafeim
  • Format:Print
  • | Language:English
  • | Pages:29
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Abstract

The transition to a low carbon economy introduces many risks and opportunities for businesses. Risks emerge from regulatory actions, such as carbon taxes and cap and trade systems, technological innovation that develop alternatives for customers making existing products and services obsolete, changes in market preferences, such as consumers shifting purchases towards low carbon products, and liability concerns, from litigation connected to the physical impacts of climate change. Opportunities arise from new products and services that will be needed for the world to decarbonize (i.e., renewable energy, battery storage, hydrogen, plant-based protein, carbon capture and storage etc.). The business analysis of climate-related risks and opportunities will be critical for the optimal allocation of resources inside organizations and markets. This paper presents a generalizable framework for such analysis. Risks create demand for decarbonization solutions which in turn create opportunities for the supply of these solutions. Central considerations include the measurement and analysis of organizational carbon exposure, sensitivity, and adaptability.

Keywords

Risk Assessment; Opportunities; Environmental Sustainability; Carbon Footprint; Risk Management; Competitive Dynamics; Business Analysis; Climate Change; Accounting; Finance; Valuation; Business and Shareholder Relations; Technological Innovation; Transition; Product Positioning; Renewable Energy; Analysis

Citation

Serafeim, George. "Risks and Opportunities from the Transition to a Low Carbon Economy: A Business Analysis Framework." Harvard Business School Technical Note 123-014, December 2022.
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About The Author

George Serafeim

Accounting and Management
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Related Work

    • January 2023
    • Faculty Research

    Organizational Climate Transition Risk Model

    By: George Serafeim and Benjamin Maletta
Related Work
  • Organizational Climate Transition Risk Model By: George Serafeim and Benjamin Maletta
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