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Navigating Transition Finance: Strategies for a Low-Carbon Future
Transition finance focuses on facilitating the shift from a carbon-intensive economy to a net-zero future, requiring an integrated approach distinct from traditional ESG investing. It emphasizes systematic analysis, expert input, and long-term strategic investments.
Aug 16, 2024
C.Robin Castelli
C.Robin Castelli, Partner, Head of Transition Finance Investing, Orange Ridge Capital
Navigating Transition Finance: Strategies for a Low-Carbon Future
  • Transition finance focuses on shifting from a carbon-intensive economy to a net-zero future, requiring a multifaceted financial approach.
  • It differs from traditional ESG investing by emphasizing adaptation, mitigation, and positive screening of companies leading the transition.
  • Climate risk is central to transition finance, demanding dynamic allocation strategies to address complex risks like stranded assets and climate litigation.
  • A systematic and analytical approach is crucial, involving rigorous modeling, stress testing, and climate risk assessments.
  • Building a transition finance portfolio is challenging due to the unprecedented nature of this economic shift, requiring innovative benchmarking and expert analysis.
  • Long-term investments in transition finance necessitate sophisticated tools, like Monte Carlo simulations, to establish benchmarks and expected returns.
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