1、25 February 2025Allianz ResearchClimate risk and corporate valuationsAllianz Research2Content Page 3-4 Executive SummaryPage 5Fossil fuels are not the only sector at riskPage 6-10 Building a climate-adjusted valuation risk frameworkPage 11-13 Adjusting sector earnings for CO pricing and emissionsPag

2、e 14-22 Which sectors are most vulnerable to climate risk?25 February 2025 Investors today face dual climate risks that stem from both the transition to a sustainable economy and the increasing severity of physical climate events.Transition risks arise from rapid policy changes,technological innovat

3、ions and evolving market behaviors,while physical risks include the damaging impacts of extreme weather,rising sea levels,prolonged droughts or productivity losses for workers exposed to heat.Together,these risks accelerate the devaluation of assets,potentially rendering them stranded long before th

4、e end of their expected lifecycles.Fossil fuels are not the only sector on the watchlist.Real estate,automotive,agriculture and heavy industry are also increasingly vulnerable due to stricter energy standards,rapid technological advancements and tighter regulatory measures.In this context,investors

5、need to reassess their portfolios across a diverse array of industries to fully capture the potential impact of climate-related disruptions.To identify which sectors are most at risk,we integrate three NGFS transition scenarios(Baseline,Net Zero 2050 and Delayed Transition)into two traditional finan

6、cial valuation methods:Discounted Cash Flow(DCF)and Interest Coverage Ratio(ICR).Under the baseline scenario,current Nationally Determined Contribution plans are realized and even slightly improved but fail to reach a 2C consistent pathway.The Net Zero scenario represents an aggressive policy enviro