Joint research paper by Amundi and the MIT Joint Program on the Science and Policy of Global Change

Joint research paper by Amundi and the MIT Joint Program on the Science and Policy of Global Change on climate stress testing and net zero valuation, a case study for selected energy-intensive companies

The paper is published at the end of the first year of Amundi’s sponsorship of the MIT Joint Program on the Science and Policy of Global Change, which studies interactions among human and Earth systems to help decision-makers confront critical challenges in future food, water, energy, climate, air quality, human health and other areas. The mission of the MIT Joint Program is to advance a sustainable, prosperous world through actionable, scientific analysis of the complex interactions among co-evolving, interconnected global systems.

The research paper connects long-term climate scenarios with corresponding financial impacts at the company level. Its key findings include:

• Expanding the approach established by the Network for Greening the Financial System (NGFS), the authors have developed a methodology for calculating company-specific cash flows and valuation metrics, along with the consequences for the cost of borrowing, under different transition scenarios.
• The research shows a substantial premium in the equity market for renewable energy companies, alongside a reduction in debt costs for entities deeply engaged in low-carbon-intensive technologies.
• The paper’s focus on selected major carbon-intensive corporations reveals that these key energy players could face up to a 50-basis-point rise in capital costs by 2030 in a net-zero- consistent scenario, barring substantial investments and low-carbon assets acquisition.
• The methodology can be expanded to different regions, economic sectors, and policy scenarios. It equips decision-makers with a deeper understanding of how different factors—including growth projections, inflation, policy shifts, and global trade developments—can influence company valuations and other climate-related financial impacts.

MIT Joint Program on the Science and Policy of Global Change Deputy Director Sergey Paltsev says :

For suggesting company-specific emissions reduction targets, numerous initiatives use science-based global CO₂ emission trajectories aligned with particular climate goals. While assigning a global emissions trajectory to the company level may provide a rough indication of the required mitigation effort, it does not adequately represent company-specific market dynamics.
In our joint work with Amundi we explored a methodology for quantifying climate-related transition impacts on energy-intensive companies.

Learn more about the MIT Joint Program on the Science and Policy of Global Change