Deloitte report on green transition risks

Greek enterprises face a significant increase in credit risk from their transition toward the green economy, Deloitte Greece said in its “Transition Risk Exploratory Impact Assessment Exercise for Greek Large Corporates” risk advisory survey conducted by its Climate & Environmental Credit Analytics group.

The evaluation test was conducted on a sample of 821 large Greek enterprises with an annual turnover of more than 20 million euros in 2021, from 96 sub-sectors of the economy.

The test examined three alternative scenarios of the Network for Greening the Financial System (NGFS) with a 30-year horizon on the price of CO2.

The three scenarios are: orderly transition, disorderly transition and hothouse world. The main conclusion of the test is that a disorderly transition will lead to a significantly higher credit risk compared with an orderly transition scenario, as shown in the increase in the probability of default.

Under the disorderly scenario, probabilities of default rise by 2.8 times (or 180%) compared with their current levels.

Under the non-action scenario, there is no impact on the transition risk, but final impact should evaluate the worsening of natural risks.

The largest impact is expected to be recorded in the sectors of energy, mining, construction and transport – that is, the carbon-intensive sectors.