Transition risks are those risks linked to the transformation towards a low-carbon economy. Shifts in societal and stakeholder responses to climate change are what’s driving transition risks. Key elements of transition risks are stranded assets and operations and regulatory and technological changes required to achieve decarbonisation. Aurecon partners with our clients to define a vision and strategy that will manage the transition risks of climate change.
Geopolitics, as well as structural shifts in stakeholder behaviours and expectations, information technology and the health of people and our planet are driving the transition away from fossil-based energy sources. The successful transformation towards a low-carbon economy requires not only a robust strategy, it also requires engagement and trust from stakeholders and the community. Organisations and governments are expected to not only think about how they will meet the climate challenge, but more importantly, to show how a transition to a low-carbon future can work in practice. Responses must show evidence of actions specifically designed to meet social and cultural needs. Aurecon can help our clients to define their climate risk responses within their strategies and business plans and then share their journey with employees, investors, shareholders and the broader community.
We start by identifying and framing their unique climate challenge. Aurecon has a real understanding of operating assets, gained from our engineering and design experience. It is this asset-specific domain knowledge we bring to clients. We can find and compare options and help our clients find the right solution to their problem.
The transition to a low-carbon future is a complex journey. After some initial easy wins, the journey becomes harder. You will hit decision points that feel like blankets of fog. On an unfamiliar road that is particularly challenging. It is why your choice of partner is so important. But with these challenges also come great opportunities.
Aurecon’s deep technical expertise and experience in managing assets and operations allow us to identify key business risks and opportunities and the many technical challenges associated with transition risk.
While there are challenges to overcome as we transition to a more sustainable future, for industry, government and communities having the capability and capacity will mean they can model what a successful transition looks like for all.
Aurecon can partner with you to manage your transition risks; create social value and meet stakeholder expectations. This may take the form of setting an energy transition strategy, decarbonisation strategy, advising on the diversification of business models and transitioning workforces or a combination of opportunities. Our teams can guide you through the uncertainty and work with you to plan your future one step at a time.
We offer clients transition risk management services in the following areas:
Social value and stakeholder expectations
Managing the social changes linked to the transition to a low-carbon economy
A change in demand, driven by changes in social value and stakeholder expectations, can have a significant revenue impact. Similarly those social value and expectations can create resistance to an organisation’s operations or expansion plans, which in turn create brand risk and can even move approvals pathways and legislation. Aurecon works with our clients to carefully consider the economic, social and environmental impact of their choices. To deliver the best outcomes for our client’s stakeholders and communities in which they operate, we adopt an integrated approach. Our services include stand-alone communication and stakeholder engagement, shaping, planning and environmental services as well as being able to fully integrate with our engineering design offering.
Supporting the transition towards a more sustainable energy footprint
Energy transition refers to the global energy sector’s shift from fossil-based systems of energy production and consumption — including oil, natural gas and coal — to renewable energy sources like wind and solar, and energy storage. Key drivers include increasing penetration of renewable energy into the energy supply mix; onset of electrification; improvements in energy storage. Energy transition takes place across all asset types and includes decarbonisation. As investors continue to prioritise environmental, social and governance (ESG) issues, energy transition will continue to increase in importance.
In setting strategy on energy transition, Aurecon partners with our clients to navigate optimal cost pathways to a sustainable energy future, manage the risks and harness the opportunities of increased renewable energy on the grid and enhance resilience of energy supply chains. We have deep knowledge across energy, resources, chemicals and transportation industries and established processes to help guide our clients to sustainable asset transformation. We use our strategic, commercial and deep technical expertise to provide an understanding of technologies and market fundamentals, support investment decisions and commercial negotiations, and inform engagement in market reform. Our expertise is increasingly in demand across heavy industry.
Reducing the amount of carbon emitted in the economy to combat the negative impacts of climate change and move to a more sustainable future
Transport, power and industry (manufacturing, mining, and agriculture) sectors are large carbon emitters and will have a big role to play. Decarbonisation is a long-term strategy. Working with our clients, to shape how they set up their businesses to reduce emissions, we would start with a strategic assessment of their risks regarding climate change. By understanding what they are wanting to achieve and why.
Outcomes would include confirmation of the following:
- Which greenhouse gas emissions, Scope1, 2 and 3, to target; strategic objectives; value drivers; existing data; strategies; targets and decision criteria, for example, addressing carbon risk impacts through the Task Force on Climate-related Financial Disclosures (TCFD) process and alignment with United Nations Sustainable Development Goals
- Investment decision process and affordability envelope, which would include developing a risk profile; setting a carbonisation strategy; scenario planning to test the decarbonisation response to the transition risk threat; exploring alternatives if decarbonisation is not the right solution; carbon benchmarking; developing a baseline of existing carbon footprint from which to measure actions; understanding current market perception towards the organisation
Transition strategy and management
Managing the diversification of business models and transitioning workforces
Organisations dealing with the disruption created by the transition to a low-carbon economy face the following challenges: the growing complexity of market and policy forces; the flood of new technologies and changing business models. By bringing diverse skillsets and perspectives to clients, Aurecon is helping organisations remain competitive in an ever-changing market.
Our infrastructure advisory teams are skilled at helping organisations make better decisions about the asset base to deliver infrastructure projects that improve both productivity and quality of life.
Changing business models and practices will bring disruption to an organisation’s workforce and the communities who depend on them. Aurecon can support organisations and governments to develop their projected workforce profiles and a roadmap for how they will support workforce planning to meet the needs of their employees and impacted communities.