Sustainability and Climate Risk (SCR) — Question 50

A bank assesses lending portfolio alignment with various climate change scenarios. To assist in this process, the risk team applies the Paris Agreement Capital Transition Assessment (PACTA) tool to examine transition risk for power generation, automotive, and steel sectors. The team examines different PACTA metrics for each sector based on data availability and sectoral profile.
For sectors with no clear zero-carbon pathway, what metric will PACTA employ?

Answer options

Correct answer: C

Explanation

The correct answer is C, Emission intensity, as it provides a measure of the emissions produced per unit of output, which is crucial for sectors without a defined zero-carbon transition pathway. The other options, while relevant in different contexts, do not specifically address the need to evaluate emissions in sectors lacking clear transition pathways.