Transition risk & carbon pricing
What carbon prices do to the bottom line across the NGFS Orderly, Disorderly, Too Little Too Late and Hot House World pathways.
The question it answers
If carbon is priced under each NGFS pathway, what does it cost us — as a share of revenue and OPEX?
Screening transition risk & carbon pricing across a portfolio
- Applies the NGFS Phase 5.1 carbon-price dataset (MYR/tCO₂e) to entered Scope 1 & 2 emissions to estimate the cost of carbon over time.
- Sets that cost against revenue and OPEX to express it as net carbon cost as a % of revenue and % of OPEX (and absolute MYR).
- Compares the Orderly, Disorderly, Too Little Too Late and Hot House World pathways side by side, gross versus net.
Inputs in, banded result out
The governed model combines the inputs below into a single banded, scenario-aware result, under formal version and change control.
Inputs
- NGFS carbon-price pathways
- Scope 1 & 2 emissions
- Revenue & OPEX
- Net-cost share
Governed model
Transition risk & carbon pricing
Anchored to public, peer-reviewed climate science.
Version and change controlledOutputs
- Net carbon cost (MYR)
- % of revenue
- % of OPEX
What goes in, and where it comes from
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NGFS carbon-price pathways
NGFS Phase 5.1 scenario dataset (MYR/tCO₂e)
The price-of-carbon trajectory under each transition narrative.
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Scope 1 & 2 emissions
Entered organisational GHG inventory
The emissions the carbon price is applied to.
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Revenue & OPEX
Entered financials
The denominators that turn carbon cost into a % of revenue and % of OPEX.
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Net-cost share
Governed assumption (50%)
A 50% net-cost-share is applied to move from gross to net carbon cost.
The futures we test
- Four NGFS pathways: Orderly, Disorderly, Too Little Too Late and Hot House World.
- Carbon prices follow the NGFS Phase 5.1 dataset (MYR/tCO₂e) for each pathway and horizon.
- A 50% net-cost-share moves gross carbon cost to a net figure.
How the result is built
- Apply the NGFS Phase 5.1 carbon price for each pathway and horizon to entered Scope 1 & 2 emissions.
- Compute gross carbon cost, then apply the 50% net-cost-share for a net figure.
- Express net carbon cost as a % of revenue and a % of OPEX (and absolute MYR).
- Report gross and net cost per pathway and horizon.
What you get back
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Net carbon cost (MYR)
Modelled absolute cost of carbon per pathway and horizon, gross and net.
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% of revenue
Net carbon cost as a share of revenue — the board-level number.
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% of OPEX
Net carbon cost as a share of operating expenditure.
- Low
- Medium
- High
Carbon-price pathways by NGFS narrative
Orderly prices early and steeply; Disorderly prices late and sharply; Too Little Too Late lags; Hot House World stays low on carbon.
How to read the band
- Orderly front-loads the cost; Disorderly defers it then spikes; Too Little Too Late stays weak and fragmented; Hot House World looks cheap on carbon but carries the heaviest physical risk — read this model alongside the physical hazards.
- The TCFD lenses it speaks to are Policy & legal, Technology, Market and Reputation.
- The % of revenue and % of OPEX figures are the board-level numbers: they put carbon cost in the language of the P&L.
Disclosure relevance
- IFRS S2 Transition-risk identification and carbon-pricing exposure.
- IFRS S2 Quantified financial effects of climate-related risks.
- TCFD Scenario analysis of transition risk and resilience.
Limitations
- Screening scope: an exposure estimate, not a financial forecast or a decarbonisation plan.
- Uses NGFS Phase 5.1 reference prices — actual policy, carbon markets and pass-through will differ.
- Covers entered Scope 1 & 2 emissions; sensitive to the quality of the emissions inventory.
Screening-level analysis; not investment or engineering advice.
Bring transition risk & carbon pricing screening to your portfolio
Screened, banded and framed for IFRS S2 and TCFD disclosure.