Transition Risk to Geopolitical Risk and Climate Changes

Abstract

<p>This chapter examines the complex relationships between transition risk, geopolitical risk, and climate change, and how these factors impact corporate decision-making. It specifically examines the roles of corporate social responsibility (CSR) and socially responsible investing (SRI) within this framework, with a focus on the technology sector, particularly semiconductor chipmakers. In evaluating these dynamics, the chapter utilizes a triangulation method that combines theoretical frameworks and empirical analysis to understand how these multifaceted risks impact corporate values, decision-making, and financial resilience. Anecdotal evidence suggests that both corporate social responsibility and socially responsible investing may exhibit shared characteristics in terms of their risk effects. The study’s findings suggest that corporate responses to geopolitical and climate change responsibilities may not have had a direct impact on behavioral decisions. This supports the criteria of impact decisions. Nonetheless, it posits that corporate decisions would have considered their corporate risk values and their inclinations toward corporate social and geopolitical responsibility risk, raising questions about how these concerns relate to transition risk, geopolitical risk, and climate change. This aligns with the Task Force for Climate-Related Financial Disclosure (TCFD), which provides guidance on climate change initiatives for associated industries. This chapter carefully articulates that corporate social responsibility risks are closely associated with threat management and risk management behaviors. Furthermore, it could facilitate a deeper exploration of attributes derived from corporate social and geopolitical responsibility characteristics and their implications for conventional corporate decision-making and existing research within corporate values.<br></p>