Vivid Economics works alongside Energy Transition Advisors and the United Nations-supported Principles for Responsible Investment on the Inevitable Policy Response (IPR),
by the Gordon and Betty Moore Foundation through The Finance Hub (which was set up to advance sustainable finance) as well as ClimateWorks Foundation and KR Foundation.
The objective of this project is to investigate the case for incorporating a forceful policy response to the climate transition – the Inevitable Policy Response (IPR)- into strategic and especially financial decision-making. The purpose of this project is to fundamentally re-orientate the expectations, actions and disclosure reporting of both private and public actors toward a business planning world in which the IPR Forecast, which involves significant economic disruption, can replace the IEA New Policies Scenario as the go to base case.
The project does this by:
making the argument for why the IPR is a rational investor expectation given the various underlying political, environmental, economic and social dynamics;
laying out the factors determining when this might occur, and motivating a plausible view that it could be within a timeframe relevant to investors (e.g. <7 years);
detailing precisely what the IPR would look like on the basis of historical evidence and robust political and economic reasoning to help investors build scenarios;
demonstrating how the IPR might impact the global economy, major regions and sectors, and asset values (upside and downside); and
examining potential investor strategic asset allocation strategies in light of the possible market responses under uncertainty.
This work is commissioned by PRI