Development of an Industrial Climate-Risk Quantification Framework Linking Physical and Transition Risks with Operational and Financial Exposure

The TCFD recommendations gave industrial organisations a shared vocabulary for climate risk but left the translation into quantified financial exposure to each organisation. This paper scores four Indian sectors on all six TCFD risk sub-categories and all four financial channels and combines them into one reproducible FE index. Oil and gas carries the highest FE and automotive the lowest, although automotive carries a maximum technology score, because that risk is not reinforced elsewhere in either taxonomy. No single one-point change in any score alters the ranking, and oil and gas stays first under moderate reweighting in 99.7% of combinations, but the order of the lower sectors is less secure. A carbon-price test on disclosed emission intensities shows that direct carbon-cost sensitivity follows intensity: a price of USD 50 to 150 on every Scope 1 and 2 tonne costs steel 18% to 54% of turnover, cement more than 45% and automotive under 0.3%. The framework is a transparent screening tool. Its value lies in making every score, its evidence and its robustness visible, so that a company or an investor can replace the judgements with its own.

Alogoskoufis, S., Dunz, N., Emambakhsh, T., Hennig, T., Kaijser, M., Kouratzoglou, C., Muñoz, M. A., Parisi, L., & Salleo, C. (2021). ECB economy-wide climate stress test: Methodology and results (ECB Occasional Paper No. 281). European Central Bank. https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op281~05a7735b1c.en.pdf Bajaj Auto Limited. (2026). Business responsibility & sustainability report [Annual Report 2025-26, 19th]. https://www.bajajauto.com/-/media/images/bajajauto/media-kit/press-release/new-annual-reports/fy2025-26/bal_brsr_fy2025-26.pdf Barrot, J.-N., & Sauvagnat, J. (2016). Input specificity and the propagation of idiosyncratic shocks in production networks. The Quarterly Journal of Economics, 131(3), 1543–1592. https://doi.org/10.1093/qje/qjw018 Battiston, S., Mandel, A., Monasterolo, I., Schütze, F., & Visentin, G. (2017). A climate stress-test of the financial system. Nature Climate Change, 7(4), 283–288. https://doi.org/10.1038/nclimate3255 Bharat Petroleum Corporation Limited. (2026, August 3). Business responsibility and sustainability report for the financial year 2025-26 [Stock exchange filing]. https://nsearchives.nseindia.com/corporate/BPCL22_03082026194130_stexintimatoinbrsrintimation3826s.pdf Bolton, P., & Kacperczyk, M. (2021). Do investors care about carbon risk? Journal of Financial Economics, 142(2), 517–549. https://doi.org/10.1016/j.jfineco.2021.05.008 Dawes, R. M. (1979). The robust beauty of improper linear models in decision making. American Psychologist, 34(7), 571–582. https://doi.org/10.1037/0003-066X.34.7.571 Dietz, S., Bowen, A., Dixon, C., & Gradwell, P. (2016). ‘Climate value at risk’ of global financial assets. Nature Climate Change, 6(7), 676–679. https://doi.org/10.1038/nclimate2972