See also SG01.6 CC and SG13.1. Climate change and energy transition scenarios and stress tests have been studied in the beginning of 2020 to assess what the impact of climate related risks and opportunities on the investment portfolio and the asset classes/ investment strategies within the portfolio. A mild and severe scenario of energy transition have been looked at in detail. Within these scenarios different regulatory changes (especially different levels of carbon tax) and possible technological changes haven been taken into account, which are seen both as risks as opportunities. Carbon intense companies (aerospace, energy, utility, cars, construction, chemical industry sectors) are going to suffer in both scenarios and especially in the severe scenario. Within the investment portfolio the pension board is advised to protect the equities portfolio (put options, in case of a severe scenario), change the regional allocation within the equities portfolio (more weight to US and EM, because Europe, Japan and Australia will be hit more severely due to the energy transition), change in the industry sector allocation (we expect external managers to do that themselves, in case they don't, PNO can set limits), higher interest rate hedge in case of a severe scenario.