Climate Risk Assessment

A climate risk assessment aims to identify and assess all potential risks a company is exposed to due to climate change, both physical climate risks and so-called transition risks (risks due to societal changes aimed at limiting or adapting to climate change). The analysis should be done following the Taskforce for Climate-related Financial Disclosures (TCFD)’s recommendations, which have been adopted by the IFRS.

TCFD-based climate risk assessments consider at least two different climate scenarios, which are based on established models and datasets such as the IPCC’s SSP models and EU Copernicus. These scenarios include both physical climate data and information on how society must develop in order for us to end up in that climate scenario.

Once the scenarios have been selected, all the potential physical and transition risks and opportunities must be assessed. This is usually done through a combination of desktop research and collaborative workshops. At the end of this process your company will have a good overview of its relevant climate related risks and opportunities – usually presented in a final report – which should then be integrated in your risk management and strategy work.

ESG Advisory can assist with every step of the climate risk assessment and will adjust the process according to your needs.