Responding to Climate Risk
All companies face risk from climate change, and they must understand the financial impact of these risks to their business and implement strategies to mitigate them.
By investing in and implementing the right governance, risk management and strategic planning processes, companies become more resilient to these risks and potentially take advantage of the opportunities posed. Through effective reporting, they will be in a strong position to make better decisions for their future business, as well as fully informing those stakeholders who have an interest in their activities.
Increasingly, investors and governments are expecting companies to disclose information on climate risk, following formal frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).
Why act now on climate risk?
- Mandatory reporting is coming: Governments are increasingly requiring companies to report on and disclose information relating to their climate risks. In 2020, the New Zealand and UK Governments announced that climate-related financial disclosures will become mandatory, and we expect this to follow for other countries in the coming year. Understanding your climate risks now will help you to prepare for this impending regulatory requirement.
- Investor expectations: Investors now consider climate change to be a material issue in many industries and expect directors to consider the potential impacts on company performance. Many of those investors are now calling on companies and asset managers to report on physical climate change risks and how they will transition to a low-carbon economy. This is now a mandatory requirement for investors signed up to the UN Principles for Responsible Investment (UN PRI).
- Physical impacts: Increasingly severe and frequent extreme weather events, including record wildfires, temperatures, droughts, and floods, demonstrate that climate change risks are real today. These events are leading to significant financial and economic losses and increased pressure on company assets and supply chains.
- Transition Risk: As companies commit to transitioning to low carbon and net zero futures, they must understand the implications to their business. Operations that are exposed to the risks of energy price increases or carbon taxation are at risk of increased Opex or even stranded assets.
Taking action on climate risk can also help companies to take advantage of the economic benefits and financial incentives associated with carbon reduction and improve their sustainability credentials.
Our Approach to Climate Risk
Through our climate risk services, we support companies and asset managers to gain insight into their climate risks and opportunities. We can assist you from undertaking a high-level analysis of risk and disclosure through to the completion of a more in-depth climate risk and opportunity profile to allow your organisation to build resilience. For each of these services, we start by undertaking a review of your current climate strategy and disclosures, such as CDP, CDSB and SASB, to allow you to understand where you are and where you need to focus.
We recommend completing the following steps in line with the recommendations of the TCFD.
We support companies with:
- Climate Risk Screening– We assess the risks and opportunities that climate change poses to each area of your organisation and define those that will have the greatest impact.
- Scenario Analysis – We model your organisation’s climate-related risks and opportunities and the impact on financial results under different climate scenarios to give you clear, quantitative insight into areas of concern.
- Climate Risk Strategy – We develop a strategy that defines a forward path for setting and meeting targets and prepares you for disclosure to help minimise risk and maximise value.
- Climate Mitigation & Adaptation – We support you to identify and measure the performance of the mitigation and adaptation actions required to reduce climate risk exposure and maximise the opportunities presented in a net zero transition.
|Click below to explore our Climate Risk resources:|
|Podcasts & Webinar Recordings|
Anthesis has extensive experience in developing robust climate change and environmental information for mainstream corporate reports, and we have worked with a wide range of companies, including many from the financial services sector.
Our approach allows clients to go beyond the mandatory or required financial disclosure to mitigate the risks that pose the biggest threat to the organisation. We also help you define a powerful, differentiated narrative about your performance and ambitions that inspires and motivates staff, customers and other stakeholders to understand, communicate and adapt.
How would you be ready and what would be the financial implications of business-as-usual in an era of changing climatic conditions?
Download our Guide to Quantifying Climate Risk
Download the Guide
Quantifying Climate Risk & Opportunity
Listen to the Podcast
Associate Director Chris Peterson is joined by former Executive Director Don Reed to discuss the emerging risks and opportunities of climate change, and how organisations can begin to quantify them.
Watch the Webinar
Anthesis experts explain the drivers, methodology and benefits of taking a quantifiable approach to climate risk and opportunity through scenario analysis.
We'd love to hear from you
Anthesis has offices in the U.S., Canada, UK, France, Ireland, Italy, Germany, Sweden, Spain, Portugal, Andorra, Finland, Colombia, Brazil, China, the Philippines and the Middle East.