The Risks and Opportunities of Climate Change

September 18, 2018 | Guidance

Are you confident your capital allocation strategies will remain efficient in the face of climate change?

Despite uncertainties around the precise effects of climate change at a local level, impacts can still be modelled with sufficient confidence to provide valuable input to business planning and enterprise risk management.

Encouraged by the Task Force on Climate-related Financial Disclosures, more and more companies are turning to scenario modelling to quantify and understand the business risks arising from climate change. Scenario modelling is useful for understanding how resilient an organisation and its business strategy are likely to be in the fact of climate-related risks and opportunities. It also helps to provide investors, lenders and insurance underwriters with the information they need to assess and price climate-related risks and opportunities.

Impacts of a Changing Climate

Climate change can present many different challenges depending on your organisation and the sector in which you operate.

  • Increasing temperatures
  • Changing patterns and amounts of precipitation
  • Increasing frequency, intensity and duration of extreme events
  • Increased flooding, severe winds, storm surges, heat waves and wildfires
  • Increase in drought
  • Rising sea levels
  • Decreases in ice, snow cover and permafrost
  • Alterations in growing seasons
  • Increase in threats to human health
  • Vector-borne diseases
  • Reduced food security
  • Population displacement.

Why should I quantify climate risk and opportunities?

There are many reasons to evaluate and quantify the impact climate change, in particular to:

  • Optimise costs for asset operation, maintenance, and insurance.
  • Assure value chain business continuity.
  • Maximise revenue potential through new business models.
  • Attracting capital and reassuring investors.
  • Positioning for and responding to regulation.
  • Reporting via CDP and all appropriate channels based on the specifics.

Lisa Grice
Executive Director, North America

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