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Increasing transparency makes markets more efficient, and economies more stable and resilient.
Corporate reporting in its simplest form refers to the disclosure of certain key information by businesses to their stakeholders. Openness and transparency in reporting not only help build trust but also allow businesses to demonstrate a clear commitment to their key stakeholders- investors, employees and customers.
Companies are increasingly appreciating the importance of reporting their impacts on society and the environment through their sustainability reporting using various useful frameworks. However, the relationship that is less understood and much less communicated, is the impact that climate change has on a business.
This is where the Task Force on Climate-related Financial Disclosures (TCFD) proves to be useful, by providing a framework for businesses to develop consistent climate-related financial risk information to investors, lenders, insurers and other stakeholders.
We help businesses in their TCFD journey by:
We also help businesses in their broader sustainability communication by:
The Task Force on Climate-Related Financial Disclosures (TCFD) was created in 2015 by the Financial Stability Board (FSB) to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders. The objectives of the TCFD recommendations were
Scenario Analysis
The Task Force also believes that organisations should use scenario analysis to assess potential business, strategic, and financial implications of climate-related risks and opportunities and disclose those, as appropriate, in their annual financial filings. Scenario analysis allows a business to explore and develop an understanding of how various combinations of climate-related risks, both transition and physical risks, may affect its businesses, strategies, and financial performance over time.
Physical risks and transition risks
The Task Force divided climate-related risks into two major categories: (1) risks related to the transition to a lower-carbon economy and (2) risks related to the physical impacts of climate change.
Transition Risks are the risks associated with transitioning to a lower-carbon economy. They may cover extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change.
Physical risks resulting from climate change can be event driven (acute) or longer-term shifts (chronic) in climate patterns. Physical risks may have financial implications for organisations, such as direct damage to assets and indirect impacts from supply chain disruption. They may also entail changes in water availability, sourcing, and quality; food security; and extreme temperature changes affecting organisations’ premises, operations, supply chain, transport needs, and employee safety.
Key Elements of Climate-related disclosures
The Task Force structured its recommendations around four thematic areas that represent core elements of how organisations operate: governance, strategy, risk management, and metrics and targets.
Governance
The organisation’s governance around climate-related risks and opportunities
Strategy
The actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning
Risk Management
The processes used by the organisation to identify, assess and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage relevant climate-related risks and opportunities
The TCFD believes that scenario analysis is an important and useful tool that allows businesses to assess potential business implications of climate-related risks and opportunities. Scenario analysis also helps in informing stakeholders about how the organisation is positioning itself in response to these risks and opportunities.
We follow a methodical approach and partner with businesses to develop their modelling for scenario analysis. We identify key material climate risks and opportunities that are relevant to the organisation. Given these exposures, we then define the scenarios, agree the input parameters, assess the datasets required and make relevant assumptions where necessary.
Once these have been agreed, we run the modelling to quantify these potential impacts under each defined scenario. We work with the organisation to identify realistic mitigation plans in response to the identified risks and opportunities.
ESG data is a valuable asset in this age of data driven decision making and strategic thinking. ESG data can offer important insights into material risks and opportunities for businesses. Integrating data analytics and artificial intelligence is a defining transformation technology of our time, and it is critical for organisations to modernise their data estate to make it ready for an AI and multi-cloud world.
We help businesses transform their sustainability journeys with data driven insights and automated project management tools. Our ESG data management solution helps to capture, manage and disclose data with ease, transparency and accuracy.
Integrating sustainability into a business is a journey in itself and it involves learning and continuous improvement. We help businesses adapt and build resilience wherever they are on this journey.
The sustainability agenda and strategy differ across businesses. We understand and appreciate these differences and tailor our solutions to suit individual business needs. All our work is bespoke, and we partner with businesses to not only deliver the outcomes but also to share knowledge and expertise along the way.
We bring a wealth of experience having worked with big corporates as well as medium sized businesses. We understand the needs, requirements and limitations facing every business and leverage our experience in navigating the corporate structure.
We are a boutique consultancy firm, which means that as well as being nimble and adaptable, we are also able to save on the huge overheads incurred by big and established firms. Quality thus does not come at a higher cost and we are able to offer much better value.
Looking For Climate Change Risk Assessment Experts?