Climate risk analysis
We will conduct a comprehensive climate risk analysis for your company or planned investment in accordance with TCFD guidelines.
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What are climate risks?
Climate risks are threats caused by climate change that can significantly impact business operations. They are associated with both the effects of global climate change and the transition process toward a low-carbon economy. According to the TCFD (Task Force on Climate-related Financial Disclosures) climate risks are divided into:
- Physical risks – direct threats resulting from climate change, such as rising temperatures or the intensification of extreme weather events. These can lead to direct losses in assets and supply chains or indirect disruptions in economic and social systems, affecting investment value, liabilities, and access to capital.
- Transition risks – indirect risks associated with shifts in climate policy and regulations, the development of low-carbon technologies, or changes in consumer preferences. These can result in asset devaluation, credit rating downgrades, and disruptions to existing business models.
Analyzing and understanding climate risks is crucial for assessing financial exposure and ensuring compliance with the expectations of regulators and investors. It is also a key element of disclosures within ESG reporting and compliance with the EU Taxonomy.
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Marcin Milczarski
Expert in ESG and sustainability, he specializes in strategic and reporting consulting and business linking environmental and social issues (green transformation, risk aggregation, degrowth vs. decoupling). Author of studies in the field of non-financial disclosures, legal-business relations and implementation of ESG strategies. Expert of the Climate Leadership program conducted by UNEP/GRID-Warsaw, academic lecturer. He combines more than 15 years of professional experience in ESG consulting, sector III, academia and marketing/communication.
Do you have any questions? We have the answers!
Is climate risk analysis mandatory for companies?
There is no regulation that directly mandates companies to conduct climate risk analyses. However, this obligation arises indirectly from the CSRD directive, which has already been implemented into national law. A company that identifies climate change as material during its materiality assessment (which applies to the vast majority of firms) must disclose its vulnerability to climate risks and describe the methodology used for the analysis. Additionally, climate risk assessment is outlined in the EU Taxonomy. Companies must demonstrate the resilience of their business activities to climate risks to meet the "do no significant harm" criterion for the second objective of the Taxonomy, which is climate change adaptation.
Can someone require my company to conduct a climate risk analysis?
Yes. Even if your company is not directly subject to the CSRD or the EU Taxonomy, you may still be required to provide a climate risk analysis by other entities. This most often comes from financial institutions—such as banks, investment funds, or insurers—that incorporate climate risks into their investment models. Key business partners in your value chain may also require climate risk analyses. Furthermore, information on climate risks is a component of numerous ESG ratings, including CDP.
Are there guidelines for analyzing climate risks?
Yes. The most widely used standard is TCFD. These guidelines categorize climate risks into physical and transition risks, and establish a standard for assessing them through scenario analysis. However, it is important to emphasize that every company should tailor its approach and methodology to its specific operations, organizational structure, and location.
How often should a climate risk assessment be performed?
There are no rigid regulations specifying how often climate risk assessments should be conducted. In practice, it is recommended to perform a full analysis when preparing your first sustainability report and to update it whenever significant changes occur in the company's operations, such as acquisitions, expansion into new markets, changes to the operating model, or the addition of new locations.
Are scenario analysis and climate risk assessment the same thing?
No. Scenario analysis is part of a comprehensive climate risk assessment. It allows for evaluating how the intensity and impact of climate risks change depending on the assumed global warming and greenhouse gas emission scenarios. This enables a better assessment of operational resilience across various scenarios.
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