Reporting climate risks

Reporting climate risks will become routine. Reporting climate risks means to publish what risks businesses face from climate change.

Climate risk reporting may remain voluntary, an act linked to CSR (Corporate social responsibility) fostering SLO (Social License to Operate).

However, the future may also go in the direction of compulsory reporting, perhaps as part of a document similar to NI43-101 or ad hoc documentation.

Britain is the first G7 country to sign into law a requirement to reach net zero emissions by 2050.  Additionally the green finance strategy sets out plans to foster investments in sustainable projects and infrastructure. These actions build on disclosure on climate risks set out by the G20 Task Force on Climate-related Financial Disclosures. Recent news from the US state climate related risks may become compulsory.

Reporting climate risks has started

The G20 Task force launched its voluntary framework in 2017. It calls on companies to provide climate-related financial disclosures in their public annual financial filings. Almost eight hundred companies and organizations, with a combined market capitalization of more than $9.2 trillion, have committed to support the framework.

The group reportedly includes insurance groups AXA and Aviva, oil companies Royal Dutch Shell and Total and mining companies Anglo American and BHP. More than two hundred of the world’s largest listed companies have forecast that climate change could cost them a combined total of almost one trillion dollars, as shown by a report by charity group Carbon Disclosure Project.

Following available information, companies have declared climate risks including potential “stranded assets” of fossil fuel, claims from flooding or hurricanes.

Our experience

At Riskope we do not generally deal with “stranded assets” issues. These may result, for example, in companies not able to burn all their oil, gas or coal resources under carbon emissions restrictions. However, we have introduced climate risk in many risk assessments and ERM. The goal is to allow operational, tactical and strategic planning based on sensible estimates.

Our studies also fulfill the task to provide better communication on how climate change could impact our client’s businesses. That is amid concerns that assets are being mispriced because due to miscalculation of the full scale of the risks.

To date we have introduced climate change risks in:

• ingress-egress logistics studies for mines;
• wood industry (fires, hurricanes);
• flooding of dykes protected islands;
• highways;
• chocolate-makers;
• environmental rehabilitations;
• water treatment projects.

Climate changes can be seamlessly integrated in our ORE risk analyses which are convergent, drillable, updatable and, of course quantitative.

The quantitative quality allows decision makers to enhance their operational, tactical and strategic planning and reach truly risk informed decision making.

Tagged with: climate risks, CSR, reporting, SLO

Category: Hazard, Risk analysis, Risk management