What challenges are companies facing?
Regulators are implementing new disclosure requirements to ensure climate risk is priced into decision-making, such as the Task Force on Climate-related Financial Disclosures (TCFD). Investors, lenders and insurers are increasingly cognisant of exposure to climate risk within the real economy. COVID-19 has not changed this, and in many ways has highlighted the vulnerability of our society to the type of global disruption that climate change may cause.
It can be a challenge to keep up-to-date with emerging climate risk regulation and either implement or adapt your company’s sustainability strategy in line with new requirements. What KPIs and information are needed to provide your shareholders and investors with sufficient transparency around your company’s climate risk exposure and approach to managing climate related risks and opportunities? Having the right frameworks in place to measure, monitor and report on climate risk both internally and externally as well as to measure the success of your strategy are vital.
How do climate risk solutions benefit companies?
- Increase competitiveness: climate change offers business opportunities which can help foster competitiveness and unlock new market opportunities.
- Reduce costs: adhering to climate targets can help companies improve resource productivity, energy and operational efficiency thereby reducing their costs.
- Spur innovation: by inspiring new products and services which are less carbon intensive or which enable carbon reduction by others.
- Supply chain resilience: by reducing reliance on price-volatile fossil fuels by shifting towards renewable energy, companies can enhance the resilience of their supply chains
How can Deloitte help?
- Measurement and reporting: we help companies with their climate risk measurement processes and controls, and implement the necessary frameworks and tools to streamline reporting requirements
- ESG/Climate risk assurance: we assess and evaluate companies’ annual climate risk reports, and identify ways to close gaps and areas of improvement.
- ClimWise: our proprietary tool enables quick and accurate identification of the transition risk concentration of business portfolios and integrates the development of climate stress tests
- Strategy and activation: we help companies meaningfully embed climate considerations into their business through scenario analysis, decarbonisation planning and risk assessments
- Management reporting and remuneration: we provide companies with the most relevant KPIs to include in management reporting and how to best include climate goals and strategy in management remuneration
- Regulatory landscape: we decipher the fast-changing regulatory requirements for companies to help them comply with the relevant regulations and assess any potential gaps in reporting requirements
- Internal audit: we train companies’ internal audit functions to be equipped with the relevant knowledge and methodologies to assess their own maturity of climate risk strategy
Would you like to learn more?
Reporting on and understanding climate risks, whilst adhering to the Task Force on Climate-related Financial Disclosures (Task Force; TCFD) can be challenging for companies. Deloitte has a strong understanding of the regulatory framework, controls and reporting mechanism of companies as well as experience in implementing change requirements can support companies along this journey. We work with our clients to help them understand the financial costs of climate change, create and implement a decarbonisation strategy including setting science-based metrics and net-zero pledges.
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