In most G20 jurisdictions there is a legal obligation to disclose material risks in financial reports, and this includes climate-related risks. Requirements to report on climate risk exposure are growing at a fast pace as monetary authorities, central banks, stock exchanges, accounting firms and ratings agencies build on the landmark recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

As well as the obvious physical risks to business caused by weather extremes and rising temperatures, the TCFD has identified regulatory, technological, legal, reputational and market risks arising from climate change. All these have impact on financial performance if not properly assessed and addressed. Climate impact is not just viewed as negative; it can be positive if the opportunities arising from transition to a low carbon economy are recognised in good time.

Most reporting standards seek to record past performance. But TCFD guidance also stresses the importance of looking forward to assess the medium to long-term financial impact of climate change in the form of scenario planning.

CCA has monitored TCFD development since it was first conceived in a speech by Bank of England Governor Mark Carney in 2015. CCA has analysed assessments of how companies are coping with the recommendations and we have noted best practice. We are equipped to offer reporting services aligned with the latest recommendations of TCFD, and also to help with the important process of scenario planning in a warming world.

TCFD reporting and investor-facing ESG assessments from CCA take account of the following:

Risk and opportunity content

• Identifying the most disruptive factors and the biggest opportunities brought about by climate change and climate change response – both acute shocks as well as long-term systemic change
• Business planning for resilience and adaptation
• Concentrations of carbon-related assets, and lock-in periods
• Material risk to physical and non-physical assets and employees from climate change impacts
• Transition and liability risks, compliance cost of meeting national and sub-national climate standards, asset impairment

Format and standards alignment

• Navigating TCFD-based reporting regimes emerging separately from regulatory authorities, stock exchanges, accounting standards and ratings agencies
• Ensuring adequate coverage of the core elements of TCFD disclosures: governance, strategy, risk management and metrics & targets
• Scenario planning that looks not just at different temperature pathways but also the impact of regulatory responses and national climate plans
• Methods to balance credible scenario planning with protecting confidential business information

CCA has the capacity and experience to assess specific corporate climate risks, to assist corporations to report on ESG and climate issues against a range of national and international standards, and to answer due diligence and fiduciary duty questions related to climate risk, high carbon assets and adaptation goals which may arise from investors, lenders or insurers.

CCA is able to draw on international best practice to recommend policies on a range of climate-related issues faced by organizations. Bespoke appraisal services can analyse and present policy recommendations related to your organization in your specific business sector.

Strengths

Where are your company's strengths in weathering the impact of climate change, and in transitioning through the economic shakeup that will accompany the agreed goal of a zero carbon world? What advantages do you have in your sector to both adapt to the physical effects of climate change and take the lead in working with the authorities on mitigation and GHG reduction? CCA will make recommendations on how to maximize and enhance these advantages.

Weaknesses

How climate-proof are your operations and markets? How cognizant is your organization of the likely regulatory impact of Paris Climate Agreement targets on your sector? Do you have the right governance structures to monitor, measure, adapt and create a resilient organization?

Opportunities

What market opportunities lie in your sector for services, process design and goods which will be in greater demand as the world responds to climate change in terms of both adaptation and mitigation? What opportunities arise from becoming an early mover in the transition, leading your sector and engaging the authorities at the regulatory design stage?

Threats

Where are you most exposed in terms of assets, supply chains and changes in customers and markets? We can model the relevance of extreme weather events, and knock-on effects on transport, health, migration and broad economic and political stability. Financially, we can advise on where potential liabilities lie from investors, insurers and customers claiming disrupted business. What are the risks of inadequate or late transition to the low-carbon economy mandated in the Paris Agreement, and what are the brand, employee morale and social license risks most likely?

CCA SWOT analysis can provide the following policy recommendations as outputs:

• Internal environmental governance and management structures and procedures
• Climate disclosure, carbon measurement and ESG reporting processes
• Risk assessment and risk register policies related to climate change
• External engagement with government and industry associations on climate issues
• Brand building and communications strategies related to climate-smart strategies