A growing number of companies face requests from investors for information on how they are addressing their climate-related financial risks and reducing their climate impacts. While many leading companies among the S&P and Fortune 500 are already reporting this information publicly, the majority of companies across our economy are still developing an understanding of their emissions and how to address financial risks from the changing climate.
These companies will benefit from a new online resource from the U.S. Environmental Protection Agency (EPA) that offers one-stop shopping for resources on identifying, assessing, and managing both physical and transition risks as well as financial opportunities.
Companies, especially those just beginning to understand their climate risks and impacts, can learn to conduct, assess, and reduce their scopes 1, 2, and 3 emissions – a key step to inform transition risk and opportunity assessments. EPA’s guidance is aligned with the Task Force on Climate-related Financial Disclosures (TCFD), which outlines a framework for measuring, assessing and addressing exposure to transition and physical risks, and the Greenhouse Gas Protocol, which provides a standard framework for categorizing and measuring a company’s emissions in its operations and throughout its value chain.
The EPA points to a Physical Risk Toolkit developed by C2ES as a key resource to help companies understand the data and information available to assess their physical climate risk. Building on our recent work on the importance of climate risk disclosure, the C2ES toolkit compiles publicly available data companies can use to assess their risks from the physical impacts of climate change. The page highlights 36 different datasets (many of which are government resources), filtered by scale, topic, and organization, among other categories.
Other resources on the EPA’s web page include steps to discover, assess, report, and manage climate risks and opportunities, market developments around climate-related financial disclosures, and climate risks and opportunities, defined. C2ES’s 2022 report also highlights emerging practices in TCFD-aligned climate risk and opportunity disclosure, drawing on experiences from different sectors, such as airlines, utilities and mining companies.
All companies stand to benefit from better understanding their emissions and related financial risks. Knowing how to measure both their impacts and their vulnerabilities can position industries in our economy to make the changes needed for them to thrive in a low-carbon future.