March 8, 2022
Contact: Alec Gerlach, GerlachA@c2es.org, 703-516-0621
C2ES Report Outlines How Companies Approach Climate Risk Disclosures and the Role of Policy
Publishes Online Resource Guide, Tip Sheet for Measuring Exposure
WASHINGTON—As media reports indicate the Securities Exchange Commission’s notice of a new rule on corporate climate-related disclosures may come soon, a new Center for Climate and Energy Solutions (C2ES) report highlights the challenges many companies face and the progress they are making when evaluating their climate-related financial risks and opportunities to understand how they fare in a low-carbon transition.
Are your facilities close to any rivers? Does your company rely on traditional or renewable energy markets? Have you considered where there may be climate exposure in your supply chain? The answers to these questions are part of what a scenario analysis of climate-related risks and opportunities, or benefits, reveals about how a company could manage the low-carbon transition.
“Companies that understand their climate-related financial risks are better positioned to successfully navigate the transition to a lower carbon future and understand where to capitalize on economic opportunities created by it,” said C2ES vice president of business engagement Verena Radulovic. “There’s an important interplay between a company’s ability to anticipate its role and risks in a low-carbon future and its strategy to thrive in a decarbonizing economy. By achieving climate resilience and emission reductions, companies will have stronger standing to shape markets, making adjustments to their operations, supply chains, and product and service offerings that make them more competitive and appealing for investors and customers.”
C2ES worked with, and learned from, companies from its business council as well as additional companies which have conducted scenario analyses to assess their climate-related physical exposure and the risks and opportunities for their business operations associated with a low-carbon transition.
C2ES’s report examines how companies measure their climate-related physical and transition risks and how they assess how these risks impact their core business strategies. It also explores the extent to which companies have taken action based on those assessments and how they disclose their findings to investors and to the public. Based on collective insights gained from C2ES research, the report includes a maturity model that companies can use to benchmark their internal progress in the four focal areas: measuring, assessing, addressing, and disclosing risk. C2ES also released a tip sheet for companies seeking to improve how they disclose their climate-related financial opportunities, as distinct from their risks, building upon recent guidance from the TCFD. Finally, C2ES released on online toolkit to filter publicly available resources and datasets that companies can use to measure and assess their physical risks from climate change.
C2ES’s report also makes the following policy recommendations that would help companies improve their climate-related financial risk disclosure, including:
- Establishing a federal hub with resources to help companies measure risk;
- Setting a standardized but flexible, approach to assess physical and transitional risk;
- Producing federal guidance on the use of scenario analysis that distinguishes between transition scenarios which can be highly sector-specific; and
- Endorsing the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) framework.
For more on C2ES’s TCFD analysis, visit: https://www.c2es.org/content/climate-related-financial-disclosures/.
About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts. Learn more at www.c2es.org.