Prepare for Climate-related Risk Reporting

Climate Risk Readiness refers to a company’s preparedness to handle and adapt to the challenges posed by climate change. It involves assessing the physical and transition risks associated with climate change. It will help companies determine whether they are prepared to meet climate risk disclosure regulations like California’s SB 261 and build strategies to ensure compliance and mitigate risks. 

Climate risks are the potential negative impacts that could happen to an organization due to climate change. These include physical risks, such as flooding from rising sea levels or damage from extreme weather events, and transition risks, which arise from the shift towards a low-carbon economy, including changing market demand, regulations, and damaged reputation. 

• Physical Climate Risks: The direct damage to assets from extreme weather, forest fires, flooding, etc., or indirect impacts from broader changes in climate patterns and extreme weather events affecting global supply chains, agriculture, and migration. 
• Transition Climate Risks: These are risks associated with the transition to a low-carbon economy, including policy changes, evolving market preferences (switch to low-carbon sustainable products), and advancements in technology affecting business models. 

Many global regulations for climate risk disclosure, including California’s SB 261, are TCFD-aligned. TCFD alignment in climate risk disclosure refers to reporting practices that align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). It involves disclosing the financial impacts of climate risks and opportunities on an organization’s operations and strategy by using four reporting pillars. 

The TCFD’s four reporting pillars are: 

• Governance: The organization’s governance around climate-related risks and opportunities. 
• Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. 
• Risk Management: The processes used by the organization to identify, assess, and manage climate-related risks. 
• Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities. 

These are also the reporting pillars of the IFRS – International Sustainability Standards Board (ISSB). 

Mandatory climate risk reporting varies by jurisdiction and industry. Some regions and regulatory bodies are increasingly requiring organizations to disclose climate-related risks. California’s recent Senate Bill 261 will require over 10,000 companies doing business in California to report on their climate risk by 2026. The EU also has a climate risk disclosure regulation, and the US SEC could also pass one soon.  

Good.Lab’s Climate Risk Readiness solution helps businesses identify and manage climate-related risks and opportunities. It provides insights and tools to develop a comprehensive strategy and help companies align with global standards like the TCFD and ISSB to enhance resilience and ensure regulatory compliance. 

Good.Lab’s Climate Risk Roadmap is part of our Climate Risk Readiness solution and includes a strategic plan tailored to your business, outlining steps to manage and mitigate climate risks and a pathway to reporting and compliance. It covers risk identification, resilience planning, and guidance for aligning with global reporting standards such as the TCFD framework. 

GoodLab. uses the latest scientific research and data to provide accurate and actionable insights into your climate risks.Our team of experts can help you implement measures to reduce your carbon footprint, increase your resilience to climate impacts, and meet regulatory requirements, including, industry specific research reports from academia, research institutes, rating agencies and the ESG risks narratives of industry leaders (sustainability reports and 10Ks). The latest industry specific legislative and regulations, including Industry research briefs from TCFD and the SEC proposal, and the climate risks narratives of top companies in each industry from publicly available sustainability reports.