Climate Finance Risk Disclosure

Climate financial risk refers to the financial impact that may have on a business or economy due to extreme weather caused by climate change. For example, if a company's assets, such as a factory, are located in an area that is not prone to flooding, the company may face significant losses if climate warming changes heavy rainfall events and makes flooding more likely than in the past. In addition, companies that rely on burning coal or oil to generate electricity may face higher operating costs and even fines as global greenhouse gas emissions regulations tighten.

Climate financial risks generally fall into two broad categories:

1. Physical risks: This refers to natural disasters caused by climate change, such as storms, floods or droughts, that may have a direct impact on corporate assets or operations.

2. Transition risks: As governments and the international community seek to reduce greenhouse gas emissions, new laws or regulations may emerge. These changes may affect the profits of some companies, especially those with higher emissions or greater reliance on carbon emissions.

When exploring the financial impacts of climate change, it is critical to understand and assess the climate financial risks your organization may face. Here are some questions tailored to your organization to help us gain a deeper understanding of your needs and goals and find the solutions that work best for you.

1. Has your organization set goals to reduce climate-related financial risks? If so, how?

2. What types of climate risks (e.g., physical, transition) are most relevant to your organization?

3. Do you currently have a process in place to analyze and quantify climate risks? If so, can you describe the process?

4. Are you familiar with any data-driven tools or methods to assess climate-related financial risks, such as using the three-step approach mentioned in this link [[1](https://www2.deloitte.com/nl/nl/ pages/sustainability/articles/climate-risk-assessment-tool.html)]?

5. What types of data do you currently use or plan to obtain to conduct climate risk assessments?

6. Are you interested in conducting an analysis of different scenarios of future climate to understand the possible impact of various climate scenarios on your financial stability? [[2](https://www.setsustainability.com/download/l53ujdhybcv69r8)]?

7. How do you plan to integrate insights gained from climate data-driven financial risk assessment tools into your company’s broader risk management and strategic planning processes?

8. Are you willing to explore machine learning techniques for large-scale data-driven financial risk management, such as methods suggested by recent research [[6](https://www.sciencedirect.com/science/article/pii/ S2665917423000922)]?

9. Are there any specific sectors within your organization or supply chain that you believe are particularly vulnerable to climate-related financial risks?

10. How do you plan to communicate the findings and insights gained from data-driven climate risk assessments to your company’s upstream and downstream manufacturer departments, as well as investors?