(C2.1b) How does your organization define substantive financial or strategic impact on your business?
Change from last year
Additional guidance
Rationale
The subsequent questions will ask you to disclose risks and opportunities with the potential to have a substantive financial or strategic impact on your business. What is considered a substantive impact for a business will be different for each responding company, therefore explaining your threshold for classifying potential impacts as substantive is critical context for CDP data users.
Response options
This is an open text question with a limit of 5,000 characters. Please note that when copying from another document into the ORS, formatting is not retained.
Requested content
General
- Describe and quantify, in detail, how your organization defines a ‘substantive impact’ on your business at the corporate level, in the context of a climate-related risk.
- What constitutes a substantive impact will vary between companies. For example, a 1% reduction in profits will have different effects on different companies depending on their respective profit margins. Companies are therefore asked to determine ‘substantive’ in the way that they would do for their business decision-making. For example, a substantive impact of relatively high magnitude could occur because of a large number for any one of the following aspects, or because of a small number for all three combines to create a larger impact:
- the proportion of business units affected
- the size of the impact on those business units
- the dependency of the organization on that unit
- the potential for shareholder or customer concern.
Explanation of terms
- Substantive impact: an impact that has a considerable or relatively significant effect on an organization at the corporate level. This could include operational, financial or strategic effects that undermine the entire business or part of the business.
Example response
A substantive financial or strategic impact on our business is defined in our risk management process as follows: either the effect on revenue is more than EUR 50 million and the probability of occurrence is above 25%, or the effect on revenue is EUR 10-50 million and the probability of occurrence is above 75%.
