(C2.2a) Which risk types are considered in your organization's climate-related risk assessments?

Question dependencies

This question only appears if you select "Yes" in C2.1.

Change from last year

No change

Rationale

Data users need to know which risk types are considered in climate-related risk assessments. Not all risk types are relevant to each organization. The aim of this question is to ascertain how thoroughly companies examine multiple risk types as an indication of the comprehensiveness of the risk assessment.

Connection to other frameworks

TCFD

Risk Management recommended disclosure a) Describe the organization’s processes for identifying and assessing climate-related risks.

S&P Global Corporate Sustainability Assessment

Climate Risk Assessment - Physical Risks

Climate Risk Assessment - Transition Risks

Climate Change Strategy

TCFD Disclosure

Response options

Please complete the following table:

Requested content

Please explain (column 3)

• Your response should explain:

- Your decision on the relevance and inclusion of this risk type in your risk assessment.
- For every risk type deemed relevant, an example of a specific risk considered in your assessment.
- If you choose ‘Not relevant, explanation provided’: why this risk type is not deemed relevant.

Note for financial services sector companies:

• Consider which climate-related risks are relevant to your lending, investment, insurance underwriting and/or financial intermediary activities, in addition to your operational risks.
• Consider characterizing your climate-related risks in the context of traditional industry risk categories such as credit risk, market risk, liquidity risk, and operational risk.
• Banks:

- Describe climate-related risks (transition and physical) in lending and other financial intermediary business activities by geography, industry, credit quality or average tenor.

• Insurance companies:

- Describe climate-related risks on re-/insurance portfolios by geography, business division, or product segments, including the following risks:
- Physical risks from changing frequencies and intensities of weather-related perils;

- Transition risks resulting from a reduction in insurable interest due to a decline in value, changing energy costs, or implementation of carbon regulation; and
- Liability risks that could intensify due to a possible increase in litigation. For example, the risk of an increase in claims for defense costs in relation to directors and officers (D&O) liability.

- Additionally, as an asset owner, please also describe the climate-related risks relevant to your investment portfolio.

• Asset managers:

- Describe the climate-related risks relevant to your product or investment strategy by geography, industry, or product segment.

Explanation of terms

• Climate-related risks: TCFD divides climate-related risks into two major categories: risks related to the transition to a lower-carbon economy and risks related to the physical impacts of climate change.
• Transition risks

- Current and emerging regulation: policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change;
- Technology: all risks associated with technological improvements or innovations that support the transition to a lower-carbon, energy-efficient economic system;
- Legal: all climate-related litigation claims;
- Market: all shifts in supply and demand for certain commodities, products, and services;
- Reputation: all risks tied to changing customer or community perceptions of an organization’s contribution to or detraction from the transition to a lower-carbon economy.

• Physical risks

- Acute: risks that are event-driven, including increased severity of extreme weather events, such as cyclones, hurricanes, or floods;
- Chronic: longer-term shifts in climate patterns (e.g. sustained higher temperatures) that may cause sea level rise or chronic heat waves.

• Upstream and downstream risks: defined based on the location of the risks in your value chain and can also refer to any of the risk types above i.e. emerging regulation, technology, legal, market reputation etc.

Example response

Questions C-FS2.2b to C-FS2.2e only apply to organizations with activities in the Financial Services sector.

C2.2a - Scoring criteria

Disclosure scoring criteria

For each completed row:

[ROUTE A]
'Not evaluated' selected in column 'Relevance & inclusion' - 0.5 points

OR

[ROUTE B]
Any option selected excluding 'Not evaluated' in column 'Relevance & inclusion' AND
Text answer provided in column 'Please explain' - 0.5 points

Awareness scoring criteria

The following conditions must be met to be eligible for Awareness points:
Any of the following selected in column 'Relevance & inclusion' in at least four rows:
- 'Relevant, always included'
- 'Relevant, sometimes included'
- ‘Not relevant, included’

For each row:

[ROUTE A]
Either 'Relevant, not included' OR 'Not evaluated' selected in column 'Relevance & inclusion' - 0 points

OR

[ROUTE B]
Any option selected excluding either 'Relevant, not included' OR 'Not evaluated' in column 'Relevance & inclusion' AND
Text answer provided in column 'Please explain' - 0.5 points

Management scoring criteria

The following conditions must be met to be eligible for Management points:
Full Awareness points awarded AND
Either 'Relevant, always included' OR 'Relevant, sometimes included' selected in column 'Relevance & inclusion' in at least one row

Any option selected excluding either 'Relevant, not included' OR 'Not evaluated' in column 'Relevance & inclusion' AND
Text answer provided in column 'Please explain' - 0.25 points

Leadership scoring criteria

Any of the following selected in column 'Relevance & inclusion' in all rows:
- 'Relevant, always included'
- 'Relevant, sometimes included'
- 'Not relevant, included'
AND
Either 'Relevant, always included' OR 'Relevant, sometimes included' selected in column 'Relevance & inclusion' in at least four rows - 1 point

Point Allocation