The UK’s new climate-related financial disclosure regulations went live on April 6, affecting more than 1,300 of the UK’s largest registered companies. While these requirements will improve decision-making and give stakeholders far greater visibility into business’ exposure to climate change, affected firms face a range of barriers to accurately reporting climate-related risks and opportunities in line with the framework.
The solution is Climate Intelligence (CI) - asset-level intelligence for managing climate risk - a new capability that is giving companies a never-before-possible view of the climate-related risks at the level of individual assets like office buildings, factories, and distribution centers. In this article, we will explain how companies can leverage CI to comply with the UK’s climate-related disclosure regulations and enhance their ESG reporting.
For a detailed overview of how CI can help your business satisfy the UK climate-related disclosure requirements, you can download Cervest’s free ebook.
The challenge of analyzing the impact of climate change
Many companies face challenges when disclosing the impact of climate change on their business. Cervest’s climate-related financial disclosure report explored the origins of this problem. Of the 800 decision-makers polled, nearly half reported the complexity of aggregating climate data as a significant barrier to accurate reporting. It’s not just accessing data that presents challenges - data quality and analysis also present significant roadblocks. Forty-four percent cited a lack of trust in the integrity of their data, while 38% attributed their reporting difficulties to an insufficient understanding of data.
Cervest’s report highlights a fundamental problem for businesses: climate data is extremely complex. Information relating to changes in global climate such as temperature and precipitation driven by increasing concentrations of greenhouse gas emissions is simply too vast and nuanced for most businesses to collate, process, and decipher in-house. Further complexity arises from the fact that climate-related hazards are interconnected; rising temperatures can make droughts more likely, which in turn can increase an area’s risk of wildfires. Multiple connected risks are known as compound risks. Third-party expert analyses are similarly limited, often taking so long to prepare that they quickly become outdated and ineffectual for reporting purposes.
There is also the issue of granularity. To disclose the impact of climate change, companies must understand its effect on assets, which is where businesses will feel many of the risks and opportunities posed by climate change. However, applying climate models at the asset level requires vast amounts of scientific know-how and computing power, which are beyond the reach of most organizations.
Enter Climate Intelligence
Understanding climate-related risks at the asset level is now possible thanks to Climate Intelligence. By fusing cutting-edge earth science and machine learning techniques, CI lets companies see the current and emerging hazards facing their office buildings, manufacturing facilities, and distribution centers, enabling them to determine the present and future impact of these hazards on their bottom line.
In a recent market perspective, global analyst firm IDC cited EarthScan™, Cervest’s Climate Intelligence (CI) product for enterprises, as a solution that can help companies integrate climate risk into decisions and workflows, and automate their climate-related financial disclosure reporting.
To learn more about enhancing your climate-related financial disclosures with Climate Intelligence, just download our free and comprehensive ebook.
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