Businesses continue to transform as they try to respond to ever changing climate trends through their operations, supply chain, and markets.  

From building a strategy down to asset level assessment, relevant, up to date, and credible information is critical for companies to understand the potential impact of climate change. However, they face several challenges in this increasingly critical area.  

Often, companies are looking to conduct rapid due diligence with an overwhelming amount of information that doesn’t provide clear next steps. Much of the data available covers what has happened in the past but isn’t easily translatable to future trends. Needs for this data are expanding, and are integral for:  

  • Reporting and TCFD-aligned disclosure, 
  • Internal risk management,  
  • Improving ESG risk rating, and  
  • Ensuring business resilience and operational continuity in planning. 

Mitigating climate risk can be as challenging as identifying it, as it often involves process transformation; engagement up and down the organization; discussing and managing uncertainty; and cultivating transparency around risks.  

ERM has identified five steps involved in the process: 

Helping our clients simplify the complex  

Addressing these risks and identifying, analyzing, managing and disclosing the respective impacts of climate change will help businesses to gain and retain the most value.

While climate-related trends are continually evolving, they fall into two broad categories:  

  • The net zero transition – the significant, economy-wide changes needed to mitigate climate change; and  
  • Physical climate change – widespread, irreversible impacts to the physical climate and environment from extreme heat through sea level rise to wildfires and many more events.  

Both can result in threats to everyday business activities, including the possibility of regulators or investor divestment, reputational risks, and increasing credit costs. At the same time, effective management of climate risk can result in a number of business benefits, including enhanced revenues, cost reduction and access to capital:

ERM is a recognized authority on climate risk and opportunity. We were the only consulting firm engaged by the G20 Financial Stability Board Task Force on Climate-Related Financial Disclosures (TCFD) and authored the Technical Supplement on scenario analysis in assessment of climate-related risks and opportunities.  

Our global and regional subject matter experts leverage deep sectoral expertise, extensive technical experience, and in-house proprietary tools and knowledge of public reference sources to work with our clients to find a solution that is right for their business.  

ERM’s Climate Risk Impact and Solutions Platform 

One of the tech-enabled solutions ERM has created to support clients is our Climate Risk Impact and Solutions Platform (CRISP). CRISP by ERM enables climate data to be converted into climate risk insights by interacting with ERM’s proprietary Global Climate Database, providing physical climate data across multiple scenarios and time periods, and converting it into meaningful, actionable climate risk information.  

The combination of ERM’s knowledge and expertise in climate risk, combined with the power of CRISP brings insight into physical climate risk across the value chain. It uses the latest climate science and data to look forward to future risks to a company, which when combined with ERM experts’ knowledge enables a comprehensive understanding of the nature and extent of physical climate-related risks facing organizations.