Climate Risk Reporting Is Not Just a Compliance Exercise

As shared by Yale Climate Connections, the earth was hit by 55 billion dollar weather events in 2025. Regulation (or lack thereof) aside, businesses should take note.

Since 2017, businesses could voluntarily report on climate related risks using the framework offered by the Task Force on Climate-related Financial Disclosures or 'TCFD'. And many companies did. When California, the 4th largest economy in the world, signed its climate accountability package into law in 2023, climate risk disclosure became mandatory for businesses meeting certain criteria. While enforcement has been temporarily halted, many companies have already stepped up.

Over the past few months, I've worked with the talented Marina Bradford of Everloop to support clients in meeting the requirements of the CA climate disclosure legislation or SB 261. Together with our clients, we parsed out the material climate risks and opportunities, ran scenario analysis to predict future risks, strengthened risk management and oversight, and supported the development of metrics and action plans to better manage climate risk and leverage opportunities.

For each of these clients, legal compliance was the initial driver for this work. However, along the way, the insights gained and the realization that climate risk is a business risk that cannot go unaddressed became the main drivers. It's easy to see why: when a critical tier-one supplier's manufacturing facility is in an area prone to flooding, production is at risk; when a key site for service delivery is prone to heatwaves, worker and attendee health is at risk, compromising productivity and sales. Knowing and managing your material climate risks is a matter of business resilience and at times, survival.

While federal climate policy is in reverse, many states continue to move ahead: NY, CO, IL, NJ, and MN, all have climate risk disclosure legislation similar to California's in the works. And even without the stick, the carrot of a more resilient, future-proof business alone is worth the work.

Photo credit: Yale Climate Connections

#climaterisk #riskmanagement #businessresilience #disclosure

Source: Climate Central