How can you create value from climate change risks?

1 Identify climate change risks

The first step to create value from climate change risks is to identify them. You can use frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) or the CDP (formerly Carbon Disclosure Project) to categorize the risks into transition and physical risks. Transition risks are related to the policy, legal, technological, and market changes that affect your business model and operations as the world moves to a low-carbon economy. Physical risks are related to the acute and chronic effects of climate change on your assets, infrastructure, supply chain, and customers. You can use tools such as scenario analysis, risk mapping, and stakeholder engagement to identify the most relevant and material risks for your business.

3 Reduce climate change risks

The third step is to reduce the climate change risks that pose a threat to your business. You can implement mitigation and adaptation strategies to lower your emissions, increase your efficiency, and enhance your resilience. Mitigation strategies aim to reduce your greenhouse gas (GHG) emissions and your contribution to climate change. For example, you can switch to renewable energy sources, improve your energy management, and invest in carbon offsets or removals. Adaptation strategies aim to increase your ability to cope with the impacts of climate change. For example, you can relocate or retrofit your assets, diversify your supply chain, and develop contingency plans.

4 Enhance climate change opportunities

The fourth step is to enhance the opportunities that arise from climate change. You can leverage your strengths, capabilities, and resources to create value by meeting the needs and expectations of your stakeholders in a low-carbon economy. You can pursue opportunities such as developing new products and services, entering new markets, improving your brand image and reputation, and attracting and retaining talent. You can use tools such as life cycle assessment, market research, and stakeholder feedback to evaluate the environmental and social benefits of your opportunities, as well as their financial viability and competitiveness.

6 Integrate climate change value

The sixth and final step is to integrate the value you create from climate change risks into your core business strategy and operations. You can align your vision, mission, and goals with the principles and practices of corporate sustainability and the global climate agenda. You can also embed climate change considerations into your governance, risk management, and decision-making processes. You can use tools such as balanced scorecards, key performance indicators, and incentives to monitor and reward your progress and performance. You can also use tools such as disclosure, communication, and engagement to share your value proposition and impact with your stakeholders.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?