Recently, an article appeared in the Financial Times magazine on an apple strain, the Tutti, that has been bred to survive in a hot climate with daytime temperatures reaching up to 40 degrees Celsius. The apple has been planted in orchards in northeast Spain, where new high temperature records were set this year. Climate change produces both physical risk, in this case high temperatures, and also transition risk, the risk that businesses and individuals have not prepared adequately for changes in climate and will not be able to immediately adapt to new conditions. The Tutti provides a great example of how transition risk can be mitigated, but it took over 20 years of partnership to develop the apple strain, according to its developer, the Hot Climate Partnership.
Climate risk can lead to several different types of issues for business, including acute and chronic physical risk, costs of reconstruction or replacement of equipment, and higher prices. As the new European Sustainability Reporting Standards take effect, businesses are required to disclose several different ways in which climate change interacts with and impacts upon a business including:
- A transition plan for climate change mitigation
- The resilience of a company’s strategy and business models in relation to climate change.
- Climate change adaptation and mitigation actions and resources allocated
- Baseline greenhouse gas footprint for the company
- Climate change targets for 2030 at least, and 2050 if available
It is important to note that changing weather does not necessarily always mean warmer weather, but can also have to do with changing levels and timings of extreme weather or precipitation. For example, Ireland had a record wet summer, leading to losses for tillage farmers whose crops became un-harvestable due to waterlogged soil, according to RTÈ, Ireland’s national broadcaster. Changes in weather can also lead to opportunities, for example the opportunity to grow crops at a distance further north or south than is currently the case.
Better management of company climate profiles through use of the ISO14064-1 and ISO14064-2 standards through the training offered by Carbon Action is a good start to understanding the way in which companies can both adapt to and be protected against changing weather conditions as well as manage ESRS compliance, produce data to answer customer queries on climate change, and report to or conform with third party climate initiatives such as the Carbon Disclosure Project, Taskforce for Climate Related Financial Disclosures and the Science Based Targets Initiative. Creation of expanded data also leads to better ability to manage long-term planning and provides the seeds for adaptation to climate change.