Building Resilience through Effective Climate Risk Data: Six Key Considerations

19th June 2024

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Climate risk data management is crucial for organisations aiming to build resilience against both physical and transitional climate risks. By effectively collating and analysing climate risk data, organisations can not only safeguard their operations and assets but also seize opportunities that arise from the transition to a low-carbon economy. Climate risk data management is now more important than ever to support organisations to comply with increasing regulatory requirements, including those from the International Sustainability Standards Board (ISSB) and U.S. Securities and Exchange Commission (SEC).

This article delves into the key considerations for optimising climate risk data management for organisations aiming to become more resilient and responsive to climate risks and opportunities.

Utilising Existing Resources

The foundation of effective climate risk data management begins with leveraging existing resources. Organisations often possess valuable data that can be repurposed for climate risk analysis, such as financial data, asset management records, and operational performance metrics. Integrating these data sets with climate-related information can provide a comprehensive view of an organisation’s vulnerabilities and strengths.

Tapping into publicly available resources such as climate databases and scientific research can provide additional insights without significant additional costs. For instance, resources like the Intergovernmental Panel on Climate Change (IPCC) reports offer robust data and projections that can be instrumental in scenario analysis and risk assessment.

A reputable climate risk data management solution provider should be able to utilise this data as part of a wider solution and understand where and how you should use it in conjunction with your own data.

Building In-House Capacity

Developing in-house capacity is essential for long-term climate risk resilience. By investing in expertise in climate science, data analytics, and risk management, organisations can maintain control over their data processes and swiftly adapt to emerging risks and opportunities.

As organisations will need to pull from a wide expertise base, it is likely to be more cost effective to outsource the specific expertise required to external advisors to interpret complex data, conduct scenario analyses and develop strategic responses, while building general in-house capacity and understanding.

Building general in-house capacity fosters a culture of sustainability and resilience within the organisation. Teams equipped with a deep understanding of climate risks are better positioned to advocate for and implement sustainable practices across all levels of the organisation, driving continuous improvement and innovation. Training for existing staff can significantly enhance the ability to implement plans within the organisation.

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Alignment with Best Practice Climate Change Models for Scenario Analysis

Aligning with best practice climate change models is essential for conducting reliable scenario analysis. Models such as those developed by the IPCC or the Network for Greening the Financial System (NGFS) provide scientifically grounded frameworks for assessing climate risks and opportunities under different scenarios. These models help organisations understand potential future climate conditions and their impacts on operations, assets, and markets.

Scenario analysis allows organisations to explore a range of potential futures, identify critical vulnerabilities, and develop robust adaptation and mitigation strategies. Utilising external models derisks the scenario analysis and builds credibility and confidence in the outputs. As a result, organisations can gain insights into how different climate scenarios could affect business objectives and performance, supporting strategic planning and helping organisations prepare for diverse climate futures.

Visual Outputs and Engagement Maps

Effective communication of climate risk data is key to engaging stakeholders and driving action. Visual outputs and engagement maps are powerful tools for making complex data more accessible and understandable. Interactive maps, dashboards, and visualisations can illustrate climate risks and impacts in a clear and compelling way, helping stakeholders grasp the urgency and scale of the issues.

Visual tools also facilitate scenario planning and decision-making by allowing users to explore different risk scenarios and their implications visually. This enhances stakeholder engagement, fosters collaboration, and supports informed decision-making across the organisation, ensuring that climate risk management becomes an integral part of the organisational strategy.

Configurability for Unique Client Contexts

Off-the-shelf climate risk management software often lacks the flexibility to account for individual organisations’ unique contexts and parameters. If opting for a digital solution, configurability is essential to ensure that climate risk data management systems can be tailored to meet specific needs and circumstances. This includes the ability to incorporate unique asset profiles, existing mitigations and adaptation measures, and specific regulatory and market conditions.

A configurable system allows organisations to customise their data inputs, analytical models, and reporting outputs to align with their unique risk profiles and strategic objectives. Coupled with subject matter experts to analyse and interrogate the climate risk data and supplement with contextual information and more granular data on risk vulnerability where necessary, this ensures that the insights derived are relevant, actionable, and aligned with the organisation’s overall strategy, making the data management process more efficient and effective.

This approach of supplementing data models with an understanding of the specific context of the organisation will become more important over time as organisations are expected to show progress when reporting to internal and external stakeholders.

Being Audit-Ready

As regulatory requirements and stakeholder expectations around climate risk disclosure increase, being audit-ready is more important than ever. Organisations need to ensure that their climate risk data is accurate, comprehensive, and verifiable. Implementing robust data management practices, such as maintaining clear documentation, conducting regular data audits, connecting in stakeholders, such as finance teams, and using standardised metrics, can help organisations meet audit requirements and increase efficiency in the process.

Being audit-ready enhances transparency and credibility with investors, regulators, and other stakeholders. It demonstrates a commitment to accountability and continuous improvement, which can bolster an organisation’s reputation and trustworthiness.

Effectively managing climate risk data is a multifaceted challenge that requires careful consideration of various factors. By utilising existing resources, building in-house capability, being audit-ready, aligning with best practice climate change models, leveraging visual outputs, and ensuring configurability, organisations can enhance their resilience to climate risks and capitalise on opportunities presented by the transition to a sustainable economy. As well as mitigating risks, these considerations also enable organisations to proactively adapt to changing conditions and drive long-term value creation.

Reporting Data

Climate risk analysis is often a starting point for a realisation that much has to change in terms of strategy, governance, and action. Our approach is to engage closely with clients throughout the process, to better understand the nuances and improve the analysis outputs, but also to advise on strategy and next steps, and be a trusted advisor.

We recommend an expert-led approach to Climate Risk, utilising robust modelling based on respected datasets, while recognising that the real value comes from the interpretation of that outputs (the “so what?”), the ability to adjust and fine-tune models to account for more specific context and data, and the consideration of actions and strategic responses that fit the client context.

How can Anthesis help?

For organisations seeking comprehensive climate risk management solutions, Anthesis is equipped to support. Our global team of 1,400 sustainability experts, climate risk consultants and data analysts can provide:

  • Fully configurable digital solutions to automate data collection, support compliance with reporting requirements and provide visual outputs and engagement maps to make complex data more understandable and support decision making.
  • Learning and training solutions to upskill and build your capacity in house, supplemented by expertise from our climate risk consultants to maximise the value to your organisation.
  • Unrivalled specialist and sector-based expertise to provide scenario analysis, climate risk strategy and mitigation and adaptation actions required to reduce climate risk exposure and maximise the opportunities presented in a net zero transition.
  • Experience developed from working with global organisations across sectors to understand best practice and benchmark against similar organisations.
  • Audit readiness experience, navigating auditor requests and managing the risk of putting financial information in the public domain, which may other providers are less familiar with.

Get in touch

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