ESRS Standard
ESRS Standard
14. The objective of this DR is to enable an understanding of how the undertaking identifies and assesses climate-related risks and opportunities for financial materiality.
15. The undertaking shall explain for each material climate-related risk identified (per ESRS 2 IRO2, paragraph 37) whether it classifies the risk as a climate-related physical risk or a climate-related transition risk.
16. In addition to the disclosure provided in accordance with ESRS 2 IRO-1, the undertaking shall disclose key elements of the methodology used to assess how its assets and business activities in its own operations and its upstream and downstream value chain may be exposed and be sensitive over the short, medium and long term to:
(a) climate-related hazards; and
(b) climate-related transition events and trends.
17. If climate-related scenario analysis is used, the undertaking shall disclose:
(a) the ranges of scenarios applied, including:
i. whether for climate-related physical risks at least one high-emission scenario was used;
ii. whether for climate-related transition risks at least one scenario in line with limiting global warming to 1.5°C with no or limited overshooting was used; and
iii. the associated global average temperature projection of the scenarios and why they are considered relevant;
(b) the scope of operations used (e.g. operating locations, business units);
(c) the key assumptions made (e.g. public policies, macroeconomic trends, national or regional variables, energy use and mix, technology developments); and
(d) the time period when it was carried out.
Application Requirements (AR)
Application Requirements (AR)
AR 6 for paras. 16 and 17 (Key elements of the methodology and scenario analysis)
In conducting its climate-related risk analysis, the undertaking shall:
(a) identify climate-related hazards (for climate-related physical risks) or transition events (for climate-related transition risks) over the short, medium and long term and screen its assets and business activities to assess whether they are exposed to such risks; and
(b) assess the extent to which its assets and business activities are exposed and are sensitive to the identified climate-related hazards and transition events, taking into consideration their likelihood, magnitude and duration. In the case of climate-related hazards the company shall take into consideration the locations of its assets and business dependencies in its value-chain.
The undertaking may use climate-related scenario analysis, for example if it uses such analysis to comply with other requirements or when applying another reporting framework or when the undertaking considers that such analysis helps identifying and assessing climate-related risks and opportunities for financial materiality.
This article has been machine translated. In case of errors, please contact [email protected].