ESRS Standard
ESRS Standard
18. The objective of this DR is to enable an understanding of the extent to which the undertaking's strategy and business model are prepared for, and can adapt to, material climate-related risks.
19. In addition to the disclosure in ESRS 2 SBM-3, the undertaking shall disclose the following information on the resilience of its strategy and business model to climate-related risks:
(a) the results of its analysis of climate resilience in relation to climate-related risks. The undertaking shall explain: (i) the implications of the assessment, if any, for its strategy and business model; (ii) how the effects identified through the climate-related scenario analysis, if used, inform the undertaking's potential response to climate-related risks; and (iii) how its transition plan, if existent, and its current and planned mitigation and adaptation actions (ESRS E1-5) contribute to its resilience to climate-related risks;
(b) significant areas of uncertainty in the assessment of its climate resilience; and
(c) its capacity to adjust or adapt its strategy and business model to climate change over the short, medium and long term.
Application Requirements (AR)
Application Requirements (AR)
AR 7 for para. 19
The analysis of climate resilience builds upon the identification of climate-related risks reported in ESRS E1-2, paragraph 15. Therefore, the scope of the analysis of climate resilience is aligned with that of the undertaking’s material climate-related risks and informed by climate-related scenario analysis if performed. If climate-related scenario analysis is used specifically for the purpose of assessing climate resilience, the undertaking shall disclose the information prescribed under paragraphs 17 and 19.
AR 8 for para. 19 (Resilience of strategy)
When assessing the climate resilience of its strategy and business model, the undertaking shall consider the implications for its strategy and business model of the assessments performed in accordance with ESRS E1-2 and of the exposures at risk disclosed in accordance with ESRS E1-11 (anticipated financial effects), including actions required to respond to the climate-related risks and opportunities identified through climate-related scenario analysis if performed.
AR 9 for para. 19(a) (Resilience of strategy)
When disclosing the results and implications of its analysis of climate resilience in accordance with paragraph 19(a), the undertaking shall provide its assessment of its climate resilience as at the reporting date. An undertaking is not required to perform an analysis of climate resilience on an annual basis. If the undertaking has updated its assessment of climate-related impacts, risks and opportunities (per ESRS E1-2), it shall update its analysis of resilience.
When disclosing information in accordance with paragraph 19, financial institutions may make use of information that they report under the applicable prudential regulatory framework if it includes references to resilience analysis or to related concepts such as usage of scenarios in the context of sustainability risk plans.
AR 10 for para. 19(c) (Resilience of strategy)
When disclosing its capacity to adjust its strategy and business model in accordance with paragraph 19(c), the undertaking shall consider:
(a) the availability of, and flexibility in, existing financial resources to manage the financial effects of climate-related risks and to capitalise on climate-related opportunities;
(b) its ability to redeploy, repurpose, upgrade or decommission existing assets in response to climate-related changes;
(c) the effect of current and planned investments in climate change mitigation, adaptation and transition opportunities for climate resilience;
(d) cross-referencing to its climate change mitigation and climate change adaptation actions, disclosed in ESRS E1-5.
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