AR 13 When disclosing the information required by paragraphs 19, 20 and 21 and sections AR 10 and AR 11, the entity shall explain how it has used a Climate-related opportunity analysis appropriate to its circumstances to identify and assess short, medium and long-term Physical risks, Transition risks and Opportunities
ESRS Standard
ESRS Standard
18 For each material climate-related risk it has identified, the entity shall explain whether the risk is a climate-related physical risk or a climate-related transition risk .
19 The company describes the resilience of its strategy and business model in relation to climate change. The description includes
a) The scope of the resilience analysis,
b) how and when the resilience analysis was performed, including the use of the Climate Scenario analysis referred to in the disclosure requirements related to ESRS 2 IRO-1 below and the corresponding application requirements; and
c) the results of the resilience analysis, including the results of the Scenario analysis.
Please also note the application requirements from ESRS E1.SBM-3
20 The entity shall describe the process for identifying and assessing Climate-related impacts, Risks and Opportunities. This description shall include its procedures in relation to
a) Impacts on climate change, in particular the company's greenhouse gas emissions (in accordance with the disclosure requirement ESRS E1-6),
b) Climate-related physical risks( Physical risk from climate change) in its own operations and within the upstream and downstream Value chain, in particular:
i. the identification of climate-related hazards, taking into account at least the climate scenarios with high Emissions; and
ii. an assessment of the extent to which the company's assets and operations may be vulnerable to these climate-related hazards in terms of the generation of gross physical risks,
c) Climate-related transition risks and opportunities in the company's own operations and within the upstream and downstream Value chain, in particular:
i. the identification of climate-related transition events, applying at least one climate scenario that takes into account limiting global warming to 1.5°C with no or limited overshoot; and
ii. an assessment of the extent to which the entity's assets and operations may be exposed to these Climate-related transition risks or opportunities.
21. in providing the information required by paragraph 20(b) and (c), the entity shall explain how it has used Climate-related Scenario analysis, including a range of climate scenarios, to identify and assess short, medium and long-term Physical risks and Transition risks and Opportunities.
Application Requirements (AR)
Application Requirements (AR)
AR 9 When providing information on the processes used to identify and assess climate change impacts in accordance with paragraph 20(a), the company shall explain how it has
a) reviewed its activities and plans to identify actual and potential future sources of greenhouse gas emissions and, where applicable, sources of other climate-related impacts (e.g. emissions of black carbon or tropospheric ozone or land use change) from its own operations and along the Value chain; and
b) has assessed its actual and potential impacts on climate change (i.e. its total greenhouse gas emissions).
AR 10. the company may combine the information reported in accordance with paragraph 20(a) and section AR 9 with the information reported under the following disclosure requirements: paragraph 16(d) of the Locked-in GHG emissions disclosure requirement E1-1, disclosure requirement E1-4 and disclosure requirement E1-6.
AR 11. in disclosing the information on the processes used to identify and assess Physical risks in accordance with paragraph 20(b), the company shall explain whether and how
(a) it has identified short-, medium- and long-term climate-related hazards and assessed whether its assets and operations could be exposed to these hazards
(b) it has defined short, medium and long-term time horizons and explained how these definitions relate to the expected life of its assets, its strategic planning horizons and capital allocation plans
(c) it has assessed the extent to which its assets and operations may be vulnerable to the identified climate hazards, taking into account the likelihood, magnitude and duration of the hazards and the geographical coordinates (such as the common classification of territorial units for statistics - NUTS for the territory of the EU) and the specific site of the company and its supply chains; and
d) the identification of climate hazards and the assessment of exposure and vulnerability are based on climate scenarios with high emissions, e.g. based on SSP5-8.5 of the IPCC, relevant regional climate projections based on these emission scenarios or climate scenarios of the NGFS (Network for Greening the Financial System) with high physical risk such as the "Hot house world" or "Too little, too late" scenarios. For the general requirements for climate-related Scenario analysis, see paragraphs 18 and 19 and sections AR 13 to AR 15.
AR 13 When disclosing the information required by paragraphs 19, 20 and 21 and sections AR 10 and AR 11, the entity shall explain how it has used a Climate-related opportunity analysis appropriate to its circumstances to identify and assess short, medium and long-term Physical risks, Transition risks and Opportunities, including:
(a) which Scenarios were used and their sources and how they were adjusted to reflect the current state of science,
b) descriptions, time horizons and endpoints used and a discussion of why the company believes that the plausible Risks and uncertainties are covered by the range of Scenarios used,
c) the key drivers considered in each Scenario and why these are relevant to the company, e.g. policy assumptions, macroeconomic trends, energy consumption and mix, and technology assumptions; and
d) key data inputs and limitations of the Scenarios, including their level of detail (e.g., whether the analysis of physical risks from climate change is based on site-specific geographic coordinates or on more general national or regional data).
AR 14. In conducting the scenario analysis, the company may consider the following guidance: the TCFD Technical Supplement entitled "The Use of Scenario Analysis in Disclosure of Climate-related Risks and Opportunities" (2017), the TCFD guidance entitled "Guidance on Scenario Analysis for Non-Financial Companies" (2020), ISO 14091:2021 "Climate change adaptation - Vulnerability, Impacts and Risk Assessment", other recognized industry standards such as the NGFS (Network for Greening the Financial System) and EU-wide, national, regional and local regulations.
AR 15 The company briefly explains how the climate scenarios used are consistent with the critical climate-related assumptions in the financial statements.
This article has been machine translated. In case of errors, please contact [email protected].