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Analyzing physical climate risks

We analyze the company’s risks related to acute weather events and more chronic changes in the climate. We do this by using the science-based forward-looking models and scenario analysis. Where possible, we use geo-spatial datasets of the different assets of the company and combine this with location dependent information about the hazards, as the exposure is not spatially uniform and differs from one region, or even location, to another.

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Climate risks mitigation

With the phyiscal climate risks are identified, we provide advice on the most important mitigation actions to reduce the risks. This includes the operational impact, but also the larger supply change and socio-economic disruptions that can occur because of climate change. To ensure the effectiveness of the mitigation actions, our reports recalculate the climate risks of the company under the hypothesis that the identified mitigation measures are applied.

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Physical climate risk disclosure

Gouvernments, financial markets and regulators encourage companies to disclose their climate related risks. Already hundreds of companies disclose this information on a voluntary basis. PlanitWise makes sure that the climate risks reports follow the most widely used standards and recommendations related to climate disclosures and helps companies to fullfill their climate disclosure pledges and obligations.

Frequently Asked Questions

Physical climate risks explained

What are physical climate risks?

Physical climate risks, or the physical risks resulting from climate change, can be seen as the exposure to harmful events that arise from climate change. We can distinguish acute event, also called extreme weather events, like flooding, hurricanes and bushfires, and chronic events that refer to longer-term shifts in climate patterns resulting in changes in average precipitation, sea level r temperature.

How are climate risks calculated?

Simply put, the climate risks can be calculated as a function of Hazard (the climate related event that can cause damage), Exposure (the level of exposure of the company’s activities that could be affected by the hazard. One can think of the phyisical value, but also the criticality of the asset in the value chain), and Vulnerability (the likelihood that the asset will be affected by the hazard).

For companies, the impact can go far beyond the direct operational impact of the asset that is affected by a climate change related event. It can for example disturb the supply chain of the company, but also provoke changes in the socio-economic situation of the consumers and therefore changing the market.

Why is it important to analyze the physical climate risks?

For companies, the impact of climate change can lead to financial losses by damaging its assets, but it can also greatly disrupt the functioning and therefore the future of the company itself by jeopardizing the operations and the logistics, and provoking unwanted changes in the market.

Is it mandatory to disclose the company’s physical climate risks?

Physical climate risks may have an impact on the valuation of the company. Therefore investors are pressing companies to analyze and disclose their climate change related risks. Regulations making climate disclosure mandatory or recommended are coming into force in various countries. Please contact us to find out whether your company needs to disclose its climate change related risks.

What standards does PlanitWise use for the climate reports?

PlanitWise applies the recommendations of the Task-Force on Climate-Related Financial Disclosures (TCFD) and the CDP. We closely follow the evolution of the different standards and integrate them as early as possible in our reporting.