CSRD Climate Risk Reporting
Preparing for the Evolving Landscape of Sustainability Reporting
What is CSRD?
The Corporate Sustainability Reporting Directive (CSRD) requires large companies and listed SMEs in any sector within the EU to report on environmental, social, and governance (ESG) factors.
This directive expands non-financial reporting and mandates disclosures aligned with the European Sustainability Reporting Standards (ESRS) for enhanced transparency.
CSRD ESRS E1-9 – The Financial Impacts of Climate Related Risks
CSRD Section E1-9 focuses on the financial impacts of climate change, requiring companies to disclose how climate-related risks and opportunities affect their financial performance, including potential costs and revenue impacts from adaptation and mitigation strategies, as well as exposure to physical and transitional climate risks within their operations and supply chain.
Whilst the data collection and reporting process can be cumbersome, it provides a real opportunity to weigh up the cost and consequences of inaction with the outcomes of proactively integrating climate adaptation processes into your strategic plans.
Preparing for ESRS E1 Climate Risk Disclosures
When preparing for climate risk disclosures, businesses must decide: manage in-house, engage consultants, or leverage software. With 20% of CSRD’s data points tied to ESRS E1, data collection can be a key challenge. Software offers a cost-effective middle ground but relies on the quality of initial data inputs.
- Data Collection: Managing internally can be a resource strain, while outsourcing without software can result in high fees.
- Financial Quantification: Advanced modelling is needed to translate risks into financial metrics, often requiring niche expertise.
- Supply Chain Risks: Understanding climate vulnerabilities within the entire supply chain is challenging, as it demands insights into suppliers’ risk factors.
Benefits Beyond Compliance – Unlocking The Power of Climate Risk Reporting
Climate risk reporting isn’t just about compliance—it drives real financial impact. Asset-level data helps target spending on high-risk areas, optimising resources. Regular supply chain monitoring detects risks early, enabling proactive mitigation and greater resilience. Transparent reporting boosts investor confidence, attracting ESG-focused capital by showcasing strong sustainability performance and risk management.