Is climate risk disclosure falling short?

Welcome to?XDI’s Physical Risk Insights.?

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Every fortnight, we provide you with a summary of the latest news and analysis in the rapidly-evolving world of?physical climate risk.?

This week's update focuses on?extreme weather, standards and a mini-course for you, with updates from the ISSB, as well as the US, Europe and Asia.

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XDI Insight?

Alphabet soup: deciphering physical climate risk disclosure

TCFD, ISSB, SEC, EFRAG....?

For companies navigating their climate risk environment, the initialisations can seem like a?bewildering foreign language.

What you have to assess, report and disclose, and when, differs depending on your jurisdiction, your size, your industry.

So what’s the best approach?

?? Our advice in our blog, from our Head of Impact Georgina Woods ?

Global ??:?News in brief

ISSB wants to hear from you

The?International Sustainability Standards Board (ISSB) is seeking input on priorities for the next two years of its work.?Comments are open until 1 September. The final IFRS Climate-related and general sustainability-related disclosure standards (S2 and S1) are expected to be released this quarter. Preparations for this are ongoing with the?ratification this month of consequential amendments to the Sustainability Accounting Standards Board (SASB) standards for three financial industry sub-categories?to bring them into alignment with the ISSB's S2.?

Small and medium-sized US Banks exposed

Recent actions by banking regulators in the US to address climate-related financial risks have been?primarily concerned with large banks, leaving?smaller, rural and more exposed banks vulnerable?says The Centre for American Progress. They have produced a map of community bank headquarters and their?FEMA National Risk Index (NRI).

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Meanwhile,?The?New York Times?says?the US has "reached a turning point" with insurance premiums rising around the country??-?particularly in high risk areas?- in response to rising damage from extreme weather.?

Disclosure falling short

The?European Central Bank (ECB)?has published its third assessment of bank climate disclosures?and says the quality of disclosures is still too low to meet upcoming supervisory standards.

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The World Economic Forum??has released a White Paper on Asia, saying the region will where "battle for net-zero will be won or lost."??Timely, then, that the Asian Investor Group on Climate Change?last week released a report on greenwashing, saying?asset managers must step up?the scrutiny of climate impact and sustainability disclosures.

The World Economic Forum??has released a White Paper on Asia, saying the region will where "battle for net-zero will be won or lost."

In the hot seat

The?Asian Development Bank??has released a report showing the Asian region will be far better off?if it?pursues 'aggressive decarbonisation'?as the avoided damage from climate change would be far greater than the mitigation costs: hundreds of thousands of lives would be spared in pollution-related deaths and 1.5 million jobs created.?The report highlights that most of the world's pipeline of new coal projects?sits in Asia, also?home to?six of the ten countries worst affected by extreme weather?so far this century.

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Proving the point, Asia has suffered a month?of record heat?-?affecting an estimated one third of the world's population?and?resulting in deaths, closed schools, and is likely?melting glaciers.

?The?Asian Development Bank?has released a report showing the Asian region will be far better off?if it?pursues 'aggressive decarbonisation'?: hundreds of thousands of lives would be spared in pollution-related deaths and 1.5 million jobs created.

And it's not just Asia.??Households in the UK have been warned of food shortages?partly as a result of the crippling?drought and heat affecting Spain. World Weather Attribution?says the heat being inflicted in the Med?would be "almost impossible" without climate change.?It's also fuelling the current?catastrophic drought in Ethiopia, Kenya and Somalia,?they say,?putting several hundred thousand people at risk of starvation.?Drought is?tightening its grip on Europe, too, leading to conflict.

Your turn!

So what next? Train-up on climate tools and solutions

Data is your best defence.

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UNEP-FI is running a "mini course"?on understanding the landscape of climate tools and solutions - drawing from the?2023 Climate Risk Landscape?report (where XDI features along with other providers of climate risk analytics).

Sign up here.