Comprehensive Reporting Framework: Suggested Approach to Reporting Climate Change Risks, Opportunities, and Natural Capital Management

Opportunity and risk assessment from climate change and addressing a company's impact on nature are two distinct aspects. Hence, when it comes to reporting, it is advisable to organize the information into three distinct sections to provide a more comprehensive and focused view of risks, opportunities and contributions.

1. Company's Climate Change Risks : This section addresses the urgent need for quick initiatives to mitigate climate risks, which is of paramount importance to investors. Recognizing and mitigating risks posed by climate change, such as floods, tsunamis, landslides, wildfires, and extreme heat disruptions, is critical. These risks are external factors beyond the company's control, and even the company achieving net-zero emissions in the next 5 years will not eliminate climate risks associated with the business. Therefore, reporting should prioritise detailing how the company manages climate risks.
2. Opportunities Arising from Climate Change Impact: This section can focus on short to mid-term strategies related to climate change's opportunities for operational, product, and resource innovations. Examples include developing climate-resistant products or adopting asset-light outsourced multilocation manufacturing models instead of establishing units in high-risk zones. This information is essential for investors interested in the company's adaptability and innovation strategies.

Few Reporting Standard References: TCFD suggests scenario analysis for recognising risks and opportunities. GRI 201-2, SASB standards – Climate Risk

1. Natural Capital - Contributions to Reducing Climate Impact: This is a mid to long-term strategy, where investors are keen to see the company's progress as it transitions to a low-carbon economy. While it may receive less weight than the first two sections, it is crucial for a comprehensive view. This involves conducting impact assessments on natural resources and implementing strategies to manage energy, water, air, emissions, and waste. By prioritising these actions, companies can actively contribute to reducing their climate impact while optimising natural resources for enhanced financial outcomes in the medium and long term. The impact of these natural capital-related initiatives is more on the company’s finances, people, and society while certainly contributing to lessening the impact of climate change.

Few Reporting Standard References: Use appropriate GRI, SASB Industry specific standards

By clearly distinguishing between these aspects, sustainability reporting can offer a comprehensive perspective on the company's stance regarding climate change, its effective risk management strategies, and its proactive contributions to mitigating environmental impact, catering to different investor interests across various time horizons.

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