Case Study: Integrating Climate Risks into Local Planning in Alameda County

Integrating climate change considerations into local planning processes can be a daunting task. Climate data is complex, fragmented, and comes in a format and at a scale that does not necessarily speak to planners and GIS analysts. More importantly, interpreting climate projections and integrating it into planning and policy processes requires a nuanced understanding of climate models as well as local governments’ inner workings.

Four Twenty Seven has developed a streamlined process to support local governments in their efforts to integrate climate risk into key planning efforts: local hazard mitigation plans, general plans, climate action plans, etc. Our services blend modeling and data integration with policy analysis to help cities and counties develop adaptation strategies that address their most critical risks and leverage local strengths and community needs.

This case study presents Four Twenty Seven’s work for six cities in Alameda County, funded by the Alameda County waste authority StopWaste, to respond to California’s Senate Bill No. 379 Land Use: General Plan: Safety Element (Jackson) (SB 379). SB 379 requires cities in California to incorporate adaptation and resilience strategies into General Plan Safety Elements and Local Hazard Mitigation Plans starting in 2017. For each city, Four Twenty Seven developed a chapter that responds to these requirements by providing a climate hazard exposure analysis and proposing a set of adaptation options to help each city plan for future conditions.

Project Objectives

  • Support participating cities meet the requirements of:
    • Relevant state legislation
    • Federal Emergency Management Agency guidance
    • Voluntary Commitments (Global Covenant of Mayors for Climate and Energy)
  • Facilitate linking of climate change components of relevant planning processes
  • Promote a consistent approach to integrating climate hazards into diverse local planning processes
  • Empower cities to use the climate change chapter to meet specific needs
  • Position cities for federal funding

Project Background

Alameda County

Alameda County is located in the east San Francisco Bay, stretching from the shoreline of the Bay east across the Berkeley and Oakland hills. Due to its location, the county is exposed to a variety of climate hazards including sea level rise, inland flooding, temperature and precipitation changes, wildfire, and rainfall-induced landslides. While some cities in the County have robust plans for climate adaptation, others lack the targeted information to consider climate in a tangible, actionable way in their City planning.

Hazard Assessment

Floodplains in Hayward California
Figure 1. Exposed assets in the 500-year floodplain (red) in Hayward, California. Source: Vizonomy, Four Twenty Seven

For the hazard exposure assessments, Four Twenty Seven leveraged our partner Vizonomy’s platform to overlay regional climate hazard data with asset location data from public sources and the cities themselves. The overlay of hazard layers and asset location informed an identification of how sea level rise, flooding, fire and landslide might affect specific assets and/or the city overall. Four Twenty Seven also modeled city-specific projections of future temperature and precipitation changes using downscaled climate data, and our partner, Cadmus, conducted a review for compliance with FEMA requirements.

Adaptation Actions

Four Twenty Seven used the results of these assessments, together with a review of existing city plans and the draft SB 379 guidelines from the California Governor’s Office of Planning and Research, to develop a set of adaptation actions that cities may use to inform relevant plans addressing these hazards.

Project stages

The actions identify adaptive policies and projects and provide information on potential implementation partners, potential funding sources, timeframe, ease of implementation, co-benefits, and equity considerations.

Streamlining Adaptation Planning

Our process supports cities and counties in integrating climate change risks and adaptation into current planning processes to align goals, promote efficiency, and leverage resources. Understanding that each city or county operates in a unique context, we work closely with relevant stakeholders to provide services that meet relevant policy requirements as well as address local needs and circumstances.

We can help you identify and prioritize actions to improve resilience in your community.

Contact: Yoon Kim, PhD., Director of Advisory Services – ykim@427mt.com – 415.890.9090


Download the case study PDF

Audio Blog: The Changing Landscape of Climate Risk Disclosures

Market expectations on corporate climate risk disclosures are fast changing as corporations, investors, and regulators are attempting to increase efficiency and strengthen economic resilience through more transparency. This panel discussion, held at the 2017 Climate Leadership Conference on March 1, 2017, provides an overview of recent developments by US and EU regulators and Bloomberg’s Task Force on Climate-related Financial Disclosures. Panelists shared how they are responding to the new regulatory context, challenges and opportunities arising from understanding climate impacts on business and markets, and expectations for further developments.

Panelists:

  • Emilie Mazzacurati, Founder & CEO, Four Twenty Seven (moderator)
  • Laline Carvalho, Director of the Financial Services Ratings Group at S&P Global
  • Tim Dunn, Founder and Chief Investment Officer, Terra Alpha Investments LLC
  • Mardi McBrien, Managing Director, Climate Disclosure Standards Board
  • Richard Saines, Partner; Head of North American Climate Change & Environmental Markets Practice, Baker McKenzie

You can listen to a recording of the panel here. Note that due to a technical issue with the recorder, the introductions from Laline Carvalho and Tim Dunn were unfortunately not captured.

For more information about the Taskforce on Climate-related Financial Disclosures, read our blog posts:

You can also watch our webinar discussing TCFD next steps, and issues to consider for implementation.

New EU Directive Requires Pension Funds to Assess Climate-related Risks

EU FlagOn December 8th, 2016 the EU adopted a new regulation regarding Pension Funds, the IORP II Directive — the successor of the Institutions for Occupational Retirement Provision Directive adopted in 2003. The directive’s main objectives are to enhance pension funds’ governance, risk management and supervision, and to facilitate cross-border activities.

A key feature of the directive is the consideration of environmental, social and governance (ESG) factors as part of pension providers’ investment. In particular, pension providers are now required to carry out their own risk assessment, including climate change-related risks, as well as risks caused by the use of resources and regulatory changes.

Moreover, the Directive explicitly allows pension funds to take into account ESG factors in investment decision-making, within the ‘prudent person’ rule. This comes as an important clarification as fiduciary duty is often cited by investors as a reason they cannot pay more attention to ESG issues in investment processes.

The implementation of the Directive

IORP II applies to all the 14,358 registered EU pension funds, among which 160 have cross-border activities.

Member States (EU countries) have until January 13, 2019 to transpose IORP II into their national law, which was published early January in the Official Journal of the European Union. According to current projections, the implementation deadline should therefore fall before Brexit, an important fact considering that the UK accounts for 50 percent of the EU occupational pension fund sector, followed by the Netherlands (33 percent).

A new risk assessment covering climate-related physical risks

The risk assessment is to be carried out every three years or after any significant change in the risk profile of the pension funds “in a manner that is proportionate to their size and internal organization, as well as to the size, nature, scale and complexity of their activities”.

The assessment must cover “new or emerging” risks, “including risks related to climate change, use of resources and the environment, social risks and risks related to the depreciation of assets due to regulatory change”.

The Directive’s preamble invites EU member states to use the Principles for Responsible Investment (PRI) as a reference for ESG and climate change-related reporting requirements and states that “the relevance and materiality of environmental, social and governance factors to a scheme’s investments and how they are taken into account should be part of the information provided by the scheme under this directive”.

While physical impacts of climate change are not mentioned in these terms, the inclusion of risks related to climate change, use of resources and social risks clearly point to the inclusion of physical impacts, in addition to regulatory and energy transition risks. National transpositions might provide more explicit guidance.

Beyond compliance considerations, pension funds are particularly exposed to climate risks given their long-term investment profile. The longer an asset manager’s time horizon, the more climate-related risks increase. As pension funds also tend to be particularly risk-averse, taking into account climate-related risks is crucial for effective risk mitigation. In 2015, the Economist Intelligence Unit valued the average expected loss as a result of climate change across scenarios as $4.2tn in financial assets.

Considering that EU pension funds now manage more than €2.5 trillion ($2.65 trillion) in combined assets, the assessment of physical climate risks will require considerable effort to access raw climate data at asset level, select appropriate indicators, and interpret the output.

Climate-related regulatory efforts gaining momentum

The adoption of this new climate risks mandatory disclosure at EU-level follows the adoption of an pioneering climate risk reporting law for asset managers and asset owners in France, discussed in a previous post, and occurs almost concomitantly with the release of the Task Force on Climate-related Financial Disclosures (TCFD) Phase II Report discussed  in a policy brief and a webinar.

European central banks and financial regulators are increasingly aware of the threat to financial stability of sudden market adjustments caused by climate-related risks. The concern is that the scale of impacts would pose a systemic risk to the financial system as a whole. A growing number of public institutions are paying attention to this issue including De Nederlandsche Bank; the Bank of England; Finansinspektionen; the SEC and the ESRB.


Four Twenty Seven helps investorsFortune 500 companies and government institutions understand how to quantify and monetize climate change impacts on operations as well as social factors that affect their value chain. Our clients rely on Four Twenty Seven’s tools and models to factor into financial and operational planning processes. Learn more about how we are helping our clients assess and adapt to climate risks.

 


You can find the full text here and the impact assessment made by the European Commission here

A handbook by Lane, Clark & Peacock on the IORP II

 

TCFD Key Recommendations for Climate Risk Disclosure

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) is an industry-led task-force established at the December 2015 G20 summit for improving voluntary financial disclosure of climate-related risks. Eight months after the release of its Phase I report (discussed  in a policy brief), the TCFD published a comprehensive set of recommendations on December 14 in its Phase II report. The recommendations provide detailed guidance for companies on how and what to integrate in their financial climate risk disclosure. These recommendations are categorized into four different components: Governance, Strategy, Risk management, and Metrics.

Core Elements of Recommended Climate Risk Disclosures

Governance

The first set of recommendations relates to the organization’s governance for addressing climate-related risks and opportunities.

At the board-level, TCFD report recommends disclosing how and how often is the board informed about climate-related issues, whether it integrates them when reviewing, guiding, monitoring the organization’s activities, and how it oversees progress against goals and targets for addressing those issues.

At the management-level, the TCFD suggests disclosing whether the organization has assigned climate-related responsibilities to management-level positions, what those responsibilities entail and how they are reported to the board. Just as for board-level, the report also invites organizations to describe processes by which management is informed about climate-related issues and how it monitors them.

Strategy

The second set of recommendations covers how climate-related issues may affect an organization’s businesses, strategy, and financial planning over the short, medium, and long term.

TCFD recommends organizations state what they consider to be the relevant short-, medium-, and long-term horizons, according to the nature of their assets / infrastructure, then identify the specific climate-related issues that could have a material financial impact on the organization for each time horizon and by distinguishing between physical and transition risks. According to the report, the risks and opportunities should be assessed by sector and geography when appropriate, and the methodology used should also be described along with the assessment.

Based on the above recommended disclosure, TCFD suggests disclosing as a first step how identified climate-related issues have already impacted the organization’s:

  • businesses, strategy and financial planning
  • products and services
  • supply chain and/or value chain
  • adaptation and mitigation activities
  • investment in R&D
  • operations, by types and location

As a second step, the report recommends assessing how the organization’s strategy is likely to perform under various climate-related scenarios and how what actions are subsequently taken to mitigate risks and take advantage of opportunities.

Risk management, metrics and targets

The last sets of recommendations relate to how the organization identifies, assesses, and manages climate-related risks, including the metrics and targets used.

The TCFD suggests disclosing the processes implemented within the organization for assessing the potential size and scope of identified climate-related risks, for managing those risks (be it through mitigation, transfer, acceptance or control) and for prioritizing them. More specifically, the organization should explain how materiality determinations are made.

According to the TCFD, organizations should consider providing the key metrics used to measure and manage those risks, especially metrics associated with water, energy, land use, and waste management where relevant, as well as the organization’s internal carbon prices. All metrics should be provided for historical periods to allow for trend analysis, along with a description of the methodologies used to calculate them.

Moreover, the TCFD recommends setting climate-related internal targets, such as those related to GHG emissions, water usage, energy usage, etc., but also efficiency goals, financial loss tolerances, or net revenue goals for products and services designed for a low-carbon economy. Targets description should detail whether the target is absolute or intensity based, time frames, key performance indicators and methodology used to assess progress against targets.

Examples of climate-related risks and their potential financial impacts

The report provides examples of physical and transition risks, along with their potential impacts on the organization’s finance.

Examples of climate-related risks and their potential financial impacts

The main challenge ahead: Identifying risk at asset-level

The process of scanning assets for physical climate risk exposure will require considerable effort and challenges, from accessing raw climate data at asset-level, to selecting appropriate indicators and time frame, and interpreting the output while accounting for climate data’s unique complexity and sources of uncertainties.

To support corporations and investors looking to identify hotspots and quantify value at risk in their portfolio of assets, facilities or across their supply chain, Four Twenty Seven has developed a suite of enterprise applications that provide rapid, cost-effective screening across portfolios of 10,000+ assets.

Learn more about CREST, our Climate Resilience Support Tool for corporate climate risk management, and our climate data analytics services for financial institutions.

Audio Blog: Climate Data & Public Health, Mobilizing Adaptation Action

Director of Advisory Services Yoon Kim moderated a panel at the 2017 National Conference and Global Forum for Science, Policy, and the Environment. The session, titled “Climate Data and Public Health: Mobilizing Adaptation Action”, explored the role of interactive data tools in the adaptation continuum – from diagnosis to planning to solutions – through concrete case studies. Presenters brought local public health and private sector hospital perspectives from across the United States. You can listen to a full recording of the panel here, and follow along with the presentation slides.



Panelists:

  • Cyndy Comerford, Manager of Policy and Planning, San Francisco Department of Public Health
  • Michele Shimomura, Public Health Manager, Denver Department of Environmental Health
  • James Evans, Sustainability Analyst, Cleveland Clinic
  • Deborah Weinstock, Director of the National Clearinghouse for Worker Safety and Health Training, Michael D. Baker, Inc.
  • Jennifer de Mooy, Climate Adaptation Project Manager, Delaware Division of Energy and Climate

California Heat & Health Project

California's Fourth Climate Change Assessment

As part of California’s Fourth Climate Change Assessment, Four Twenty Seven is working with project partners to develop a tool that will inform long-term planning efforts to communicate the urgency of and mitigate the public health impacts of increasing extreme heat events across the state.

The Challenge of Heat Events in California

The number of extreme heat days in California are projected to increase from currently around ten a year to 25-50 by 2050, and upwards of 100 by the end of the century. Extreme heat has major impacts on human health, especially on the most vulnerable populations.

The California Heat & Health Project is funded by the California Energy Commission as part of the California Fourth Climate Change Assessment to develop an interactive, user-friendly tool that will provide public health and planning stakeholders with detailed projections on extreme heat events and the potential health impacts for local communities.

User Needs Report

California Heat & Health Project: A Decision Support ToolTo better inform this tool, we conducted a robust literature review and user needs assessment to understand how the California Heat and Health Project can best inform and improve current efforts in all California regions. Our report outlines our key findings from this research including results from an online survey and interviews with public health, planning and emergency preparedness stakeholders throughout California.

Our research shows the limitations of emergency response to prevent the health impacts of heat waves. The greatest strides can be made through interventions planned well ahead of time, such as changes in the urban design and social programs. Therefore, we conclude that a new online decision support tool is best geared towards informing mid and long-term interventions to reduce the public health impacts of extreme heat.

The online decision support tool is currently in development, and will be available in the fall of 2017 through Cal-Adapt, the state’s adaptation portal.

Download the report

 


 

Founded in 2012, Four Twenty Seven is an award-winning climate risk and resilience research and advisory firm that brings climate intelligence to economic and financial decision-makers. Four Twenty Seven helps investorsFortune 500 companies and government institutions understand how to quantify and monetize climate change impacts on operations as well as social factors that affect their value chain. Customers rely on Four Twenty Seven’s tools and models to factor into financial and operational planning processes. Four Twenty Seven’s team is comprised of highly qualified professionals with backgrounds in climate science, economics and finance, natural resources management, policy analysis, public health, and international development.

Art. 173: France’s Groundbreaking Climate Risk Reporting Law

National Assembly, Paris, FranceIn the fall 2015, in the run up to COP21, France became the first country to pass a law introducing mandatory extensive climate change-related reporting for asset owners and asset managers, the Energy Transition Law and its now famous Article 173.

The reporting obligations set out under Article 173 and its implementing decree have potentially far-reaching implications, requiring institutional investors to report on the integration of both physical risks and ‘transition’ risks caused by climate change on their activities and assets.

Whom Does Article 173 Apply To?

Article 173 addresses publicly traded companies, banks and credit providers, asset managers and institutional investors, the latter being listed as insurers, pension or mutual funds and sovereign wealth funds, with differentiated reporting obligations depending on their size and nature.

The law applies to French companies, meaning that French subsidiaries of large financial groups are potentially subject to requirements that do not apply to their parent companies.

What Must the Climate Change-Related Reporting Include?

A comply or explain approach

The law provides investors with broad flexibility in choosing the best way to fulfil the objectives, based on a comply or explain approach. It does not impose any specific method, giving leeway to find the reporting methodology suiting best the investment portfolio, for example reflecting specific asset classes or subsidiaries. However, investors must provide information and justification on the methodology used. They are encouraged to draw from current best practices. An assessment of the implementation will be carried out after two years, at the end of 2018, and the best-in-class approaches will be promoted.

Differentiated requirements

Banks and credit providers will be subject to regular stress tests including a climate change component.

Publicly traded companies’ annual reports must disclose the financial risks related to the effects of climate change, the measures adopted by the company to reduce them and the environmental impact of the company’s activities and of the use of goods and services it produces.

Asset managers managing funds below 500 M€ and institutional investors with balance sheets below 500 M€ must report on the implementation of their ESG policies.

Asset managers managing funds above 500 M€ and institutional investors with balance sheets above 500 M€ are subject to extended climate change-related reporting obligations (besides their ESG policies). Those obligations are two-fold:

  1. Assessment of the portfolio’s exposure to climate change-related risks, including both physical risks (physical impact of climate change) and transition risks (impact of the transition to a low-carbon economy).
  2. Assessment of the investor’s contribution to meeting the international and national low-carbon goals, including the low-carbon targets set by the the investor itself and the actions taken to achieve these targets.

While Asset management companies have to report separately on each of the above 500 M€ funds they manage, institutional investors must provide a consolidated reporting on their assets.

Note that institutional investors may have a commercial relationship with asset management companies via dedicated funds and/or management mandates. Therefore, asset management companies may be directly or indirectly affected by Article 173, via their institutional investor clients. The terms and conditions of access to ESG information required by institutional clients to meet their own Article 173 reporting obligations are to be defined in the contractual relations between them and the asset management companies involved.

Though investors are free to choose which exact data to report, the implementing decree suggests including the following information:

  • The consequences of climate change and extreme weather events on the assets
  • Changes in the availability and price of natural resources
  • Policy risks related to the implementation of national and international climate targets
  • Measures of past, current or future emissions of GHG (both direct and indirect)

As mentioned above, all assessments must come with an explanation and justification of the methodology used.

As of now, 60 institutional investors are subject to the latter reporting requirements.

The Assessment of Climate Change-Related Physical Risks

What really makes Article 173 groundbreaking is the reporting obligation on climate change-related physical risks. The inclusion of physical impacts of climate change in a financial risk analysis is in line with the industry-led Task Force on Climate-related Financial Disclosures (TCFD) recommendations report, released on December 2016 and discussed in a policy brief and a webinar.

While traditional climate-related reporting focuses mainly (if not exclusively) on the impact of the organization’s activities on climate change, the French Energy Transition Law is truly pioneering as it also emphasizes the impact of climate change on the organization’s activities and assets. This new focus meets the demand of investors for enhancing financial risks assessment through taking better account of climate-related risks.

A Ripple Effect

The French government is hoping for a ripple effect, both internationally and on a national level, across the investment value chain. The service providers of eligible investors are already considering how to enhance their ESG and climate reporting practices in order to meet their clients’ demands and comply with the law.

Moreover, climate-related regulatory efforts are gaining momentum. Article 173 is expected to be the first of a series of national equivalent regulatory frameworks among the G20 countries. The TCFD was established shortly after the Law passed, at the December 2015 G20 summit, and explicitly offers its guidance for compliance with Art. 173.

In March 2016, the Dutch central bank DNB announced it was taking steps to monitor and mitigate climate risk. Last November, the European Union has issued a directive requiring all EU-based pension funds to assess for climate change risk.


Four Twenty Seven helps investorsFortune 500 companies and government institutions understand how to quantify and monetize climate change impacts on operations as well as social factors that affect their value chain. Our clients rely on Four Twenty Seven’s tools and models to factor into financial and operational planning processes. Learn more about how we are helping our clients assess and adapt to climate risks.


Documents
A handbook on Article 173 published by the French SIF

By Delphine Ly, Climate Analyst at Four Twenty Seven

[Webinar] TCFD Recommendations – What You Need to Know

How will the disclosure recommendations developed by the Task Force on Climate-related Financial Disclosures be put into action? Four Twenty Seven in partnership with Crowell & Moring LLP hosted a webinar on January 12th, 2017 to present key TCFD recommendations and discuss feasibility, next steps, and issues to consider for implementation. Watch the unedited recording to learn about best practices, innovative tools and emerging methodologies to assess carbon and climate risk at the corporate and portfolio level.

Speakers:

  • Emilie Mazzacurati, Founder and CEO, Four Twenty Seven
  • Cameron Prell, Counsel, Crowell & Moring LLP
  • John Hekman, Project Officer, CDP
  • Romain Poivet, Climate Program Officer, ADEME

 


 

Four Twenty Seven helps investorsFortune 500 companies and government institutions understand how to quantify and monetize climate change impacts on operations as well as social factors that affect their value chain. Our clients rely on Four Twenty Seven’s tools and models to factor into financial and operational planning processes. Learn more about how we are helping our clients assess and adapt to climate risks.

India Heat Impact Project

Using High-Resolution Climate Models to Explore the Impact of Rising Temperatures on Human Health and Labor Productivity

India Heat Impact Project

 

Globally, higher daily peak temperatures and longer, more intense heat waves are becoming increasingly frequent due to climate change. India, with relatively low GDP per capita, high population density, and tropical climate, is particularly vulnerable to these trends. As a result of climate change, heat waves in this region will last longer, be more extreme, and occur with greater frequency in the coming years.

Impacts will be felt most acutely by vulnerable populations, which include not only those with frail health, but also populations otherwise considered healthy whose livelihood involves working under exposure to high temperatures. The problem is exacerbated by low levels of economic development, particularly in the under-provision of medical services, a higher proportion of weather-reliant income sources, and the inability to recover quickly from shocks.

Responding to these challenges requires collaboration among the disciplines of climate science, public health, economics, and public policy. This project explores three main dimensions of the challenge:

  1. The impact of extreme heat on human mortality
  2. The impact of combined heat and humidity (as measured by wet bulb globe temperature) on labor productivity
  3. Emerging best practices in adaptation planning

The results of the project have been presented as an online web application using Esri’s ArcGIS Story Map.

Explore the app

TCFD: Climate Risk Disclosures Gaining Momentum

The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) released a comprehensive set of recommendations on December 14. The recommendations provide detailed guidance for companies on how and what to integrate in their financial disclosures related to climate change. The TCFD’s definition of climate risk encompasses both transition and physical risk (see chart below) and recommends companies address climate risk across governance, strategy and risk management, with a set of metrics and targets to show ambition and progress.

How climate risk disclosures and opportunities affect financial impact
Source: Recommendations of the Task Force on Climate-related Financial Disclosures

The recommendations also encourage companies to consider opportunities to be found in climate-related efforts such as cost savings through improved resource efficiency or supply chain resilience. The Task Force recommends the use of scenario analysis to disclose an organization’s planning under future scenarios, most notably one with in a 2°C scenario.

Growing Regulatory Momentum in Europe

With these recommendations, companies will be guided to producing long term outlooks on their value and risk management strategies for financial markets. The recommendations for disclosures of climate-related information are voluntary, but offer transparency that is increasingly being demanded by investors and resonate with recent regulatory efforts in France and the UK to require such disclosures. Indeed, responsible investing received a big boost in Europe, as the European Parliament voted to confirm a law that will require pension fund managers in the EU to account for climate-related risks in their investment strategies. The law introduces new requirements for risk management and reporting.

The law echoes Art. 173 in France‘s Law on the Energy and Ecology Transition (Loi TEE), which requires asset owners and asset managers to disclose financial climate risks ranging from carbon and energy risks to physical impacts of climate change.

A Market Imperative

Climate risk disclosures are more important than ever. In the context of the Trump Presidency and the latest round of cabinet appointments, it may be tempting to dismiss the risk associated with the “Energy Transition” – the rapid transition to a low-carbon economy. It may be tempting to ignore the need to disclose risks from the physical impacts of climate change in a context that promises fewer regulations and a dismissal of climate policy.

Yet, there’s no escaping the science and the reality of climate change, and the Trump administration’s stance on climate change gives even more urgency to both transition and physical risks of climate change.

Climate change and its impacts are not going away, and will likely worsen at an increasing rate if we continue to ignore them. Looking out a few years, these same physical impacts from climate change will eventually force us to transition rapidly away from fossil fuels to stop further degradation of the climate, leading to a ripple effect across the economy as entire value chains relying on fossil fuels, including major energy and transportation systems, will need to adapt – potentially at a high cost. The only question is how fast, and how expensive.

Markets have a chance to avoid being blindsided by a predictable risk. The TCFD offers a market solution, by the market, for the market. Mark Carney and Mike Bloomberg point out in an Op-Ed in The Guardian that “early disclosure rules allowed 20th-century financial markets to grow our economies by pricing risks more accurately.”

Disclosures are a small step that can help set in motions much larger changes through market forces, by pricing risk accurately, rewarding companies that take appropriate steps to prepare and adapt, and unlocking finance for resilience. Climate risk disclosures are an opportunity and a necessity for markets to both accelerate the energy transition and prepare for growing climate impacts.

Tools for Identifying Risk

Climate Risk Portfolio Screening: the Right Tool for the JobThough the TCFD recommendations do offer guidance to disclosing climate risk, the process of scanning assets for exposure raises a number of challenges — from accessing raw climate data to selecting appropriate indicators and time frame, and interpreting the output while accounting for climate data’s unique complexity and sources of uncertainties.

To support corporations and investors looking to identify hotspots and quantify value at risk in their portfolio of assets, facilities or across their supply chain, Four Twenty Seven has developed a suite of enterprise applications that provide rapid, cost-effective screening across portfolios of 10,000+ assets.

Learn more about CREST, our Climate Resilience Support Tool for corporate climate risk management, and our climate data analytics services for financial institutions.

 


 

Four Twenty Seven in partnership Crowell & Moring LLP hosted a webinar on January 12th to present key recommendations from TCFD and discuss feasibility, next steps, and issues to consider for implementation. View the webinar recording.