Scope
This Standard applies to:
climate-related risks the organization faces, which are:
- climate-related physical risks: and
- climate-related transition risks;
climate-related opportunities available to the organization.
Climate-related physical risks from climate change can come from sudden events (acute physical risk) or from long-term changes in climate patterns (chronic physical risk). Acute physical risks come from weather events like storms, floods, drought or heatwaves, which are becoming more severe and frequent. Chronic physical risks come from long-term changes in climate patterns, including shifts in rainfall and temperature, which can cause sea level rise, less water availability, loss of biodiversity and changes in soil productivity.
These risks can have financial effects on an organization, such as costs from direct damage to assets or from supply-chain disruptions. The organization’s financial performance can also be affected by changes in water availability, sources and quality, and extreme temperature changes that impact its buildings, operations, supply chains, transportation needs and employee health and safety.
Climate-related transition risks are risks that come from efforts to move to a lower-carbon economy. Transition risks include policy, legal, technological, market and reputational risks. These risks can have financial effects on an organization, like higher operating costs or reduced asset value because of new or changed climate-related rules. The organization’s financial performance can also be affected by changing consumer demands and the creation and use of new technology.
Climate-related opportunities are the possible positive effects that come from climate change for an organization. Efforts to reduce or adjust to climate change can create climate-related opportunities for an organization.
Climate-related risks and opportunities that could not reasonably be expected to affect an organization’s prospects are not covered by this standard.