The New EU-Driven Climate Risk Regulations Are Here. Are You Equipped to Respond?

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As we edge closer to 2025, the landscape of corporate sustainability reporting is undergoing a seismic shift. The European Union's Green Deal, an ambitious plan to make the EU's economy sustainable, has introduced stringent regulations that will redefine how organizations worldwide approach their environmental impact, starting with mandatory disclosure in 2025, for fiscal year 2024. 

Understanding these new requirements can be daunting for everyone across the finance and sustainability spectrum. But it's crucial to recognize that these directives are not just about compliance—they are about embracing a future where businesses operate with a clear vision of their role in society and the environment.

The Basics

At the heart of this transformation is the Corporate Sustainability Reporting Directive (CSRD), a policy that will compel businesses to disclose their sustainability practices and impacts in detail. The European Sustainability Reporting Standards (ESRS) provide the specific details and framework that companies should follow when reporting under the CSRD. Alongside the CSRD, the EU Taxonomy (EUT) acts as the guiding dictionary, categorizing and defining what counts as sustainable activity.

In simpler terms,

• The EUT determines WHICH economic activities are sustainable 
• The CSRD mandates THAT you should report on those as well as other activities
• The ESRS details HOW you should report it

The Importance of Physical Climate Risk Reporting

Physical climate risks are becoming a focal point for investors and stakeholders, influencing market dynamics and investment decisions. Reporting on these risks is more than a regulatory requirement; it's a necessity to uncover hidden business vulnerabilities as well as potential opportunities, such as identifying assets at high risk from flooding or wildfires, assessing supply chain resilience, or anticipating the costs of adapting to chronic heat.

Moreover, with the introduction of the CSRD, businesses are now required to report the anticipated financial effects from physical climate risk. This includes disaggregating the monetary amount of impacted assets by acute and chronic risk and assessing how much of your net revenue is impacted over the short-, medium-, and long-term. It's a step further than what was defined by the EUT, placing a new emphasis on the financial dimensions of climate risk.

Beyond Compliance to Resilience

As professionals in the field, we must not view these new reporting requirements as a hurdle, but as a stepping stone towards greater transparency and long-term value creation. This means you need a clear strategy and the right tools to assess, report, and ultimately manage physical climate risks effectively.

Data is the linchpin in the new era of sustainability reporting. Reliable, high-resolution, decision-making data enables you to create accurate reports and develop effective strategies for managing climate risks. This is where forward-looking projections and historical baselines become indispensable, providing the context for how climate conditions have evolved and how they are likely to change. And this kind of data best positions you for long-term resilience.

Decoding Regulatory Complexity: Your Guide to Relevant Climate Risk Reporting

It's natural to feel overwhelmed. The EU's classification of climate hazards shown below can seem like a vast and intricate web of climate science. But don't let the initial complexity intimidate you. This classification is simply a method the EU uses to categorize hazards—it's not an assumption that every hazard applies to every business. Some, like ocean acidification or glacial lake outbursts, may be so rare in occurrence that they're barely relevant to your operations. The key is to differentiate between what's listed and what's actually impactful for your business. 

Ask yourself: 

• Which hazards are recognized and quantifiable within the scientific community? 
• Which can I measure with the climate data available to me? 
• And crucially, which ones have the potential to materially affect my business?

The diagram above of hazards is not just a list; it's a starting point for a thought exercise. It's an invitation to pare down a complex list to something that is manageable, pertinent, and actionable for your specific context. And this is where your data provider should be equipped to guide you through this exercise. 

At Jupiter, we use a combination of climate science expertise and an extensive array of peril and financial metrics to help our customers to identify the hazards that matter most to their business. We assist in transforming what initially seems like an onerous task into an opportunity for strategic enhancement, ensuring that their sustainability reporting adds real value to their business.

By focusing on the relevant risks and leveraging expert guidance, Jupiter can help you distill the CSRD's complexity into clarity and action. Our approach simplifies the journey, making sure that you're not just ticking off boxes but are also gaining a competitive edge by understanding and mitigating the risks that are most significant to your organization.

Allies in Sustainability Reporting

ClimateScore Global

It's important to acknowledge that while the requirement to assess and disclose may be daunting, there are resources available to help. ClimateScore Global, Jupiter’s flagship physical climate risk data and analytics solution, offers a deep and granular view of climate risks. It has everything needed to report your physical climate risk under EUT/CSRD regulations. It’s designed to aid you in understanding and projecting how your portfolio of assets might be affected by various climate perils over time. It's not merely about meeting the immediate reporting requirements but about equipping you with the insights needed to navigate a sustainable future.

‍Jupiter CSRD Toolkit

Tailored to help you prepare and comply with the CSRD’s materiality requirements and ESRS E1 Physical Climate Risks disclosures, the CSRD Toolkit delivers comprehensive insights into climate-related physical risks and their financial impact, along with the tools and data needed to meet compliance requirements, with confidence and ease.

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Jupiter’s CSRD Toolkit includes:

• Jupiter’s Materiality Tool. An interactive workbook that calculates materiality risk rankings based on Jupiter’s climate risk data and asset vulnerability library and aligns with CSRD requirements

• CSRD E1 Physical Risk Data. Configurable data that can be easily leveraged for CSRD reporting internally and within industry standard reporting systems

• Visualizations & Enrichment. CSRD and EU Taxonomy-aligned dashboards for hazard screening and exposure assessment, plus downloadable reports and tables that can be incorporated for presentation, storytelling, and conveying context

• Documentation. Overview of reporting requirements and comprehensive user documentation, including Jupiter’s materiality assessment methodology

• Reporting Support. Up to 5 hours of consultation, if needed

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Businesses within the EU and around the world need to begin submitting disclosures as early as 2025 should start preparing today. Jupiter’s CSRD Toolkit has everything you need to calculate materiality and prepare your CSRD ESRS E1 physical risk disclosure filings to comply with reporting deadlines.

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Embracing the Future with Informed Confidence

As we look towards 2025 and beyond, let's view these regulations and changes not as an endpoint but as a milestone in our ongoing effort to build sustainable, resilient, and competitive businesses. With informed strategies and robust tools like Jupiter's CSRD Toolkit, you can turn sustainability reporting into a process that not only fulfills regulatory requirements but also enhances business value, fosters innovation, and leads to a more sustainable economy for us all.

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Talk to a Jupiter climate and CSRD expert. Contact us here.

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