Climate risk and TCFD

Climate risk and TCFD

Delivering strategic sustainability support to enable effective climate risk mitigation

Ricardo's extensive experience in strategic consulting, combined with the depth of expertise in climate science and technical environmental subject matters, enables our experts to provide comprehensive support to an organisation's understanding and response to climate risk.

Demonstrating effective climate risk management through a TCFD-based framework

The strategic significance of environmental and climate-related matters means that business model disclosures need to fully represent and integrate the risks and opportunities companies face. Ricardo can support your approach to reporting against the FSB's Task Force on Climate-related Financial Disclosures (TCFD).

The TCFD framework is intended to provide greater understanding and communication of the risks associated with the worsening effects of climate change. Our expert support will enable you to consider and understand the physical, liability and transition risks associated with climate change and importantly what effective disclosure means across different industry types.

We have developed a number of modules to support our clients disclose against the TCFD recommended disclosures.

Module 1: TCFD workshop and gap analysis

We have found that if climate risk and TCFD guidance is new to an organisation, then our introductory workshop is an ideal entry point to understanding the issues and actions required. The workshop provides information on TCFD and its application of climate impacts and scenarios from climate and sectoral experts.

Our gap analysis provides a systematic review of existing governance structures, management and control systems, and recommendations through governance and metrics to enable the adoption of leading disclosures practices.

Benefits of a Ricardo TCFD workshop include:

  • Enables you to understand where you meet the recommendations already and where you need to focus to align more closely

  • Provides an opportunity to benchmark against your peers

  • Identify areas of strength and weakness in your existing non-financial disclosures

Module 2: Climate risk materiality assessment

Our materiality issues assessment provides a structured process for defining the risks that are relevant and have the potential for significant impact to your business model, either immediately or in the future.

Benefits of Ricardo’s climate risk materiality assessment include:

  • Enables identification of your company’s most important issues to support fundamental input into your strategy

  • Provides a robust process to determine priority issues, enabling companies to make a strong case for how they decide to distribute people and investments

  • Gathers internal and external engagement from key stakeholders, providing a solid foundation for decision-making

Module 3: Future scenario planning

A thorough analyse of climate risks and the subsequent impacts on your organisation are required to provide the operational resilience needed for future challenges of a changing climate.

Scenarios built for TCFD applications are very powerful because they can reflect the certain (e.g. inevitable physical shifts) and the uncertain (e.g. political response to climate change). They also promote reflection, systems thinking and a consideration of consequences. For example, our future scenarios not only take into consideration feature events that directly relate to climate risks and opportunities, but also cover adjacent issues such as transportation shifts, water shortages and pandemics. No issue exists in isolation.

Our expertise helps present the impacts of long-term risks and opportunities from climate change using different temperature scenarios.

Benefits of Ricardo’s future scenario planning include:

  • Provides a tangible view of how products and services will be used in the future enabling conventional business models to be tested

  • Enables understanding of the impact of climate change on your business against both transitional and physical risks

  • Identifies specific areas of risk and opportunity across different climate scenarios

Module 4: Response identification and governance

There is increasing pressure on CEO’s and other senior stakeholders to demonstrate their in-depth understanding of the impact of climate change on their business - mitigating risks and realising the opportunities. Transitioning TCFD outputs into strategic responses is essential to capture benefits, implement improvements and make organisations more resilient. 
Ricardo’s response identification and governance approach provides a structured assessment process to qualify each risk and opportunity and provide the resulting disclosure framework.
 
Benefits of Ricardo’s response identification and governance approach include:

  • Provides a holistic view of the risks and opportunities material to the company
  • Insights to inform strategy and risk planning
  • Improved board oversight and communication from risk managers, operations and supply chains

You can read a case study about Ricardo's own implementation of the TCFD framework here