Climate-related financial risks are a major concern facing publicly traded companies. In the near future publicly traded companies will have to quantify climate-related risks in much the same way they measure business-related financial risks today. Regulators believe this information is essential to help inform all stakeholders in a company’s ecosystem.
New climate-related disclosures will shape how companies cultivate financial or relational capital in the communities where they do business. The future of business will be as much about adaptability as it is profitability today.
Client: Regional financial institution with <$2 billion assets under management
Problem: Senior leadership needed to understand the impact of climate-related financial disclosures ahead of a meeting with state regulators.
Solution: Manage climate-related financial risks by shaping regulations as they develop and building new lines of business to begin adapting to a new economic landscape.
Deliverable: Developed a primer on climate-related financial risks for senior leadership to read ahead of their meeting. The primer broke down different climate-related risk categories, identified leading frameworks that will be the basis for future regulations, and proposed several courses of action the financial institution could begin taking.
Outcome: Senior leadership was adequately prepared for their meeting with state regulators. The primer gave a top-level overview of the issues and regulatory frameworks that will shape the development of future regulations. By having an informed seat at the table, the institution could raise the right questions about future regulations that could have a tremendous impact on their business model in the near future.
The primer’s simplified analysis allowed leadership to allocate more time and resources toward developing internal capabilities to meet future disclosure requirements, as well as the opportunity to evaluate new lines of business.
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