Climate change ESG basics

Financial exposure touches every plan. Extreme weather damages plants, delays logistics, and increases insurance excesses. Adding climate change ESG metrics to regular reviews helps finance and operations prove why resilience budgets protect EBIT.

Stakeholders benchmark credibility. Customers, lenders, and regulators now expect to see climate risk registers, transition timelines, and emissions progress next to other ESG indicators. Plain-language updates build trust faster than long technical reports.

Governance momentum follows clarity. When leaders see how climate change ESG ties to scenario planning, supplier contracts, and executive incentives, they can approve electrification projects, renewable deals, and nature-positive investments without hesitation.

1. “Climate change is just an environmental topic.” In reality, it influences workforce safety, community expectations, and governance accountability. Treat it as an ESG-wide issue so responsibilities are shared.
2. “We must perfect the data before talking about it.” ESG audiences prefer transparency over silence. Flag assumptions and gaps, then update them as better datasets arrive.
3. “Climate change ESG requires massive tech spend from day one.” Start with spreadsheets, board packs, or Drova templates to log objectives and approvals. Upgrade tooling once the cadence and owners are stable.

Physical risk. Damage from floods, fires, storms, or heat that disrupts assets, supply chains, and workforce wellbeing. Tracking physical risk keeps the Environmental pillar grounded in real sites.

Transition risk. Policy, market, or technology shifts—such as carbon prices, disclosure laws, or investor mandates—that affect revenue and cost structures. Knowing transition risk helps the Governance pillar stay proactive.

TCFD & TNFD. Taskforces that guide climate and nature disclosures. They give ESG teams standard questions so reports stay comparable and trustworthy.