TCFD and CSRD - compliant Climate Risk Disclosures
We provide a comprehensive risk analysis of chronic and acute physical climate risk for risk management and reporting purposes.
Climate Risk Downside Protection
We advise on climate risk adaptation strategies and structure index-based financial products to enable our clients to improve their resilience and competitiveness along the value chain, from supply to end consumer.
Climate Revenue Management
Our clients use index-based financial products either to protect against downside risk as a traditional hedging instrument, or to drive their business and provide compensation or incentives to their own customers when climate conditions prevent them from taking full advantage of their products or services. We cover Europe out of our offices in France and in the United Kingdom.
TCFD and CSRD-compliant Climate Risk Disclosures
Climate variability and extreme events can potentially affect both volumes and prices across the whole value chain of the company from suppliers to the end customers, interrupt business operations, and damage productive assets, all of which have financial implications. In many situations, field managers have an empirical knowledge of how climate conditions influence the business. Our risk analysis makes this information objective, verifiable, auditable, and dynamic, so that it can be used to better understand past performance, and to plan and manage future risks and opportunities.
We offer our clients a complete analysis and risk assessment report of the climate risks to which their activity is exposed, which complies with TCFD requirements on climate-related disclosures.
Our methodology is based on the propagation of effects of climate risks all the way to financial KPIs. By cross-analysing business and climate data, we identify the most influential climate parameters and conditions that explain changes in financial performance. We model the relationship between financial indicators and climate parameters, and provide the sensitivity of business activity to climate, the historical contribution of climate to business activity, and the statistical probability distribution of climate impact, including the maximum potential loss (Climate Value at Risk).
Climate Risk Downside Protection
Climate conditions drive consumers’ decisions as to what products they buy, in what quantity, and when and where purchases are made. They don’t just drive sales. They drive inventories, supply, production costs, and profits. The accumulation of adverse climate conditions or the occurrence of specific climatic events can result in significant financial losses comparable to or greater than the impact that foreign exchange or interest rates can have. With climate change, the frequency, duration, and intensity of abnormal climate events and patterns are increasing, with escalating consequences for the profitability and financial stability of many businesses. Like foreign exchange, interest rate or commodity risks, climate risks can easily be hedged when they are known and quantified, which is what the climate risk assessment achieves.
We offer our clients financial protection and tailored products to cover them against the financial consequences of specific weather conditions that affect their activity, wherever they are and do business. Climate financial protection works like any traditional financial instrument, except that the index that automatically triggers and determines the payment is a climate index that fits our clients’ risk management objectives and policies.
Thanks to our database, innovative proprietary climate risk assessment platform, and experience in designing climate risk downside protection for a wide range of activity sectors and business sizes, we successfully provide reliable and efficient cover to reduce financial uncertainty due to climate variability and climate events, and to reinforce resilience to business interruption and climate change.
Climate risk downside protection products can be packaged as a standard derivative instrument (forward or option contracts) or as a parametric or index-based insurance product. Parametric insurance simply means that the payout is calculated on a pre-agreed formula where the only variable is the climate index. In both cases the payout is the same, only the accounting treatment is different, and vary from country to country. We help our clients selecting the most appropriate format.
Climate Revenue Management
In some cases, climate risks do not directly affect our customers, but directly affect
their customers, retail networks, or the end consumer. Adverse climate
conditions result in lost sales, inventory build-up, lack of replenishment,
reduced order renewals and poor end-customer satisfaction, all of which have a
knock-on effect on our clients’ profitability and resilience.
We help our clients manage the climate risk embedded in the service or product they offer
to their customers, and design packaged climate indexed solutions where the end
consumer, or the retailers are compensated by our clients in case of
unfavorable climate conditions.
Our solutions allow our clients to drive sales and inventories, and to
offer a unique value-added service and competitive advantage to their own
customers in a win-win partnership to reduce the exposure to climate
variability.
