Projects
Funded by: Fondazione Eni Enrico Mattei
March 2016 / December 2021

DeRisk-CO - Disclosure, Measurement, Management and Mitigation of Climate Change Risk for Companies


This research and outreach project aims at stimulating a debate on the relevance of assessing and disclosing climate-related risks and opportunities and their impact on financial performance, with a particular focus on Italian businesses. Throughout 2017 and 2018, De Risk-CO developed its research around the Recommendations (on governance, strategy, risk management, metrics and targets) set by the Task Force on Climate-Related Financial Disclosure (TCFD) of the Financial Stability Board (FSB), then restated by the European Commission in “Guidelines on non-financial reporting” (2017/C 215/01) related to the 2014/95/EU Directive. When recommending the need to fully capture and disclose climate-related risks, the TCFD makes a clear distinction between physical and transition risks. To this end, DeRisk-CO aims at helping firms better communicate key climate-related information with reference to scientifically sound scenarios (as those from the IPCC and the IEA respectively) that can help them throughout this process. Overall, De Risk-CO’s objectives are the following:

  • to raise further awareness among companies on the importance of taking account of and disclosing climate-related risks and opportunities;
  • map, review and evaluate outstanding methodologies and tools to be used for climate strategy disclosure, especially those related to the financial evaluation of physical and transition risks within a scenario analysis perspective;
  • provide evidence on the impacts of firms’ environmental strategies and disclosing practices on their financial performance.
Main Results and Outputs

Methodologies and Tools to Evaluate the Financial Impact of Climate-Related Risks and Opportunities using Scenario Analysis

Since the TFCD began its work, demand from investors for improved climate-related financial disclosures has experienced a considerable increase. The industrial sector appears to be increasingly aware of the need to tackle the risks and seize the opportunities related to climate change. DeRisk-CO aims at emphasizing the importance of implementing a complete and transparent disclosure of the risks and opportunities highlighted above. To this end, it will gather useful information on the methodologies currently available to fulfil the TCFD’s Recommendations in order to introduce and guide Italian companies towards a full disclosure of the financial impact of climate change on their business models. Promoting a higher degree of transparency on this matter implies a better allocation of capital and contributes to ease the transition to a more sustainable, low-carbon future.

The evolving policy context in European capital markets

The EU has committed to decrease greenhouse gas emissions by at least 40% with respect to 1990 levels by 2030, while also improving energy efficiency by 27% and increasing the percentage of renewable energy sources to 27% of final consumption. Environmental policies are therefore being tailored at an European level to deliver such objectives. Within this context, DeRisk-CO will monitor how environmental objectives at a EU-wide level will concretely translate into policy-making with a particular focus on how legislative developments could affect firms’ operations.

links
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FEEM Brief - Disclosing Climate-Related Risks: Current and Future Prospects
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FEEM Brief - Le raccomandazioni della Task Force on Climate-related Financial Disclosures - Analisi di scenario e impatti finanziari per le imprese
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FEEM Brief - The British Approach to the World’s Best Framework for Climate-Related and Sustainability-Related Financial Disclosure
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Watch the Interviews to the Speakers of the 2018 Workshop
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FEEM Brief - Transforming the EU Financial Sector into a Powerful Actor in Promoting Sustainability
Project team
Project leader
Pareglio Stefano
Firms And Cities Towards Sustainability - FACTS Program Scientific Coordinator
stefano.pareglio@feem.it Read more

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