Projects
Funded by: Fondazione Eni Enrico Mattei
March 2016 / December 2018

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


This research and outreach project aims at stimulating a scientifically founded debate on the relevance of disclosing climate-related risks and opportunities and their impact on financial performance by companies, with a focus on Italian businesses. De Risk-CO’s objectives are twofold:

  • to raise further awareness among companies on the importance of 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 in a scenario analysis perspective.

The project began in 2016 within FEEM research program on climate change Economic Impacts and Adaption (EIA). In 2017 and 2018, the project continues within FEEM research program Society and Sustainability (SAS), in collaboration with FEEM research program on Climate and Sustainable Innovation (CSI) and external partners. Up to 2017, De Risk-CO studied the approach used by a significant sample of Italian firms – generally listed companies, operating in the energy, utility, insurance and agri-food sectors – when studying the impacts of climate change. The research found a high degree of company awareness on the risks involved with climate change towards their current business models and the necessity to improve the evaluation and disclosure of such risks.

In 2018, De Risk-CO develops 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. It will gather useful information on the methodologies currently available to fulfil the Recommendations in order to introduce and guide Italian companies towards a full disclosure of the financial impact of climate change on their business models. Making a first approach to TCFD's Recommendations would help companies align with the guidelines by the High-Level Expert Group on Sustainable Finance, then included in the Action Plan on Sustainable Finance published by the European Commission. To increase the value of this guidance, the project will also analyse some case-studies on the application of these Recommendations by companies already implementing them, to see how they the transition and physical risks/opportunities suggested by the TCFD/FSB in terms of financial impacts. 

Main Results and Outputs
  • Businesses exposed and risks associated with climate change: the general context
    The industrial sector appears to be increasingly aware of the need to tackle the risks and to seize the opportunities related to climate change. The fact that the TCFD has received a lot of attention by the private sector comes as a confirmation of this matter. When recommending the need to fully capture and disclose climate-related risks, the TCFD makes a clear distinction between physical and transition risks. Having enshrined this concept, DeRisk-CO aims at ensuring that firms go a step ahead by identifying and analysing both types of risk by using scientifically sound scenarios (as those from the IPCC and the IEA respectively) that can help them throughout this process.
  • Promote and encourage the importance of non-financial disclosure
    Via its research outputs and its analyses on methodologies and tools used to evaluate the financial impacts of climate change, DeRisk-CO aims at emphasizing the relevance of implementing a complete and transparent disclosure of the risks and opportunities highlighted above. Indeed, encouraging a higher degree of transparency on this matter implies a better allocation of capital and a solid step for sustainable finance.
  • Italian enterprises: analysis of case studies
    DeRisk-CO established a network of Italian listed and non-listed major companies (acting in different sectors) that have shown their interest in learning more about how to deal with climate-related risks and opportunities and in how to disclose them properly via the Recommendations. This network was not only built to raise awareness on the topic, but also to allow its members to share their individual experiences on how to have (or are willing to) manage and disclose climate-related risks.

In collaboration with: ANRA, Assicurazioni Generali, Barilla, Edison, ERG, Hera, Iren, La Doria, Leonardo, Pirelli, Prysmian, Saipem, Sorgenia, TIM, Unipol, Utilitalia.

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Download the FEEM Brief "Le raccomandazioni della Task Force on Climate-related Financial Disclosures - Analisi di scenario e impatti finanziari per le imprese" (in Italian)!
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Watch the Interviews to the Speakers of the Workshop
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Watch the Interviews to the Society and Sustainability Program Researchers (In Italian)!
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