Climate-related financial disclosures: an opportunity to build a more resilient economy
The importance of transparency for climate-related issues with financial markets has increased over the last few years, with climate reporting requirements becoming more stringent with the European Non-Financial Reporting Directive (NFRD) ¹, the new Corporate Sustainability Reporting Directive (CSRD) ², and the Task Force on Climate-related Financial Disclosure. ³ The increased regulatory pressure for climate reporting should not be considered by companies as a burden, but rather as an opportunity to perform an in-depth identification and analysis of the risks of their business activities to build up their resilience. Beyond compliance, early adopters that perform a deep risk analysis of the risks along their value chain and take action ahead of time to mitigate those risks will gain a significant competitive advantage.
High-quality, clean, and consistent climate-related financial disclosure is also critically important for investors, lenders, and insurance underwriters to evaluate companies’ strategies and performance to prepare for a low-carbon economy.
What changes for your business in Switzerland?
In this context, the Swiss Federal Council brings an ordinance on mandatory climate disclosures for large companies into force as of January 1, 2024. ⁴ The new ordinance on climate disclosures requires large Swiss companies to disclose climate-related risks aligned with the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD). ⁵ Public companies, banks, and insurance companies with 500 or more employees and at least CHF 20 million in total assets or more than CHF 40 million in turnover are obliged to report publicly on climate issues. Public reporting involves disclosures on the financial risk that a company incurs as a result of their activities, but also on the impact of the company's business activities on the climate, a concept known as double materiality. In addition, the company has to describe the reduction targets it has set for its direct and indirect greenhouse gas emissions as well as how it plans to implement them.
The TCFD recommendations are structured around four thematic areas that are core elements of organizations’ operations: Governance, Strategy, Risk Management, and Metrics and Targets.
Correntics’ support to businesses for their climate-reporting disclosure
Companies are required to provide scenario-based climate analyses to support their climate-related disclosure.
To better support companies in this journey, Correntics develops a data-driven, forward-looking climate-risk analytics solution and automated reporting tools, which provide a scientifically-based and quantified analysis of the physical risks due to climate change on global supply chains.
As part of the National Centre for Climate Services (NCCS) Global Impacts program that aims to evaluate the impact of global climate change on the Swiss economy, Correntics will contribute to building up the resilience and competitiveness of the Swiss economy.
Correntics welcomes the various industry initiatives around climate-related disclosures because we are convinced that more transparency will enhance climate resilience. Events like the Swiss Climate Reporting Forum, themed “From Compliance to Competitive Advantage: Leveraging the Ordinance on Climate Disclosures”, held in Zurich in May 2023 facilitated the discussion on the latest trends in climate reporting in Switzerland. It also provided an excellent overview of the status and capabilities of companies to report on their climate risks while offering a great opportunity to engage with companies and support them to be prepared for new regulatory requirements.
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