As extreme weather events continue to reshape communities and economies worldwide, the urgency of addressing climate change has never been clearer.
Just a few months ago, in October 2024, devastating floods swept through Valencia, damaging homes, businesses, and infrastructure on an unprecedented scale. This extreme weather event came on the heels of the 2023 forest fires in Canada that severely disrupted local businesses, particularly in the forestry and tourism sectors.
These disasters are just a couple of the most recent alarming climate-related incidents that are not only growing in number but in intensity too.
And their impact reflects in mounting costs in damages and mitigation, year on year. According to the World Meteorological Organization (WMO), the total loss from weather, climate and water-related disasters scaled to $4.3 trillion between 1970 and 2021, with rises in every decade.
With these alarming realities hitting closer to home, businesses are stepping up to reduce their environmental footprint and embrace sustainable practices as part of climate action. This widespread movement is reshaping how we live and work globally, as companies reconsider the impact of their operations.
But is enough being done in this direction? What are some things companies need to be looking out for as they regear their processes towards increased sustainability?
In a conversation with Ashley Hegland, the Chief Operating Officer at leading climate tech company Intensel shared valuable insights into how businesses can assess and manage climate risks—critical steps when climate change is reshaping industries and economies.
What’s driving the shift in climate risk management?
The business landscape has changed dramatically—climate risk is no longer some distant threat; it’s already here. However, many companies still lag in addressing it.
“Climate risks have not been priced into financial models. That’s a big problem.”
However, frameworks like the International Sustainability Standards Board (ISSB) and the Task Force on Climate-Related Financial Disclosures (TCFD) are leading the charge to ensure climate-related risks and opportunities are considered as part of company strategy and risk exposure disclosed.
And why is this shift critical? The ISSB, a recent initiative, aims to establish consistent global standards for sustainability disclosures, pushing businesses to evaluate both their physical and transition climate risks in a comparable, structured way.
According to Ashley, frameworks like ISSB enable businesses to move beyond surface-level reporting: “It’s about understanding the specifics,” he explains. “Businesses need to identify which assets are vulnerable, which risks are material, and then act on that knowledge.”
With the ISSB guidelines, companies now map climate impacts across short- and long-term scenarios, setting the foundation for proactive climate risk management.
Most importantly, this isn’t just about corporate social responsibility or ticking boxes for investors. As Ashley underscores, it’s about protecting the bottom line. “Companies that fail to account for climate risks now will face higher costs, disrupted operations, and a tougher time attracting investment,” he points out.
Physical risks: Are you ignoring the biggest threat to your business?
But what exactly does “physical climate risk” mean for businesses? And how well do businesses truly understand the specific risks they face?
From sudden, acute disasters like floods and storms to the slow-burning threats of heat stress and rising sea levels, physical climate risks can disrupt operations and damage assets—often before companies even realize what’s happening.
“We have to look at real climate hazards, both present and future scenarios.”
The stakes couldn’t be higher, particularly in regions like Southeast Asia, where heat stress is becoming a significant operational challenge, even affecting labor productivity. As temperatures climb, companies are being forced to ramp up their cooling systems, driving up energy costs and complicating their efforts to meet decarbonization goals.
This financial hit of heat stress is significant and growing over time, as are the physical and operational losses caused by the rapidly increasing intensity of rainfall flooding.
Without proper climate risk management systems, these challenges aren’t just hypothetical anymore. Ashley points out, “Businesses failing to account for physical climate risks may soon find themselves uninsurable or face skyrocketing premiums.”
In places like Florida, for instance, insurers have already started withdrawing from high-risk areas, exposing businesses to potentially devastating losses.
And what about transition risks?
Physical risks aren’t the only threat. Transition risks—the risks associated with shifting to a low-carbon economy—are equally critical. These include changes in regulations, market preferences, and technology advancements impacting how companies operate and adapt.
“There has been a large focus on decarbonization, but we’re starting to understand how physical and transition risks come together.”
It's important to note that transition risks are about more than compliance on decarbonization—they’re about staying competitive. Companies that rely on fossil fuels or outdated tech could quickly fall behind as regulations tighten and consumer preferences move toward greener options.
“If you’re not considering transition risks,” Ashley adds, “you could be left behind while others get ahead by embracing new technologies and approaches.”
The takeaway here? Transition risks are no longer optional considerations. Integrating both physical and transition risks into climate assessments enables businesses to build a comprehensive strategy that safeguards assets today and positions them for future success in a sustainable market.
Facing the data challenge: Can technology bridge the gap?
Of course, understanding these risks is easier said than done.
One of the biggest obstacles is reliable data collection. Businesses operating across multiple regions face inconsistency and varying data quality, which complicates a uniform climate risk approach.
“You may be in a market like Hong Kong, where there is reliable data on sea-level rise, but how do we compare that with other climate hazards, like river flooding or heat stress, in the Southeast Asian market?” Ashley points out. “Without the right tools, it’s challenging to compare and convert these into comparable financial value at risk.”
This is where technology steps in. Companies like Intensel are using asset-level analytics to bridge data gaps, combining local climate data with advanced modelling to help businesses accurately assess their climate risk profiles. This approach turns scattered data into clear, actionable insights, giving companies a true picture of their climate risks.
And, as Ashley emphasizes, “The real challenge is turning data into actionable insights.” Insights that businesses can use to build effective climate risk management strategies.
On the whole, effective technology solutions are making it imminently possible for businesses to go beyond data collection and develop proactive climate risk strategies.
Read more about how Unravel Carbon’s data workflow solutions can help improve your data collection processes here.
Why going beyond disclosure matters
“It’s great that you’re disclosing the risk, but identification and disclosure does not mean that the company has de-risked and built climate resilience.”
Here’s the thing: climate risk disclosure alone isn’t enough.
Too many businesses limit their climate risk strategy to compliance. Without deeper analysis and action, disclosure lacks impact. To be effective, businesses must do more than report risks—they need to take concrete steps to reduce exposure. That might mean implementing flood barriers, upgrading infrastructure, or optimizing supply chains to manage energy use.
And businesses that take proactive steps can uncover significant opportunities. By integrating climate risk strategies, companies don’t just avoid losses—they also enhance their reputation, build investor trust, and even open up new market possibilities.
Ashley explains, “Companies that understand and mitigate their climate risks are going to add value to their assets.” Investors increasingly favour companies with strong climate strategies, seeing them as lower-risk, more resilient options. For instance, real estate companies that factor climate risks into their site selection and asset management gain an edge, attracting investors with safer, future-proof properties.
Forward-thinking businesses can also align with sustainable market trends, tapping into growth areas like renewable energy and low-emission technology. Climate risk management, then, isn’t just about protection—it’s about positioning your business for growth.
Conclusion
With so many variables in play—from data and technology to transition and mitigation—it’s easy for businesses to feel overwhelmed by climate risks. But as Ashley points out, the path forward is clear: “It’s about the intention. We’re not here to tick boxes. We’re here to de-risk.”
The first step? Conducting a thorough climate risk assessment to identify your business’s most vulnerable hotspots. From there, it’s all about taking action—whether through adaptation measures like flood defenses or operational changes that reduce risk exposure.
Frameworks like TCFD and ISSB provide a practical roadmap for businesses just starting their climate risk journey. They ensure they tackle both physical and transition risks in a structured, manageable way.
The future belongs to businesses that take climate risks seriously, make data-driven decisions, and invest in resilience. So, the question is, are you ready to not only survive but thrive in a low-carbon economy?
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