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Implementation

Examining climate risk over varying time horizons

clock 5 minute read

The TCFD recommends that organizations identify, assess and manage climate-related risks and opportunities within the context of an organizationwide risk management framework. That includes looking at risk from varying time horizons, such as the short, medium and long terms.

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Delineating time horizons

As part of examining climate risk over several time horizons, the TCFD recommends that investors also describe:

  • What their organization considers to be its short-, medium- and long-term time horizon, taking into consideration the useful life of the organization’s assets or infrastructure and the fact that climate-related issues often manifest themselves over the medium and longer terms.
  • The specific climate-related issues for each time horizon (short, medium and long term) that could have a material financial impact on the organization.
  • The process (or processes) the organization uses to determine which risks and opportunities could have a material financial impact on the organization, as well as risks and opportunities by sector and or geography.
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Assessing the materiality of risks

The TCFD recommends that organizations assess the materiality of climate-related risks, the potential for climate-related disruption to supply chains, as well as incentives for the organization and its employees to take climate-related factors into consideration in such areas as the use of energy-efficient materials, transportation and the selection of office space.

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