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C4 – Climate risks

🗂️ VSME Comprehensive Module - Environmental Metrics, page 13

  1. If the undertaking has identified climate-related hazards and climate-related transition events, creating gross climate-related risks for the undertaking, it shall:

(a) briefly describe such climate-related hazards and climate-related transition events;

(b) disclose how it has assessed the exposure and sensitivity of its assets, activities and value chain to these hazards and transition events;

(c) disclose the time horizons of any climate-related hazards and transition events identified; and

(d) disclose whether it has undertaken climate change adaptation actions for any climaterelated hazards and transition events.

  1. The undertaking may disclose the potential adverse effects of climate risks that may affect its financial performance or business operations in the short-, medium- or long-term, indicating whether it assesses the risks to be high, medium, low.

🗂️ VSME Comprehensive Module Guidance – Environmental Metrics, page 46

  1. Climate-related hazards are drivers of climate-related physical risks that arise from the effects that climate change has on the undertaking. They can be classified into acute hazards, which arise from particular events (such as droughts, floods, extreme precipitations and wildfires), and chronic hazards (such as changing temperatures, sea level rise and soil erosion), which arise from longerterm changes in the climate (Commission delegated regulation 2021/2139). Physical risks are a function of climate-related hazards, the exposure of the undertaking’s assets and activities to these hazards, and how sensitive the undertaking is to these hazards. Examples of climate-related hazards are heat waves, increased frequency of extreme weather events, sea level rise, glacial lake outburst flood and change in precipitation and wind patterns. Climate-related physical risks can be identified and modelled by using climate scenarios that consider high emissions trajectories such as IPCC SSP5-8.5.

  2. Climate-related transition events may be (according to TCFD classification) policy- and legalbased (e.g. enhanced emission-reporting obligations), technology-based (e.g. costs of transition to lower emissions technology), market-based (e.g. increased cost of raw materials) and reputation-based (e.g. increased stakeholder concern).

  3. Gross climate-related risks refer to gross physical risks and gross transition risks that may result from exposure of the undertaking’s assets and business activities to climate-related hazards.