Category Archives: ilmastoriskit

Sustainability 2026: Beyond the ”year of Omnibus”

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Vastaus

As we wrap up the ”year of Omnibus,” what should we expect for corporate sustainability in 2026? My focus remains on the real-world impacts and the critical role of finance. 

Many have expressed concern about a dip in ambition after the EU streamlined certain reporting requirements. However, I believe that despite the so-called ”ESG backlash,” underlying issues like climate change and social inequity are only intensifying. This makes a structured framework more essential, not less.

The escalating cost of physical climate risks and social pressures across supply chains are not abstract concepts, they are fundamental to business continuity. Sustainability isn’t just a ”nice to have”, it is our most viable tool for translating real-world phenomena into corporate strategy and accountability

I remain also positive about the future of sustainability reporting. While it will take time for the market to settle with the updated CSRD/CSDDD expectations and voluntary reporting (VSME), we must remember where we started.

I remember five to ten years ago, the financial sector was constantly highlighting the lack of reliable sustainability data. You cannot price risk or allocate capital effectively without mandatory, assured, and standardized data. Because the financial sector (banks, insurers, and asset managers) needs this data for transition finance and systemic risk management, I believe market practice will demand high-quality disclosures regardless of regulatory changes and Omnibus. To me, the ongoing revision of the SFDR is a perfect example of this. It is not about lowering the bar, but rather refining the framework to keep up the pace with market needs and ensure it remains a credible tool for the transition.

My final key point is the role of SMEs. For sustainability to truly work, SMEs must be brought into the ”sustainability bubble” to access green finance. Value chain requirements, especially Scope 3 and social impact, are the most challenging but also the most transformative parts of EU regulation. Large companies must continue to engage and mobilize their smaller partners to provide auditable data. I am confident this will become standard practice, even with the current restrictions on information requests.

While disclosures are essential, so much is happening on a voluntary basis. For example, biodiversity is a field where many companies are now leading the way outside of mandates. I’ve seen this firsthand since starting our naturetech company, NaturAI Oy.

Let’s focus on cooperation and supporting one another in this field.

I wish everyone reading my blog a joyful holiday season and a wonderful new year!

#omnibus #sustainability #greenfinance #sustainablefinance #SFDR #greentransition #climate #humanrights #biodiversity 

Why companies need climate and environmental scenario analysis

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Vastaus

The European Banking Authority (EBA) has published its Guidelines on Environmental Scenario Analysis. 

https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-its-final-guidelines-environmental-scenario-analysis

Many in my network working in the banking sector are already familiar with these developments, but their implications for other industries are far less widely recognised. Although addressed to banks and investment firms, these guidelines may have implications beyond the financial sector. As the EBA notes, ”climate and other environmental risks, such as extreme weather events, ecosystem degradation, and growing pressures on land and water resource, pose considerable challenges for the economy”. These risks are already driving economic transitions that affect financial institutions and the companies they finance.

The guidelines outline expectations for how credit institutions and investment firms should assess their resilience to environmental risks, primarily climate-related physical and transition risks, through scenario analysis. Scenario analysis evaluates how different plausible futures might affect an institution’s strategy, operations, and risk exposure. It can be a straightforward “what if” exercise or a more advanced analysis backed by data, models, and narrative pathways. In all cases, it is designed to help organisations anticipate risks, strengthen preparedness, and identify emerging opportunities.

Environmental risks are becoming more material and can influence every financial-risk category. By setting common EU-wide expectations, the EBA aims to improve how these risks are recognised, assessed, and integrated. Although the guidelines are directed at banks, they may also influence the expectations placed on companies that rely on external financing, including how they assess environmental risks and the resilience of their business models.

Being proactive now helps companies stay ahead of evolving requirements, supervisory expectations, and market pressures. Conducting environmental scenario analysis can support access to capital, strengthen strategic planning, and offer a competitive edge as the transition to a low-carbon, resource-efficient economy accelerates. 

It is important not to underestimate the potential economic and business impacts of climate change and nature loss.

#biodiversity #climate #scenario #eba #banking #esgrisk #climaterisk #adaptation 

New method for assessing physical climate risk to business and finance

Posted on by
Vastaus

I found this paper on physical climate risk assessment published in Nature Communications very interesting and I assume also my network of climate and sustainability experts as well as risk experts might be interested.

https://www.nature.com/articles/s41467-024-48820-1

Researchers use acute physical climate risks in Mexico as a case study and show how easily physical climate risk of portfolios can be underestimated when using climate risk scores. There is a need for more precise analysis of firms’ different locations and business lines. Sectoral or geographical climate scores are not necessarily enough.

There will always be some limitations and uncertainties in assessing climate risks on a business or financial asset level, but it is still important to develop assessment methodologies. They are needed for the design of policies and financial instruments aimed at building resilience to climate change and filling the adaptation gap. As the researchers say in an interview, we may be seriously underestimating the financial resources needed for climate adaptation.

https://www.news.uzh.ch/en/articles/media/2024/Climate-Risk-Assessment-Methods.html

#climate #adaptation #risk #physicalrisk #acute #chronical #methodologies #financing