In this session, we dove deep into the Strategy pillar of the AASB S2 framework, which focuses on how organizations plan and respond to climate-related risks and opportunities. Afonso shared insights into the process of building a climate transition plan, while Alex provided practical examples of how to integrate climate resilience and strategic decision-making. The session also addressed common challenges faced by reporting companies and consultants, offering guidance on how to navigate these complexities effectively.
Key Takeaways from Session 3: Strategy
- The Importance of a Climate Transition Plan: A well-structured climate transition plan is crucial for demonstrating proactive climate action and aligning with a low-carbon economy. It should include clear objectives, stakeholder engagement, and resourcing for implementation.
- Physical vs. Transition Risks: It's essential to differentiate between physical risks (e.g., extreme weather events) and transition risks (e.g., regulatory changes), and understand their respective impacts on business models and value chains.
- Short-Term, Medium-Term, and Long-Term Planning: The need to assess and disclose climate-related risks over different time horizons (short, medium, and long-term) to showcase comprehensive strategic planning.
- Quantitative vs. Qualitative Data: Acknowledged the challenges in providing quantitative data for climate risks and opportunities, with a strong emphasis on documenting the process and providing reasonable and supportable estimates where necessary.
- The Role of Stakeholder Engagement: Collaboration between consultants, finance teams, and other stakeholders is critical when defining risks, forecasting impacts, and allocating resources for climate action.
- Leveraging External Data: The importance of using external data sets, past events, and industry forecasts to support the identification and prioritization of risks and opportunities.
A few interesting questions raised during the session included:
- How granular should climate-related risk disclosures be? The consensus was that the focus should be on the process rather than granular details. The key is ensuring that the selected risks and opportunities are material to the business.
- How do you balance the need for transparency with protecting competitive advantage? It’s essential to disclose enough information to meet regulatory requirements without giving away sensitive business strategies or trade secrets.
If you wish to access other resources, reach out to francesca.castro@netnada.com.au.
