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Governance related Climate Change Reporting

The proposal for a Corporate Sustainability Reporting Directive (CSRD) identifies EFRAG as technical advisor to the European Commission providing draft European Sustainability Reporting Standards (‘ESRS’). EFRAG was requested by Commissioner McGuinness in May 2021 to put in place interim working methods in project mode to start the technical development of these draft standards immediately, in parallel to the legislative process of the CSRD. EFRAG’s mission is to serve the European public interest in both financial reporting and sustainability reporting by developing and promoting European views in the field of corporate reporting and by developing draft EU Sustainability Reporting Standards.

The governance related Climate Change reporting is based on the Project Task Force on European sustainability reporting standards (PTF-ESRS) and will be amendend/discussed in the consultation period of the Exposure Draft ESRS E1 (Climate Change).

Effects of climate change on business model and strategy

  • Describe the actual and potential effects of climate-related risks and opportunities on the business model and strategy, including reference to products and services, operations and value chains.
  • Describe where in the value chain climate-related risks are concentrated, including an identification of key resources and processes of the undertaking these risks relate to.
  • Describe how climate-related risks and opportunities serve as an input to management’s strategy and decision making.

Resilience of the business model and strategy

  • Describe the resilience of the current business model(s) and strategy to climate-related risks.
  • Has the resilience of the business model(s) been verified by using a range of climate scenarios, including a 2°C and 1.5°C scenario for transition risks and >2°C scenarios for physical risks?
  • If yes, describe the scenarios that have been considered, why they were chosen, key assumptions taken and the time horizon over which the analysis has been conducted.
  • Describe the short-, medium- and long-term strategic implications resulting from the analysis above.
  • Disclose the share of turnover from Taxonomy-aligned activities in comparison to Taxonomy-eligible activities and provide an estimate of this ratio in 5 years.

Impacts of the business model and strategy on climate change

  • Describe how the current business model and strategy cause and drive GHG-emissions and other climate-related impacts in own operations and along the value chain.
  • Describe the plans to ensure that the business model and strategy are compatible with the transition to limiting of global warming to 1.5 °C in line with the Paris Agreement (i.e. transition plan).
  • Describe the process for identifying and assessing the adverse and positive impacts on climate change along the value chain.
  • Describe the processes for identifying and assessing short-, medium- and long term transition risks and opportunities along the value chain, including a definition of the considered time horizons and scenario analysis how size and scale of the risks and opportunities are assessed and how principal transition risks and opportunities are selected.
  • Describe the processes for identifying and assessing short-, medium- and long term physical risks along the value chain, including a definition of the considered time horizons, scenario analysis, how size and scale of the hazards are assessed and associated principal risks are selected.
  • Describe the processes for validating the assessment output of the impacts on climate change as well as climate-risks and opportunities.
  • Describe how processes for identifying, assessing and managing impacts on climate change and climate-related risks and opportunities are integrated into the overall risk management, management system and strategy definition.
  • Is there formal board level oversight of climate-related issues?
  • Describe the governance structure and committees at board level responsible for climate- related issues, including processes for delegating authority from Board level to management and operation levels.
  • Describe the competencies of board members relating to climate change
  • Describe the Board oversight process covering climate-related decision, including:
    • Strategic or plans review
    • When and how a climate related issue is raised to Board attention
    • Performance/target monitoring
    • CapEx/M&A decisions…
  • Number of climate-related decisions taken by the Board in the reporting year as shown in the minutes of the Board meetings?
  • Does the undertaking assign climate-related responsibilities and authorities to senior executive positions or committees?
  • Describe the associated organizational structure(s) and reporting lines.
  • Describe the role of management and operations levels relating to, e.g.:
    • Business model and strategy
    • Climate mitigation or adaptation policies
    • Assessment and/or management of impacts, risks and opportunities
    • Emissions reduction targets
  • Describe the competencies of the senior executives regarding climate change.
  • Describe the engagement with stakeholders regarding impacts on climate change and climate- related risks and opportunities, including engagement with upstream and downstream partners to promote climate mitigation and/or adaptation solutions.
  • Percentage of people incentivised for GHG emissions reduction targets achievement (%)?
  • Relative proportion of variable remuneration indexed on GHG emissions reduction targets achievement (%)
  • Share of total compensation based on incentives on GHG emissions reduction (%)

Describe how internal carbon pricing schemes are implemented in the undertaking: Internal carbon pricing

  • Does the company use internal carbon pricing systems to incentivise climate performance such as:
    • CapEx shadow price
    • R&D investment shadow price
    • Internal carbon fee/fund
    • Others


The scope of climate reporting will increase substantially and align with the scope of financial reporting in the long term. Additionally, there will be an integration of financial and ESG reporting. Contact us to build or expand your ESG reporting and take it to a new level.

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Georg Tichy

Georg Tichy

Georg Tichy is a management consultant in Europe, focusing on top-management consultancy, projectmanagement, corporate reporting and fundingsupport. Dr. Georg Tichy is also trainer, lecturer at university and advisor on current economic issues. Contact me or Book a MeetingView Author posts