Climate Risk & Scenario Analysis: Future-Proofing CSRD Compliance

Climate risk is not about if — it’s about how prepared your company is. Climate impacts are no longer distant probabilities, they are materialising faster than ever. For businesses, the challenge is not predicting the unpredictable but preparing for it with structured, actionable plans.

In our recent denxpert webinar, we explored the foundations of climate risk assessment and scenario analysis — not from a theoretical perspective, but grounded in real-world examples and practical advice. While global regulatory landscapes, such as the Corporate Sustainability Reporting Directive (CSRD), are undergoing significant changes, the importance of understanding and managing climate risks remains clear and urgent. The better your preparation, the stronger your company’s position in the eyes of investors, customers, and regulators, regardless of legislative shifts.

Why Climate Risk Assessment Matters

Climate risks are not just about extreme weather or rising temperatures; they have become fundamental business risks. The contrast between two recent cases illustrates this point clearly.

In Parajd, Romania, a salt mine collapsed due to intensified rainfall — a direct result of shifting climate patterns. Early warning signs were present, but no preventive measures were taken. The lack of a structured risk management plan left the region vulnerable, and locals are now left without income or a clear future. Authorities were underprepared for the aftermath.

By contrast, in Switzerland, authorities faced the inevitable collapse of a glacier. Rather than waiting for disaster, they developed a comprehensive risk plan years in advance, mapped evacuation routes, and ensured that when the glacier did collapse, there were no casualties. The key difference wasn’t technology — it was mindset. Switzerland proved that effective climate risk management is not about predicting every detail, but about preparing for foreseeable risks with the right data and decisive action.

This mindset shift is increasingly essential as investors sharpen their focus on climate risks. Norges Bank Investment Management, for instance, has estimated that in a 3°C warming scenario, the value of an average S&P 500 holding could decline by nearly 19% — a stark contrast to the 2–4% loss predicted by traditional models. Companies without credible, transparent strategies are exposing themselves not only to climate hazards but also to reduced valuation and investor divestment.

Why Climate Risk Is More Than Just Hazards

Many still equate climate risk with hazards like floods or wildfires. But the IPCC framework shows it’s more complex. Climate risk is shaped by three interdependent factors:

• Hazard – Potential occurrence of a climate-driven event (floods, droughts).
• Vulnerability – How susceptible your company is and how well you can adapt.
• Exposure – The extent to which your assets, people, and operations are in risk-prone areas.

Hazards are becoming more frequent. Vulnerability can be reduced through adaptation, while exposure can be lowered by rethinking locations or operations. Real resilience means tackling all three.

Six Essential Steps for Climate Risk Analysis

our experts recommend a six-step approach for robust climate risk assessment:

1. Set Objectives and Boundaries – Define why you’re assessing (compliance, resilience, strategy) and set horizons.
2. Screen for Risks – Identify hazards and transition pressures; map exposures and vulnerabilities.
3. Gather Data – Use location-specific data and credible climate scenarios (IPCC SSPs, NGFS).
4. Quantify Financial Impacts – Translate risks into monetary terms and opportunities.
5. Integrate and Manage – Embed findings into ERM systems, guide mitigation, and investments.
6. Disclose and Align – Report transparently under TCFD or ESRS E1, tying results to governance.

Scenario Analysis: Preparing for Multiple Futures

No one can predict the future, but you can prepare for it. That’s the purpose of scenario analysis.

A solid analysis examines both:

• Physical risks – storms, droughts, sea-level rise.
• Transition risks – carbon pricing, litigation, policy shifts, consumer demand.

You should stress-test your company against:

• High-emission scenario – 4°C warming by 2100, widespread hazards.
• Paris-aligned scenario – 1.5°C pathway with tough regulatory shifts.

Disclosure Frameworks

Even under the Omnibus proposal, ESRS E1 climate disclosures remain stable and technical, listing physical risk and scenario expectations. Many companies start with TCFD’s simplicity, then align with ESRS or ISSB S2 for deeper reporting.

At denxpert, we provide an ESRS-aligned reporting solution that integrates risk assessment and scenario analysis directly into your sustainability workflow — transparent, manageable, and audit-ready.

Recommended Data Sources

Robust analysis depends on credible, open-source datasets. Key sources include:

• IPCC scenarios
• World Bank Climate Knowledge Portal
• ThinkHazard! platform

These datasets ensure scenario planning is actionable, credible, and trusted by investors.

Leading Examples from the Field

• Vattenfall – Uses multiple climate scenarios, integrating results into business planning rather than CSR-only exercises.
• Arla Foods – Embeds climate risk assessment within its Double Materiality Assessment, tailoring time horizons to sector-specific realities.
• Enel – Aligns transition planning with decarbonisation and social considerations, openly mapping workforce transitions tied to plant closures.

Preparedness as Competitive Advantage

In today’s business landscape, climate risks are financial risks. Preparedness is no longer optional, it’s a competitive advantage. Companies that integrate climate risk assessment and scenario analysis into strategy are building resilience, investor trust, and long-term value.

If you want to see how structured, transparent, and actionable climate risk management can transform your reporting, explore how denxpert’s ESRS-aligned solutions can support your next step.

Ready to dive deeper? Watch our on-demand webinar Climate Risk & Scenario Analysis for real-world strategies and expert insights.

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