The present guide provides recommendations for the well-founded implementation of climate risk analysis within the EU Taxonomy Regulation 2020. Companies seeking EU Taxonomy compliance must make a substantial contribution to one of the six defined environmental objectives, must not significantly harm any of them, and must comply with minimum social standards.
Within Environmental Objective 2 "Adaptation to Climate Change", the implementation of a climate risk analysis (CRA) is central to the required evidence. In addition, the so-called "Do-no-significant-harm" (DNSH) principle applies across all environmental objectives, which also requires, among other things, the implementation of a climate risk analysis for all other environmental objectives. Ultimately, therefore, all companies are required to carry out a CRA as part of their EU Taxonomy compliance assessment.
The requirements for the CRA are set out in Delegated Acts (Regulation (EU) 2021/2139 & Regulation (EU) 2023/2486); however, there are still some ambiguities and open aspects regarding their implementation. This guide aims to help clarify these as far as possible. Carrying out the climate risk analysis means that companies must engage with the impacts of current and future climatic conditions on their economic activity or activities, thereby gaining a better understanding of possible climate risks and adaptation measures to reduce them. Climate risk is made up of a particular hazard, the exposure and the vulnerability of the economic activity, with the identification of relevant hazards and vulnerabilities posing a particular challenge for companies. For this reason, the guide sets out the five steps for carrying out a CRA, accompanied by guiding questions from both the perspective of the companies carrying out the analysis and those commissioning it.
Since data from climate models must be used for economic activities with a service life of >10 years, possible datasets are listed specifically for Austria, but also for other European countries. In addition, the guide describes which of the hazards listed in Annex I, Appendix A can be derived from existing models for the future from a scientific perspective. Furthermore, corresponding indicators for determining the hazards are provided, which may vary depending on the risk being assessed.
The present guide provides recommendations for carrying out the climate risk analysis in the context of the EU Taxonomy and is aimed at companies and institutions that
- carry out or commission climate risk analyses,
- offer climate risk analyses, or
- review climate risk analyses.
It is important to clarify that the guide focuses on the CRA within the EU Taxonomy (not the Corporate Sustainability Reporting Directive) and provides recommendations in this regard, but does not replace expert knowledge.
The project grew out of the Working Group on Climate Risk in ESG Reporting and was funded by the Climate and Energy Fund.