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The impact of global climate change is undeniable. Recently, there has been a rapid, and imperative focus on reducing Greenhouse Gas (GHG) emissions to avoid worsening conditions associated with increasing global temperatures.
Apart from the importance of a company knowing its carbon footprint so it can be managed, there is need to understand the risks associated with a changing climate. These risks can be categorized as:
- First-order impacts which are physical impacts and transitional risks that directly affect operations, supply chains or markets. Examples of such physical risks include excessive or reduced rainfall and more frequent and intense wildfires and storms. Transitional risks include carbon taxes, limits to the amount of GHG emissions allowed by an entity or change in the market demand for products and services
- Second-order impacts which can be classified as climate hazards that affect the broader economic, human, or natural environment such as social displacements or biodiversity loss
The full effects of climate change on business are unknown but can be predicted. They may cause disruptions to operations (direct and indirect), increase the cost of materials, and can result in higher insurance premiums.
At the core of the Task Force on Climate-Related Financial Disclosures (TCFD) framework is the setting of metrics and targets, and implementing processes to assess and manage relevant forward-looking, climate-related risks and opportunities.
Some governments are now mandating the requirement for climate change risks and contingencies to be included as a separate risk assessment when applying for a permit or license to undertake certain activities.
Managing climate change risks with IsoMetrix
The IsoMetrix Health, Safety and Environmental (HSE) solution can inherently define a risk and assess it, before and after taking associated controls into account through its Risk Management Module. The controls can be scheduled for periodical review to ensure they are still fit for purpose. If the residual or final risk status is not of an acceptable level to a company, appropriate actions can be taken to rectify this.
Climate-related risks can be listed and elaborated on within the risk module. A live risk register displayed in the dashboard provides a clear view of the risk status, a schedule of when risks and critical controls need to be assessed.
The integrated nature of the IsoMetrix system enables incidents or audit findings to flag a risk source related to the event or finding, which in turn sets the risk to a status that requires a review. Through this mechanism, any risk should it materialize, will be reassessed and the need identified if additional controls are to be implemented.
With climate change manifesting itself in a number of ways, organizations need a solution that makes it easy to track and report on the effects of their business operations. The IsoMetrix management system ensures that climate risks identified can be assessed and managed appropriately to reduce the likelihood of impacts materializing.