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Within the Task Force on Climate-related Financial Disclosures (TCFD), strategy disclosures should help you understand the risks and opportunities posed by climate change. They provide insight into the potential impact of these factors on your business and highlight existing and planned mitigation actions, where appropriate.

What TCFD recommends on strategy
Recommendation	Disclose the actual and potential impacts of climate-related risks and opportunities on your business' strategy, and financial planning where such information is material.
Key aspects	Describe the climate-related risks and opportunities your business has identified over the short, medium, and long term.
	Describe the impact of climate-related risks and opportunities on your business' strategy, and financial planning.
	Describe the resilience of your business' strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

Climate change will bring a wide range of both positive and negative impacts to businesses. Like any other issue facing your business, it is important to understand how extreme weather and climate change impacts could affect you.

Planning ahead where possible, rather than responding reactively, will help you to:

save your business money in the long term
give your business the best chance to continue to operate and meet customer orders, despite the weather
identify possible business opportunities, eg new products or services, reduced costs

Climate-related risks

TCFD divides climate-related risks into two main categories:

Transition risks (related to the transition to a low-carbon economy)
Current and emergent regulation	Policy developments that attempt to constrain actions that contribute to the adverse effects of climate change or policy developments that seek to promote adaptation to climate change.
Technology	Risks associated with technological improvements or innovations that 91�㽶��ɫ��Ƶ the transition to a low-carbon economic system.
Legal	Climate-related litigation claims.
Market	Shifts in supply and demand for certain commodities, products, and services.
Reputation	Risks tied to changing customer or community perceptions of a business' contribution to or detraction from the transition to a low-carbon economy.
Workforce	Is your business going to be able to find the right skills for its post-transition form, eg electric vehicle mechanics?
Financial market	Is your business prepared for your finances to be tied to green policies and/or to bear a higher interest rate if you do not meet green criteria?
Physical risks (related to the physical impacts of climate change)
Acute	Risks that are event-driven, including increased severity of extreme weather, eg flooding, heatwaves, storms.
Chronic	Longer-term shifts in climate patterns, eg sea-level rise.

This checklist will 91�㽶��ɫ��Ƶ you through the strategy disclosures area of TCFD's recommendations, which is about assessing and reporting on actual and expected climate-related risks to your business. Key impacts that climate change could have on specific business functions, applicable to any business or sector, are highlighted with questions that will help you plan actions to improve the resilience of your business.

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1

Supply chain - Impacts and actions

Impacts

Business logistics, including supply chains, utilities and transport arrangements, can be disrupted by extreme weather events. Those that rely heavily on utilities, the transport network or who have inflexible supply networks will be particularly vulnerable. Businesses in Northern Ireland must consider the additional supply chain logistics of crossing the Irish Sea for supplies and deliveries to Great Britain.

Risks
Flooding (high rainfall, coastal and river)	Flooding and landslips will disrupt transport for deliveries.
Extreme weather events (storms and intense cold)	Extreme weather events can cause disruption of supply chains due to: transport disruption impact on suppliers, eg flooding of premises changes in raw material price or availability
	Extreme weather events can cause disruption to utilities supply and distribution.
	Utilities such as energy distribution and drainage infrastructure are generally vulnerable to extreme weather events.
Opportunities
Competitive advantage for companies with flexibility built into delivery systems and supply chains or those undertaking business continuity planning.
Supplying local markets creates an opportunity for a marketing approach based on regional distinctiveness or reduced product miles.
Developing a diverse network of suppliers (especially local) can simplify access to supplies in bad weather, increasing your resilience.

Suggested actions

What would happen to your business if suppliers cannot get to you because of weather-related disruptions?
Have you considered what would happen if you cannot get your products/services to your customers or if your customers cannot get to you?
Have you considered alternative suppliers and/or increasing storage capacity to increase your ability to operate without deliveries?
Do you have any processes or products that are sensitive to changing temperature or climate conditions?
Have you considered the circumstances under which you might decide to scale back or suspend operations during weather-related disruptions?
Have you identified critical activities and the employees and inputs required to maintain them?

2

Finance/insurance - Impacts and actions

Impacts

Climate change will impact business finances through the cost of damage, supply chain disruption and lost sales. A climate-resilient business is ultimately more insurable, more profitable, and more investable.

Risks
Flooding and extreme weather events.	Flooding damage and other severe weather events could result in unplanned business costs.
	An increase in extreme weather events will see more insurance-related issues.
	Global climatic events could impact international investments or products sourced from overseas.
	Cost implications for retrofitting existing buildings or relocating to cope with climate impacts.
	Failure to climate-proof your business, eg product range, and premises, will increase the potential for legal action, increase insurance premiums and reduce confidence amongst investors.
	Taking no action to prevent the risks and impacts of climate change could cost the business more in the long term.
	Disruptions to supply chains can have significant negative financial impacts.
Opportunities
Proactive risk assessment and implementation lead to a decrease in potential risks and a reduction in liabilities.
Clients and customers attracted to businesses that can show they are resilient to climate change.
New insurance products and services that spread the risk of climate change.
Increasing resilience now can pay off many times over in the future.
More weather-related claims improve the efficiency per claim.

Suggested actions

When did you last check that you have the insurance you need?
Are you covered for floods and storm events?
What are your insurance limits? Check excess and coverage terms and conditions, watch for small print and under-insuring.
Does your policy cover the full value of your business?
Do you keep documents safe from weather impacts (and store copies off-site)?
Do you have business continuity cover if your business is interrupted?
Do you have a business continuity plan?
Have you considered the financial management implications of a severe weather event?

3

Products and services - Impacts and actions

Impacts

Risks
Flooding (high rainfall, coastal and river)	Increased heavy rainfall and flood risk will increase demand for products, services and expertise to 91�㽶��ɫ��Ƶ sustainable water resource management.
Flooding (high rainfall, coastal and river)	Negative impact on reputation if insurance becomes unavailable in areas of increasing risk, such as high-risk zones for flooding or subsidence.
High Temperatures and Drought	Existing buildings not well-adapted to new climate, especially in hot summer conditions, leading to reduced value of existing buildings if they are not future climate-proofed.
	Quality issues relating to climate, eg overheating of grain, and supermarkets demanding washed produce – which is very water intensive.
	Reduced occurrence of frost and snowfall may have business implications for those that rely on the winter season.
Extreme Weather Events (storms and intense cold)	Maintaining a supply to markets could become more challenging particularly for businesses that heavily rely on climate-sensitive supply chains.
Opportunities
New innovative products, or modifications to existing products, in response to a changing market.
Warmer conditions could see an increased demand for more parks and gardens and further extend the growing season with potential benefits for agriculture and forestry.
Advantages for those who are quick to respond to changing markets and lifestyles.
Increased business opportunities in some sectors because of an extended tourist season, warmer summers and longer growing seasons.

Suggested actions

Is your business product or service weather or climate-sensitive?
Have you put in place measures to increase your business' resilience?
Does your business have global markets or suppliers that could be affected by climate change in other countries?
Have you considered establishing alternative suppliers for critical goods and services?
How would it impact your customers if you could not provide your product or service?
Would it change your customers’ requirements?
To what extent do others depend on your business in the event of a severe weather event?
Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and plan for any appropriate changes?

4

Operations - Impacts and actions

Impacts

Risks
Flooding (high rainfall, coastal and river)	Flood or torrential rain conditions may cause difficulties accessing premises, land or sites.
High Temperatures and Drought	Hotter summers may impact IT equipment such as servers, on-site construction processes, food preparation and storage.
	Existing crops may no longer be viable in new climatic conditions.
	A warmer climate may cause pests and diseases to spread and new threats to become established limiting the potential for increased productivity in the agriculture and forestry sector.
	Water quantity and quality may be reduced in the summer months impacting on manufacturing processes relying on water.
Extreme Weather Events (storms and intense cold)	Extreme events can cause damage or disruption to some production processes.
Opportunities
A warming climate may improve the growing conditions of certain crops in Northern Ireland and increase the productivity for agriculture and forestry.
Warmer conditions and longer growing seasons will mean new species and varieties of plants.
Increase in the frequency and intensity of heavy rainfall events will present opportunities to develop expertise and technology in water management and drainage.
As the climate changes, there will be an increased need for skills and expertise designing well-adapted buildings and managing construction processes in response to climate change.
There will be opportunities to develop new farming and forestry practices that 91�㽶��ɫ��Ƶ increased resilience.

Suggested actions

Should your computers be unavailable, what processes would be affected, eg orders, payroll, contacts, and would your business still function?
Do you have documentation of all key processes/procedures?
Do you scan important physical documents and store the originals off-site?
Have you considered backup utilities – energy and water?
What arrangements are in place to ensure the availability of supplies in the event of a severe weather event?
Have you considered where you store your products, stock, and raw materials?
Does your business depend on water? If there was a drought would you be able to reduce your water usage while continue running your business?
Have you identified which equipment is potentially vulnerable to flooding, and which equipment your business could not operate without?
Have you considered the possibility of changes to your product, service, or channels of customer interaction during a prolonged severe weather event and planned for any changes?
Do you have a contact list of current and alternative suppliers?

5

Scenario planning - Impacts and actions

Impacts

One of the recommended disclosures from TCFD focuses on the resilience of a business’ strategy. This evaluation involves considering different climate-related situations, including a 2°C or lower scenario, which is the target of the UN Paris Agreement. This objective aims to limit the increase in global average temperatures to a maximum of 2°C from pre-industrial levels. However, current projections indicate that temperatures may rise to as much as 3°C or 4°C degrees by the end of the century. Each degree of global warming significantly impacts the global climate system and increases risk for society, the environment and the economy.

Scenario
Indicator	2°C in 2100	4°C in 2100
Average Annual Temperature	+ 1.27°C	+ 2.5°C
Average Mean Rainfall	1.25% change	2.93% change

Suggested actions

Think about what impacts you are already seeing in your business and what areas are being affected by asking questions such as:

How might your governance procedures have to change between a 2°C and 4°C world?
How might your risk management processes have to change between a 2°C and 4°C world?
How might your supply chain, finance/insurance, products and services, and operations be impacted and what action can you take to reduce these risks?
How might these changes affect your transition risks?
What metrics and data, eg weather-related losses and supply disruption, are you already gathering which could help inform these decisions? Are there any priority data gaps?