Climate Change Transition and Physical Risks of Industrial Companies in Australia, Canada, the European Union and the United States

Abstract

We present a methodology to develop the integrated climate change transition and physical risk assessment of industrial plants in Europe, Northern America and Australia. There is an increasingly important need for effective large scale climate change risk assessment solutions with more governments aligning their company reporting regulations with the Task Force on Climate-related Financial Disclosures recommendations. In this paper we measure key aspects of climate change risks of industrial firms on the globe and vice-versa. The study provides valuable insights into climate risk exposure for companies, investors, and consumers, offering a pioneering approach by integrating data from major international registers. We analyse data from 70,000 companies and their 170,000 plants, which report to fragmented Pollutant Release and Transfer Registers and Greenhouse Gas Reporting Programs. For our assessment, transition risks are measured in terms of reported greenhouse gas emissions, while physical risks calculated for all company plant locations in terms of historical cooling energy needs, flood exposure and photovoltaic power potential. We show that climate change transition and physical risks are not correlated, therefore there are no winners and losers of climate change in general. The research contributes to the evolving landscape of climate risk management and highlights the need for standardized methodologies in the face of impending regulatory changes.