In January, we sat down with Alice Saunders, climate risk specialist in the Verdantix Net Zero & Climate Risk team, to discuss her recent research into climate scenario analysis.
Can you tell me a little bit more about what you’re researching at the moment?
My research primarily looks at climate scenario analysis and the climate risk solutions market, but I have also started to explore biodiversity and nature-related reporting. I recently completed a best practices report on climate scenario analysis, digging into the key things organizations need to know when undertaking scenario analysis and looking into how corporates have started tackling the challenge.
In 20 words or less, can you tell me why climate scenario analysis is important for firms?
It helps organizations plan for different futures, which is critical considering the impact climate change will have on the world.
What are the wider implications for this issue?
If all firms started running climate scenario analyses, they would be able to understand potential future risks – and financial losses – and plan appropriately. Organizations may find they need to radically change their business models, sell off or insure assets, or alter their supply chains due to the effects of climate risks. It is far better to plan for these eventualities and shore up the business instead of taking the hit later down the line – the PG&E bankruptcy is a great example of act now or pay later.
What would you most like to see corporates do to tackle climate scenario analysis?
I’d like to see corporates taking this challenge seriously, bringing in expertise from across departments, reading up on the bias that can come in when doing scenario analysis, and the assumptions and limitations involved. One main thing I’d like to see corporates do would be to choose their scenarios wisely: firstly to run at least three to ensure comparability, and then to really get under the hood of how these scenarios, from the IPCC or IEA for instance, were created so they can tweak and update them accordingly.
What is one recent innovation in the climate technology space that’s caught your eye?
Something related to what I will be doing more research on in 2024 is the use of geospatial data to facilitate biodiversity assessments. I think it will be interesting to see how quickly this technology use-case is adopted. MSCI, for example, recently launched a ‘nature and biodiversity metrics’ data product using geospatial data. Measuring nature-related impacts and risks is going to be a significant undertaking, and its great to see how technology can offer valuable data to help organizations make more informed decisions on their investments or value chains.
What’s the last thing you read that really got you thinking?
A ‘2023 global trends in climate litigation’ report produced by the Grantham Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy. It brings together data on climate litigation cases in the past year and trends in the space, which got me thinking firstly about the financial impact these filings may have on firms and secondly about how the increasing diversity of cases demonstrates different ways that organizations are being held accountable for climate damages. The climate litigation space is certainly one to watch, and I find myself constantly referring back to this report and gaining new insights.
What’s next on your research agenda?
In 2024, as mentioned, I will be conducting research into data tools and solutions that can support firms doing biodiversity assessments and reporting. Nature and biodiversity is not a brand new topic for corporates with rigorous EHS agendas, but the topic is seeing an increasing focus, a growing scope and louder calls for more accurate data following the finalization of the TNFD recommendations and biodiversity being incorporated in regulations such as the CSRD. Measuring biodiversity impact effectively will be a big undertaking for firms, hence why I’ll be looking into data solutions to support their efforts, one of which will definitely be geospatial data products.
