Satisfying the SEC Requires ‘Peeling Back the Onion’ for Real Climate Risk Insights
The recent SEC proposal is changing the landscape of climate risk disclosures required from companies and organizations.
by Meghan Purdy
The SEC’s recent proposal for climate risk disclosure is an exciting and critical step forward in building an understanding of climate change’s expected impacts on our markets.
As firms go on the hunt for physical climate risk data, it’ll be tempting to “tick a box” with basic climate scores or climate value-at-risk metrics and move on. But the SEC is looking for more: they’re asking companies to disclose the risks that are material to an asset. They give examples of floods and fires causing business interruptions, changing property values, and increasing insurance costs; of high temperatures affecting outdoor workers; and of water stress affecting industrial plants.
These are tough questions, and they can only be answered by peeling back the onion and looking at the raw physical hazard metrics—flood depths, wind speeds, heat days, and so forth—that a firm’s assets and that of their suppliers and distributors will face over time.
Conversely, solutions that only provide a score or a loss, but no information about the underlying hazard, leave customers dead in the water, with no possibility of understanding their situation more deeply or customizing the analysis for the unique attributes of their assets, their planned mitigation measures, and their financial situation.
At Jupiter, we’re proud to offer a wide breadth of metrics—including new metrics for extreme cold and water stress—that are designed to feed assessments of material climate risk across a range of time horizons and emissions scenarios. And while we provide scores, we recognize the importance of understanding the story behind the score, and we only use them as a first step in a deeper risk assessment. For many firms, the SEC is prompting their first foray into physical climate risk assessment, and we want to help them start off on the right foot.
Meghan Purdy is a Senior Product Manager at Jupiter Intelligence.
Jupiter Intelligence is the global leader in climate analytics for resilience and risk management. For further information, please contact us at firstname.lastname@example.org.