Climate change is no longer a distant threat; it’s a financial reality. Businesses across the UK and beyond are increasingly exposed to climate-related risks that can disrupt operations, supply chains, and financial performance.

As a global example, economic losses from natural disasters reached $368 billion in 2024, driven by major storms in North America and widespread flooding across Europe.

These escalating costs are driving governments and regulators to enforce mandatory climate risk reporting, urging businesses to assess and disclose their exposure to climate-related risks.  

Today, more than 6,000 climate policies across 198 countries aim to address climate risks, making climate risk assessment and transparent reporting essential for regulatory compliance, investor trust, and long-term resilience.

But what exactly is climate risk reporting and how can businesses make climate risk assessment reporting easier?  

This guide breaks down the key concepts, frameworks, and practical steps to help you get started, and shows how Mitiga’s climate intelligence solutions can support your journey.

What is climate risk reporting?

Climate risk reporting is the process by which organisations analyse and disclose their exposure to climate-related risks.  

These risks fall into two main categories:

• Physical risks: Direct impacts from climate events such as floods, heatwaves, and storms. ‍
• Transition risks: Financial and operational challenges linked to the shift toward a low-carbon economy, including policy changes, market shifts, and reputational pressures.

To produce a solid climate risk assessment report, your business must gather relevant data, analyse how climate risks could affect its operations, and communicate these findings to stakeholders, such as investors, regulators, and the public.

The purpose of climate risk reporting is to increase transparency around how climate change may influence an organisation’s short, mid, and long-term resilience and what mitigation strategies are in place.  

Types of climate risk: Physical vs. transition

A key part of any climate risk assessment is understanding the two main categories of climate-related risks: physical and transition.

Physical climate risks

Physical risks refer to the direct impacts of climate change on assets, operations, and infrastructure.  

These are typically divided into:

• Acute risks: Sudden, severe events such as hurricanes, floods, wildfires, and heatwaves. These can cause immediate damage to property, disrupt supply chains, and drive up insurance costs. ‍
• Chronic risks: Gradual, long-term changes like rising temperatures, shifting rainfall patterns, and sea level rise. These can erode asset value, increase operating costs, and make certain regions less viable for business, especially in sectors like agriculture or real estate.

Both acute and chronic risks can significantly affect a company’s financial performance and long-term resilience, making them essential components of any climate risk assessment report.

Transition risks

Transition risks stem from the global shift toward a low-carbon economy.  

These include:

• Regulatory changes (e.g. carbon pricing, emissions caps, mandatory climate disclosures) ‍
• Market shifts (e.g. changing consumer preferences) ‍
• Technological disruption (e.g. renewable energy adoption) ‍
• Reputational risks (e.g. stakeholder pressure for sustainability)

Transition risks can reshape business models, impact asset valuations, and create competitive pressure, especially for carbon-intensive industries.

Why materiality matters in climate risk reporting

Once physical and transition risks are identified, the next step is determining which ones are material, meaning they are significant enough to impact decision-making or financial outcomes.

Materiality helps organisations focus their climate risk reporting efforts on what truly matters, especially when resources are limited. It ensures that disclosures are relevant, targeted, and useful to stakeholders.

Single vs. double materiality

• Single materiality (financial materiality) considers how climate risks affect the company’s financial performance. For instance, flooding could disrupt operations or increase insurance costs. ‍
• Double materiality expands the lens to include how the company’s activities impact the environment and society. This dual perspective is increasingly required by regulations such as the EU’s Corporate Sustainability Reporting Directive (CSRD), which mandates companies to assess both inward and outward impacts.

Investors are also adopting this approach to better understand both the exposure and environmental footprint of their portfolios, making double materiality a cornerstone of transparent and responsible climate risk assessment reporting.

Key frameworks, standards, and regulations for climate risk reporting

As climate-related risks become more material to business performance, governments around the world are introducing stricter requirements for climate risk reporting.  

These requirements are shaped by a mix of:

• Laws and mandates: Legal obligations for companies to disclose climate-related information ‍
• Frameworks: Guiding principles for structuring disclosures ‍
• Standards: Detailed rules on what and how to report

Understanding this landscape is essential for producing a compliant and decision-useful climate risk assessment report.  

Below is a breakdown of key initiatives by region. This is not an exhaustive list, and requirements vary depending on where a business operates and who its stakeholders are.

🇪🇺 Europe: CSRD and ESRS

• Law/Mandate: Corporate Sustainability Reporting Directive (CSRD)
• Framework: ESRS (European Sustainability Reporting Standards)
• Standard: ESRS E1 (Climate Change)

Under CSRD, large companies and listed SMEs must disclose climate-related risks and opportunities using ESRS standards. ESRS E1 covers both physical climate risks (e.g. extreme weather, sea level rise) and transition risks (e.g. regulatory changes, carbon pricing), and applies the principle of double materiality.

This regulation is legally binding for EU companies and also relevant for UK-based organisations with operations or investors in the EU.

🇬🇧 United Kingdom: UK SRS and FCA Listing Rules

• Law/Mandate: UK Government’s Sustainability Disclosure Requirements + FCA Listing Rules
• Framework: TCFD (now absorbed into IFRS) / UK SRS
• Standard: UK SRS S2 (based on IFRS S2)

The UK has adopted TCFD-aligned disclosure requirements, now evolving into the UK Sustainability Reporting Standards (UK SRS). These are based on IFRS S2, and apply to premium-listed companies, asset managers, and insurers.  

The Financial Conduct Authority (FCA) enforces these rules, requiring businesses to report both physical and transition risks.

🇺🇸 United States: SEC Climate Disclosure Rules

• Law/Mandate: SEC Climate Disclosure Regulation (proposed, 2024)
• Framework: TCFD (legacy)
• Standard: IFRS S2 (influencing structure)

The SEC’s proposed 2024 climate disclosure rules would require companies to report how climate change affects their operations and financial performance. This includes both short-term and long-term risks, and strategies for managing them.  

While not formally adopting IFRS S2, the SEC’s approach is influenced by its structure and principles. This rule is not a law passed by Congress, but a regulation issued by the SEC, a federal agency with authority over capital markets.  

If upheld in court, it will carry binding force for all listed companies. The rule is currently facing legal challenges, and its implementation has been temporarily paused by a U.S. appeals court.

🇺🇸 California: CRFRA / SB 261

• Law/Mandate: Climate-Related Financial Risk Act (CRFRA / SB 261)
• Framework: TCFD
• Standard: IFRS S2

California’s climate disclosure law requires companies to assess and report climate-related financial risks using the TCFD framework, now aligned with IFRS S2. This applies to companies doing business in California above a certain revenue threshold.

🇦🇺 Australia: Treasury Laws Amendment Bill 2024

• Law/Mandate: Treasury Laws Amendment (Financial Market Infrastructure & Other Measures) Bill 2024
• Framework: ASRS (Australian Sustainability Reporting Standards)
• Standard: AASB S2 (aligned with IFRS S2)

Australia is implementing AASB S2, its climate disclosure standard aligned with IFRS S2, under the broader ASRS framework.  

This regulation has already been approved, and companies are now expected to disclose climate-related risks and opportunities in line with global best practices.

Climate risk reporting landscape by region

How to get started with climate risk reporting

Building a robust climate risk reporting process requires a structured, cross-functional approach that balances regulatory compliance, stakeholder expectations, and operational realities.  

Below is a checklist to guide your organization through the key steps, from risk assessment to disclosure, using climate intelligence tools like Mitiga’s reporting solution, Disclose.

1. Define your climate risk strategy

Start by laying the foundation for your climate risk reporting process.

• Define the scope: Use materiality to prioritise geographies, assets, or business units most exposed to climate risks. A logistics company may focus on warehouses in flood-prone areas across Europe. ‍
• Identify key stakeholders: Engage internal (e.g., sustainability, finance, legal) and external (e.g., investors, regulators) stakeholders to ensure disclosures are relevant and targeted. A real estate firm may involve its legal and investor relations teams to align disclosures with shareholder expectations. ‍
• Set objectives, timelines, and governance: Establish clear goals, reporting cycles, and assign accountability across teams. A multinational energy company may set quarterly climate risk reviews led by its ESG committee.

2. Assess exposure to climate risks

Understanding your organization’s exposure to climate-related risks is a critical early step.

• Map your assets: Geolocate infrastructure, operations, and supply chain components to assess spatial exposure. ‍
• Select climate scenarios: Model future climate pathways (e.g., Paris-aligned, business-as-usual) to understand potential impacts. ‍
• Choose climate hazards: Assess risks such as flooding, drought, wind, and heat stress, but focus only on those hazards that materially impact your assets, operations, or supply chain. Disclosure frameworks typically require reporting on risks that are financially or operationally significant to your organisation. ‍
• Review risk ratings: Identify which assets are most vulnerable and quantify potential financial and operational impacts.

There are tools available to help with this step. For example, Mitiga’s Disclose allow you to upload asset locations, select climate scenarios, and assess exposure to multiple hazards in one place. It also enables you to quantify the potential impact of those hazards, helping you save time and improve accuracy when evaluating risk.

3. Select a climate disclosure framework or standard

Choose the appropriate reporting framework or standard based on your geography, industry, and regulatory obligations.

Common standards:

• IFRS S2 (global baseline, ISSB)
• ESRS E1 (EU regulation under CSRD)
• UK SRS S2 (UK-specific standard based on IFRS S2)

For instance, a UK-based insurer with EU operations may need to align with both UK SRS and ESRS E1 to meet cross-border compliance.

Selecting the right standard early ensures your disclosures are structured correctly and meet stakeholder expectations.

Some platforms provide guidance and templates aligned with climate disclosure frameworks and standards, helping teams structure their reports correctly from the outset.  

For example, Mitiga’s Disclose tool supports disclosures aligned with the IFRS S2 and the ESRS E1 standards, making it easier for organisations to meet regulatory requirements with confidence.

4. Gather and analyse climate data

Collect and analyse the data needed to support your climate risk and opportunity assessment, making sure that climate hazards are presented in formats that connect directly to asset exposure, scenario modelling, and financial impact.

• Climate hazard data: Flood trends, temperature projections, drought indices ‍
• Asset-level exposure: Location, value, operational role ‍
• Scenario modelling inputs: Emissions pathways, time horizons ‍
• Financial impact analysis: Revenue, cost structures, insurance data, and estimated monetary impact by hazard, scenario, and time horizon

Tools like Disclose help streamline this process by combining geospatial data, climate models, and scenario analysis to generate asset-level insights.

It also delivers decision-ready financial impact estimates, including Climate Value at Risk (CVaR), making climate risk tangible for financial decision-makers.

For example, a retail chain may use Disclose to evaluate flood risk across its store portfolio under a Paris-aligned scenario and identify high-risk locations for adaptation planning.

5. Develop mitigation and adaptation plans

Translate insights into actionable strategies to reduce risk and build resilience.

• Identify material exposures: Focus on high-risk assets or operations ‍
• Determine interventions: Adaptation measures (e.g., flood barriers, cooling systems) ‍
• Evaluate feasibility: Assess cost, quantify financial impact, and alignment with business goals ‍
• Set climate targets: Define measurable goals for risk reduction and resilience ‍
• Monitor progress: Track implementation and adjust as needed

For example, a real estate investment firm may use climate risk data to avoid developing in flood-prone areas and instead prioritise resilient locations. It may also invest in flood barriers or elevation measures for existing assets, setting a target to reduce flood-related financial losses by 40% over the next decade.

6. Prepare and disclose climate risk information

Once your assessment is complete, prepare and publish your climate risk assessment report in line with the selected standard

• Structure disclosures: Align with IFRS S2, ESRS E1, or UK SRS as applicable ‍
• Ensure transparency: Document assumptions, data sources, and methodologies ‍
• Communicate findings: Share disclosures through sustainability reports, investor updates, or regulatory filings

Many organizations use reporting platforms to streamline this step. For example, Disclose, Mitiga’s climate reporting tool, helps companies generate disclosure-ready reports aligned with IFRS S2 and ESRS S1.  

This reduces manual effort and improve consistency across filings.

Before publication, reports typically undergo an assurance phase, where a third-party auditor reviews the climate disclosures for accuracy and completeness. This process can take up to two months.  

To support this, Disclose includes dedicated tabs and pre-filled narrative cells designed to streamline assurance reviews and facilitate auditor engagement.

7. Monitor, update, and improve

Climate risk reporting is not a one-time exercise; it’s an ongoing process. To remain compliant and resilient:  

• Reassess risks regularly: At least annually, as required by regulations like CSRD ‍
• Track regulatory and market changes: Stay informed of evolving local or industry regulations and stakeholder expectations ‍
• Update your strategy: Reflect new risks, opportunities, or business changes ‍
• Integrate climate risk into business planning: Embed climate risk into investment, procurement, and operations

Common challenges in climate risk reporting and solutions

Even with growing awareness and regulatory momentum, many organisations face significant hurdles when implementing climate risk reporting.  

Understanding these challenges and how to address them is key to building a resilient and compliant strategy.  

If climate risk reporting is already required for your company, it’s important to get started now so your team can meet the rules, check the data, and make reporting easier.

Data gaps and inconsistencies

Climate risk reporting depends on high-quality, location-specific data, but many organizations struggle to access or consolidate it.

• Challenge: Incomplete asset-level data, outdated climate hazard maps, or inconsistent financial metrics can undermine the accuracy of risk assessments. ‍
• Solution: Climate intelligence platforms can help centralize and enrich datasets by combining geospatial data, climate models, and financial inputs improving both coverage and consistency.

Not sure where to start when selecting a platform? Check out our guide on How to choose a climate risk intelligence platform, which walks through key criteria helping you make an informed decision based on your organization’s needs.

Scenario modelling complexity

Modelling future climate risks under different emissions scenarios is essential but often technically demanding.

• Challenge: Selecting appropriate scenarios (e.g., Paris-aligned vs. business-as-usual), defining time horizons, and interpreting outputs can overwhelm teams without climate science expertise. ‍
• Solution: Tools that offer pre-built scenarios, intuitive visualisations, and asset-level impact insights can simplify this process. This helps teams understand how each asset is affected under different hazards and timeframes without needing deep technical expertise.

Internal alignment and ownership

Climate risk reporting is inherently cross-functional, but siloed teams and unclear responsibilities often slow progress.

• Challenge: Sustainability, finance, legal, and operations may have different priorities, leading to fragmented data and inconsistent messaging. ‍
• Solution: Establishing clear governance, shared objectives, and collaborative workflows ensures that climate risk reporting supports broader business strategy.

Navigating regulatory complexity

The evolving landscape of climate disclosure frameworks and standards can be difficult to navigate.

• Challenge: Understanding the differences between climate disclosure frameworks (such as TCFD), standards (like IFRS S2 and ESRS E1 under the CSRD), and regulatory rules (such as SB 261 climate disclosure requirements), and aligning your reporting accordingly, requires specialised knowledge. ‍
• Solution: Tools like Mitiga’s Disclose offer structured templates aligned with major frameworks and standards, helping organisations produce compliant, disclosure-ready reports with confidence.

How Mitiga can help

Mitiga’s climate intelligence platform and reporting tool, Disclose, simplify climate risk reporting, making it faster, more accurate, and easier to scale.

• Audit-ready disclosures in minutes: Upload your asset list, select a standard (e.g., ESRS E1, IFRS S2), and generate science-based reports across IPCC-aligned scenarios and time horizons. ‍
• No technical expertise required: Disclose automates data structuring, scenario modelling, and financial impact analysis, eliminating the need for third-party modelling costs. ‍
• Built for assurance and stakeholder use: Narrative outputs and quantitative insights are designed to support the assurance phase, helping auditors review disclosures efficiently. Analytical data from the Excel outputs can also be shared with internal teams, investors, and other stakeholders. ‍
• Scalable and fast: Whether you're reporting on 5 or 5,000 assets, Disclose delivers high-quality results in minutes, a process that traditionally takes weeks using manual modelling, with minimal effort and reduced ESG spend.

Conclusion: Take the next step in climate risk reporting  

Climate risk reporting can feel overwhelming, especially with evolving regulations and growing stakeholder expectations, but it doesn’t have to be.  

By following a structured approach and leveraging science-based tools, businesses can move from complexity to clarity.  

Mitiga is here to help. Whether you're just starting or scaling your disclosures across global portfolios, Disclose, our reporting tool, makes it easier to assess, report, and act on climate risk with confidence and speed.  

Explore Mitiga’s solutions or get started to see how we can support your climate risk reporting journey.