A benchmarking framework to evaluate business climate change risks: A practical tool suitable for investors decision-making process

Abstract

A fundamental concern for the investor community is to identify techniques which would allow them to evaluate and highlight the most probable financial risks that could affect the value of their asset portfolio. Traditional techniques primarily focus on estimating certain conventional social-economic factors and many fail to cover an array of climate change risks. A limited number of institutional documents present, to a somewhat limited extent, some general-defined types of business climate change risks, which are deemed most likely to influence the value of an investors’ portfolio. However, it is crucial that stakeholders of businesses and scholars consider a wider range of information so as to assist investors in their decision making. This paper aims at establishing a new framework to operationalize and quantify an array of business climate change risks to provide more comprehensive and tangible information on non-traditional risks. This framework relies on the benchmarking – scoring systems and Global Reporting Initiative (GRI) guidelines, and is applied to various Greek businesses that are certified by Environmental Management and Audit Scheme (EMAS).

Keywords

• Climate change finance
• Financial risks
• Climate change risks
• Environmental finance
• Corporate sustainability
• Sustainable development