Discussions on the directions of sustainable development in Europe are gaining momentum, and there are no signs of this trend slowing down. Many organizations struggle with the challenges of sustainability reporting in line with the new CSRD directive, and employers often question the purpose of such actions. Regardless of the nature of their operations, each company must individually identify its risks and opportunities. However, some issues are universal and require special attention—climate change and, more specifically, climate risks. Extreme weather events, rising sea levels, droughts, and other consequences of global warming have a tangible impact on business operations, supply chains, and financial stability. In response to these challenges, the European Union introduced the CSRD directive to enhance transparency and corporate responsibility in sustainable development.

Additionally, new reports are continuously being published, helping us better assess climate risks worldwide. Recently, the "Climate Risk Index 2025" (CRI) was released by the German non-profit organization Germanwatch, which analyzes economic and social data, particularly in the context of climate action assessment. This report evaluates the extent to which countries have been affected by extreme weather events. It includes data such as the number of fatalities and financial losses resulting from these occurrences.

Below are the key findings from the index:

• Increasing Frequency and Intensity of Extreme Weather Events: The report highlights an alarming rise in the number and severity of extreme weather events such as storms, floods, droughts, and heatwaves.
• Severe Human and Economic Losses: Between 1993 and 2022, extreme weather events caused over 765,000 deaths and economic losses estimated at $4.2 trillion.
• Unequal Risk Distribution: While climate change affects all countries, the Global South is particularly vulnerable to its negative impacts, exacerbating existing inequalities.
• Impact on Various Sectors: Extreme weather events disrupt businesses across multiple industries, from agriculture and tourism to infrastructure and finance.
• 2022 – A Year of Extremes: In 2022, Pakistan, Belize, and Italy were particularly affected. Several EU countries—such as Greece, Spain, and Portugal—also faced severe floods, hurricanes, and heatwaves.

Although detailed data for Poland is not yet available, forecasts and ongoing climate changes indicate that this issue also affects our country. A clear example is the flood that hit southern Poland in 2024, with preliminary loss estimates in just three provinces exceeding 4.2 billion PLN. It is essential to recognize that climate change intensifies extreme weather events, leading to significant economic damage.

Climate Risks in the CSRD Directive

The CSRD directive aims to increase corporate transparency and accountability in sustainable development. Climate risks are explicitly addressed within the European Sustainability Reporting Standards (ESRS), particularly ESRS E1, which focuses on climate change. These standards define the specific information that companies must disclose, covering aspects such as greenhouse gas emissions, reduction targets, and adaptation strategies for climate change.

The CSRD directive also introduces the concept of double materiality, meaning that companies must consider both their impact on the environment and the environment’s impact on their business. In the context of climate risks, this means organizations must analyze how extreme weather events or climate-related regulations could affect their operations, supply chains, and financial value.

Integrating climate risks into a company’s overall risk management system is not just recommended but essential. The CSRD clearly states that these risks should not be seen as separate issues but as an integral part of risk management strategies, ensuring they are considered in decision-making at all organizational levels. Furthermore, since the Climate Risk Index does not account for long-term phenomena such as glacier melting or rising sea levels, it is even more crucial for businesses to analyze their activities thoroughly and proactively develop strategies that address climate risks and regulatory requirements.

Are our manufacturing plants at risk of flooding? Are our suppliers dependent on regions affected by drought? Answering these questions today is crucial for ensuring business stability and sustainable growth in the future.