Discussions about the directions of sustainable development in Europe are gaining momentum, and there is no sign that this trend will weaken. Many organizations face challenges related to sustainability reporting in accordance with the new CSRD directive, while employers themselves often question the purpose of such activities. Regardless of the nature of their operations, every company must take an individual approach to identifying its risks and opportunities. However, some issues are universal and require special attention. These are climate-related risks. Extreme weather events, rising sea levels, droughts, and other consequences of global warming have a real impact on business operations, supply chains, and financial stability. In response to these challenges, the European Union introduced the CSRD directive, aimed at increasing transparency and corporate responsibility in sustainability matters.

Additionally, new studies are continually published, helping us better assess climate risks worldwide. Recently, the "Climate Risk Index 2025" (CRI) report was released by the German non-profit organization Germanwatch, which specializes in analyzing economic and social data, particularly regarding climate action assessment. The report’s goal is to analyze the extent to which countries have been affected by random events linked to current weather phenomena. It is important to note that the data includes figures such as the number of fatalities and the financial costs incurred due to such events.

Here are the key findings included in the index:

• Increasing frequency and intensity of extreme weather events: The report documents an alarming rise in the number and strength of extreme weather events such as storms, floods, droughts, and heatwaves.
• Massive human and economic losses: Between 1993 and 2022, extreme weather events caused the deaths of over 765,000 people and economic losses estimated at $4.2 trillion.
• Uneven distribution of risk: Although all countries are affected by climate change, Global South countries are particularly vulnerable to its negative impacts, deepening existing inequalities.
• Impact on diverse sectors: Extreme weather events disrupt business operations across various sectors, from agriculture and tourism to infrastructure and finance.
• 2022 – a year of extremes: In 2022, Pakistan, Belize, and Italy were particularly hard hit. Several EU countries, including Greece, Spain, and Portugal, also faced severe floods, hurricanes, and heatwaves.

Although we do not yet have such detailed data for Poland, by analyzing forecasts of future events and observing ongoing changes, we can conclude that this issue also affects our country. A prime example is the flood that struck southern Poland in 2024. Preliminary estimates of losses in just three voivodeships exceeded 4.2 billion PLN. It is important to remember that climate change intensifies the occurrence of extreme weather events, which translates into real economic losses.

Climate Risks in the CSRD Directive

The CSRD Directive aims to increase transparency and corporate accountability in the area of sustainability. A central element where climate risks are reflected is the European Sustainability Reporting Standards (ESRS), particularly the ESRS E1 standard, which focuses on climate change. These standards specify the information that companies are required to disclose, covering a broad range of data — from greenhouse gas emissions and reduction targets to climate adaptation strategies.

The CSRD Directive also introduces the concept of double materiality, meaning companies must consider both their impact on the environment and the impact of environmental factors on their business. In the context of climate risks, this means organizations need to analyze how extreme weather events or climate-related regulatory changes may affect their operations, supply chains, and even their financial value. Integrating climate risks into the company’s overall risk management system is not only recommended but essential. CSRD explicitly emphasizes that these risks should not be treated as a separate category but as an integral part of the risk management strategy, ensuring they are considered in decision-making processes at all organizational levels.

Moreover, considering that the current Climate Risk Index does not fully account for long-term phenomena such as glacier melting or sea level rise, it becomes even more important to thoroughly examine organizational activities and proactively prepare strategies that incorporate climate risks and comply with relevant regulations. Are our manufacturing facilities exposed to flooding? Are our suppliers dependent on regions affected by drought? These questions need to be answered today to ensure the company’s stability and sustainable growth.

Author: Zofia Nocoń (Junior ESG Specialist at ESG Institute)

ESG Institute Sp. z o. o.

info@esginstitute.eu

Rondo ONZ 1,
00-124 Warszawa

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