Embracing climate resilience in business: Antoine Oger, IEEP

How will European policy be able to provide frameworks to reduce climate risk and provide a more resilient economy? 

It works in two directions, both a bottom-up and a top-to-bottom approach. Bottom-up, across Europe, different regions, operators, and citizens are facing very different types of risk. These experiences can be pushed upward to the EU-institutions, which have the capacity to aggregate them into knowledge, data points, etc. Upon that, the EU can continue to build and provide economic, social and environmental impact assessments. In turn, top-to-bottom, these can be deployed into legislation, strategies, a framework, to be implemented in the member states.

This approach has two main advantages. One, it’s as informed as possible. The best available scientific knowledge is driving these frameworks.
Secondly, it provides a benchmark. Which doesn’t mean: a one-size-fits-all to implement exactly the same for everyone. Because again: different regions, different people will face different risks. But it does provide a benchmark, structures, a framework in which member states, and eventually local governments, citizens, and businesses can actually work.

How do you expect the upcoming changes in sustainability reporting (CSRD, omnibus package and so on) to impact the urgency for the private sector to take action on addressing and reporting their climate related risks?

At the moment, I think we’re facing three different kinds of evolutions. And from an environmental perspective, some of them are good.

First of all, there is the short term political gain. For instance, the proposal to delay for businesses the implementation of a measure by two years. From a climate risk perspective, that makes no sense, because the situation will be the same in two years. A business needs to plan its investments more than two years ahead, and the climate is not going to change in two years. This approach is not entirely useless, because businesses can take more time to prepare a bit better for what might come. But it has very limited gains.

Secondly, there is the very important aspect of simplification, a fair objective indeed. As we have mentioned, from a bottom-up approach we can identify a lot of data points based on the best scientific knowledge. Though this is good practice scientifically, to abide by all the data demands of the EU might be hindering the capacities of businesses, local authorities and other operators. It is extremely hard to collect the data, and it is getting harder still. The more data points you have to report on, the harder it is to collect the data. At the end of the day, you reach a point where it becomes counterproductive. Because it takes too much time, too much effort.

And as a business, you have other priorities to deal with. Including adapting your operations to climate change, which you may not be able to, because you spend all of your time reporting. So, the absolute priority for the EU institutions right now, is to find that sweet spot where we get the data, the required knowledge to actually make a difference and drive change, but are not hindering the actual operations, are not overburdening the businesses with something that becomes counterproductive. Finding that balance is extremely hard.

So, thirdly, at the moment the EU is buying a bit more time to raise the threshold of regulations that will impact companies. I mentioned overburdening: a company with an income of a billion, 7000 employees in 30 countries and offices all over the world will have vastly different capacities to adapt or to report on new requirements, than a locally base SME in Brussels, for instance, with three people working on the matter. So eventually, it’s also a question of raising the threshold upon which companies would be required to report on all of these environmentally related matters.

And that can make sense, as arguably bigger companies are the major drivers of impact.
So they should stay in scope, whereas the smaller companies risk much quicker to reach that point I mentioned before, where it becomes counterproductive.