Climate change refers to long-term changes in temperature and weather conditions caused, apart from natural causes, by the burning of fossil fuels such as coal, oil and natural gas after the 1800s. Greenhouse gas emissions increased by the burning of fossil fuels cause temperatures to rise and extreme weather events to increase.

The 2015 Paris Agreement set the goal of keeping the average global temperature increase below 2°C above pre-industrial levels and preferably limiting the increase to 1.5°C. As a result, legal regulations aimed at limiting greenhouse gas emissions and reducing the impacts of climate change, particularly in the EU and many other countries, have begun to affect the policies and activities of countries and the business world.

Within this scope, countries and the business world have made physical risks and transition risks part of risk management, and these risks have gained critical importance for sustainable governance.

Adaptation to climate change is possible by anticipating losses and damages and taking necessary actions on time; long-term resilience is achieved by assessing climate risks, analyzing their impacts, and identifying and implementing strategic actions to reduce those impacts.

With the climate change risk analysis methodology it has developed, CGE Evaluation assesses the magnitude of risks’ impacts on people, assets, settlements, critical infrastructure, value chains and ecosystems, and contributes to identifying appropriate solutions. It ensures that these risks are linked with enterprise risk management processes and relevant committees and included in strategic decision-making processes.

CGE Evaluation’s climate risk analysis and management methodology consists of five basic steps:

1 - Current situation analysis: Identification of current strategies and goals, stakeholders, climate-risk-related policies and procedures, regulatory changes, and factors that may negatively affect corporate sustainability through internal and external analysis, and preparation of a SWOT report.

2 - Scenario analysis: Defining worst-case, ordinary and best-case scenarios by taking into account internationally accepted climate-related scenarios and local scenarios developed for the geographies where the organization operates.

3 - Risk and Opportunity Assessment: Identifying climate risks and opportunities in light of the scenarios, covering the organization’s activities and critical stakeholders in its value chain; creating a risk and opportunity inventory; assessing current and future levels; and planning the actions to be taken.

4 - Determining Risk Tolerance: Determining the acceptable levels of risks, creating risk tolerance definitions, and evaluating response mechanisms that will enable transformation and adaptation.

5 - Identifying Loss/Opportunity Partnerships and Collaborations: Identifying options to prevent or reduce risk-related losses and damages, assessing manageability by considering current and planned actions, and analyzing the costs and benefits of additional actions defined for adaptation.

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