Climate risks and consequences of climate change

The Climate Change Conference in Paris in 2015 was the catalyst that put climate change and its consequences squarely on the risk agenda for decision-makers. However, it is only in the last five years – following the EU Green Deal – that this topic has occupied the No.1 spot in the risk agenda, not only among C-suite executives but also among the general public and politicians.

So far, the public discussion and regulatory deliberations have primarily focused on climate action. Reducing greenhouse gas emissions is seen as the key to mitigate climate change and its consequences. Since the Paris Climate Accords, there has been a far greater awareness of extreme weather events such as heat waves, intense rainfall, droughts and storms.

Businesses must now grapple with challenges related to protecting themselves against climate risks and mitigating the consequences of climate change that have already arisen. The discussion about broadening the perspective into a three-pronged approach comprising of climate action, protecting against climate risks, and mitigating the consequences of climate change is something relatively new.

For businesses, climate change and its consequences will become a matter of broad strategic interest rather than just associated with regulatory compliance, and each and every company will have to undergo a “Trial by ordeal” to come to terms with it.

For the study “Climate risks and consequences of climate change – Study on the potential of German industry and solutions based on innovation and changes to portfolios”, KPMG and the VDMA (German Engineering Association) surveyed 235 decision-makers from businesses in Germany. The analysis demonstrates firstly how businesses currently assess climate risks and factor them into their strategies, and secondly how they are currently positioned in the context of reducing the consequences of climate change. We also asked what contributions businesses are able to make – now and in the future – to reduce the consequences of climate change. The results first and foremost reflect the self-assessment of the survey respondents, which are industrial firms active in mechanical and plant engineering, and the automotive industry.