Provisional framework for business vulnerability assessment to decarbonization pathways

Inspired by the latest Intergovernmental Panel on Climate Change’s Assessment Reports (IPCC AR5 and AR6), LOCALISED developed its business vulnerability assessment framework to reflect the latest knowledge in the field of climate change risk assessment.

Using the IPCC Risk Framework, the risk imposed by decarbonization pathways to regional businesses and industries can be calculated through a circular process starting with the identification of hazard as a set of environmental, economic, and social changes induced by the pathways. The vulnerability then will be calculated along different dimensions such as energy demand, labour, raw materials, demand, supply, logistics, final output, emissions, and the geographic location of the business entity.

This framework allows LOCALISED to investigate the impact of downscaled decarbonization pathways on businesses and industries in terms of their exposure to direct and indirect changes in their environment, emissions, energy input, supply of raw material, and demand. Businesses may choose to respond differently to such changes depending on their sensitivity and vulnerability.

LOCALISED is in the process of identifying and engaging with key business stakeholders in order to co-design the vulnerability index tailored to the needs and ambitions of each business sector. The vulnerability assessment helps businesses in identifying their sensitivities and strengths compared to their peers and to pave the way for strengthening their competitiveness.