What will the collapse of Atlantic currents mean for the Nordics?

/in , /by

Atlantic currents redistribute heat and cold. If it stops working, the results could be catastrophic. Source: Woods Hole Oceanographic Institution

New research suggests the risk of a breakdown in North Atlantic currents to be nearly four times higher than previously thought.

The most recent IPCC report said that the collapse of the AMOC was less than 10% likely before 2100. A new study, Shutdown of northern Atlantic overturning after 2100 following deep mixing collapse in CMIP6 projections, examines a longer timeframe and says that the chances are much higher. In the best-case scenario, with lower carbon emissions, a shutdown of the northern AMOC is still 25% likely by 2300. If emissions continue to increase, as they are currently, the likelihood of a shutdown jumps to 70%.

The Atlantic Meridional Overturning Circulation (AMOC) is the main ocean current system in the Atlantic. It brings warm salty water to Northern Europe from around the Gulf of Mexico (hence the name Gulf Stream) and returns cold less-salty water to the south.

As GHG emissions continue, the planet warms and ice sheets melt, releasing fresh water into the oceans. It is believed that this influx of fresh water will disrupt the entire system, breaking this process which redistributes heat to the North.

There is uncertainty here, because scientists aren’t sure 1) if AMOC will collapse, 2) when it will collapse and 3) what will happen if it does. Generally, current research suggests the Nordics will suffer from the following.

  • Overall cooling, particularly in the winter
  • More intense cold extremes; winter storms will strengthen
  • Larger day-to-day temperature fluctuations

Some of the possible results of these changes include:

  • Greater energy needs for heating
  • Higher maintenance costs on buildings, vehicles and infrastructure
  • More likelihood of power failures
  • Higher insurance costs
  • More transport disruptions
  • Damage to agriculture, aquaculture and forestry industries

Climate change really does have a financial cost to people, businesses and society. Any company doing long-term planning should be taking these increased risks and costs into consideration.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com

How will America’s gutting of climate science impact businesses?

/in , /by

Artist rendition of the Orbiting Carbon Observatory satellite OCO-2. Image by John Howard / JPL.

The United States is probably the world’s largest contributor to global climate change science and research. It provides a big chunk of ground-based data and is the largest single provider of satellite data. About a fifth of climate modelling and research comes out of American institutions. Much of this is on the chopping block.

The current American administration is proposing huge budget cuts to the National Oceanic and Atmospheric Administration, NASA, the National Science Foundation, the Environmental Protection Agency and many academic research grants and programmes focusing on the climate. Perfectly good satellites, like the Orbiting Carbon Observatory instruments, are planned to be destroyed, according to NPR. NASA alone will have €2.9 billion cut from its science budget.

The results of this will include the loss of critical data which is used by everyone from weather forecasters to farmers to insurance companies. In corporate reporting, many companies rely upon these datasets for their disclosures, risk analysis and transition plans. Much of the high-quality data collected by American government institutions is open access, free for anyone to use. Alternative sources, if even available, could be expensive and less reliable.

In recent years America has chosen to stop being a global leader in many areas. Could others pick up the slack?

China has its Fengyun and Gaofen series of satellites, which focus on meteorology and monitoring, respectively. India also has a fleet of modern Earth-observation satellites. Europe has EUMETSAT, the agency for monitoring weather, climate and the environment from space. It has a budget of €763 million, which is only about 23% of NASA’s science budget even after the cuts.

Some private companies, such as MSCI, S&P and a partnership between Intercontinental Exchange and Dun & Bradstreet, will sell climate data to businesses. Overall, though, these sources are likely to be poor substitutes compared to what we used to get.

Although the proposed dismantling of America’s climate science infrastructure has not yet been approved by Congress, it would be safe to start planning for the worst.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com

EFRAG simplification 2

/in , , /by

EFRAG is working to make corporate sustainability reporting simpler and, in some cases, clearer and more relevant.

I’ve had the opportunity to go through the proposed new ESRS 2 and ESG standards. Again, this is not a comprehensive overview but some points which I found interesting.

Less granular approach to narrative disclosures

I like this change, as I like the narrative side of the reports.

Options for the disclosure of anticipated financial effects

I’m not sure about this one. The sustainability report is supposed to complement the financial report, but the problem is that quantifying financial effects is not easy. There is a lack of mature methodologies as well as concerns from some companies about disclosing commercially sensitive information. EFRAG has specifically asked for feedback on this, and I am interested to see what preparers and users think.

More focused reporting

Good; some of the previous language was too vague and all-encompassing.

Flexible approach to granularity and in terms of the level of aggregation

Note this does not apply everywhere, but it does add some power back to the report writer.

Voluntary datapoints are deleted

At first glance, the deleted datapoints were not uniform. For instance, I saw very little cut from the beginning of E1 Climate Change, but quite a bit from E2 Pollution. I began to carefully list and count the deleted datapoints, but there is still a lot of ambiguity.

Clarity between direct data and estimates

Another good change; I use many estimates for VSME reports for small businesses.

Public consultation

EFRAG has a questionnaire for preparers and users to give feedback on the proposed changes. The deadline for submission is 29 September 2025.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com

First thoughts on the ESRS 1 simplification

/in , /by

The proposed changes aren’t exactly cutting the Gordian Knot, but they are welcome improvements.

EFRAG has released their proposed simplification of ESRS. Here are my initial thoughts of the proposed ESRS 1 amendments.

EFRAG has boasted that their revision has:

  • Reduced mandatory datapoints by 57%
  • Cut full set of disclosures by 68%
  • Shortened the total length by 55%.

This will not be a comprehensive examination of the changes, but what I find interesting.

Undue cost or effort is clearer (sort of)

The idea is that complying with the CSRD shouldn’t be too big of a burden. ‘Undue cost or effort’ isn’t precisely defined, but we do have some clarifications. Basically, if you already have the information (or should have it), then it shouldn’t be a problem to use it for your sustainability report.

For example, a company might already have the information from:

  • Making their financial statements
  • Operations
  • Setting their strategy
  • Conducting sustainability due diligence
  • Managing impacts, risks and opportunities.

See ESRS Chapter 7.3

Member states could offer limited opt-outs

This is a curious addition in the section regarding classified and sensitive IP. It gives EU member states the ability to give companies the right to limit information if its release could be ‘seriously prejudicial to the commercial position’ of the company, provided the omission does not prevent a good understanding of the company.

There was already provisions for classified information, so it is interesting that this new section was added for individual countries to opt-out.

See ESRS Chapter 7.8

Sub-subtopics simplified

There has been some news about EFRAG cutting the sub-subtopics, but many were not exactly deleted. Here’s a simplified example.

Old

  1. Own workforce
    1. Working conditions
      • Secure employment
      • Working time
      • Work-life balance
      • Adequate wages

New

  1. Own workforce and workforce in the value chain
    1. Working conditions (adequate wages, work-life balance, working time, secure employment)

In this case, the sub-subtopics weren’t eliminated at all; they were simply moved up to the subtopic level. There isn’t anything wrong with this, but it is a bit disingenuous to claim this will reduce the burden on companies. The only thing this might change is the report’s layout.

See new Appendix A.

Miscellaneous improvements

  • Less unnecessary direct data collection from value chain
  • Simplify rules for M&A
  • Common sense relief for metrics
  • Executive summary allowed

I worked on several executive summaries which were unofficial, but now the rules specifically allow them as part of the reports.

Conclusion

Overall, I like what EFRAG has done. I just mentioned a few changes that caught my attention, but there are many other updates, as well as a big effort to simplify the language, clarify ambiguities and reorganise the information. I’ll follow up this post with one about ESRS 2.

Of course, keep in mind that these are only proposed changes. Nothing is official yet.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com

Swedish companies lead the way with SBTi commitments

/in , , /by

I used the SBTi dashboard to see how companies in the Nordics compare. It is probably no surprise that Sweden leads the way, but I didn’t expect Norway to be in last place.

  • Sweden: 482
  • Denmark: 306
  • Finland: 191
  • Norway: 157
  • Iceland: 12

In fact, Swedish companies make up for 42% of all 1,148 Nordics who have set targets or commitments.

If we compare these commitments to the relative size of our economies, Sweden still leads. Probably the big surprise to me is Norway. By many measures, Norway leads the world in sustainability initiatives. So why are they in last place here?

An interesting study titled Climate change adaptation in Norwegian businesses – Awareness, integration and barriers from last year doesn’t address SBTi directly, but looks at perceived barriers to climate change adaptation in Norwegian companies. Their analysis shows the main problems are:

  1. Costs
  2. Uncertainty related to effectiveness
  3. Staffing
  4. Lack of knowledge and competence
  5. Unclear regulations

Maybe the real problem is how net zero doesn’t conceptually work with oil and gas, which makes up about 20% of Norwegian GDP. The good news is that at least two of the biggest Norwegian firms, Kongsberg Gruppen and Telenor, have made SBTi commitments. SBTi just released their new standards for financial institutions, which should encourage other industries to commit.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com