XN Clima · ESRS E1 and IFRS S2
ESRS E1 and IFRS S2: physical climate risks, site by site
ESRS E1 and IFRS S2 ask which climate hazards assets and activities are exposed to, over several horizons, and how much value is at risk. The risk engine computes it for every site; the materiality assessment and the disclosure stay with the company.
The standards
Two standards, the same question on physical risk
The revised ESRS E1 (Delegated Regulation (EU) 2026/1563, from financial years 2027) and the ISSB's IFRS S2, into which the TCFD recommendations flowed, both ask for physical climate risks to be assessed with scenarios.
- E1-2
Methodology and exposure
How the company assesses the exposure of assets and activities to climate hazards over the short, medium and long term, and whether each material risk is physical or transition.
- E1-11
Financial effects
The anticipated financial effects, including the carrying amount of assets at material physical risk.
- S2 para. 22
Scenario analysis
The resilience of the strategy, through climate-related scenario analysis.
- S2 para. 29(c)
Vulnerable assets
The amount and percentage of assets or business activities vulnerable to physical risks.
Sources: Delegated Regulation (EU) 2026/1563, ESRS E1 · IFRS S2 Climate-related Disclosures · FSB, the TCFD's work is complete (2023)
The risk engine
The hazards of every site, by scenario and by year
About thirty types of risk per site, each with a class from A to F, for four SSP scenarios and for the years from 2026 to 2100.
What we give
- Acute and chronic hazards per site, classified as in the EU Taxonomy list
- Four scenarios, SSP1-2.6, SSP2-4.5, SSP3-7.0 and SSP5-8.5, from 2026 to 2100
- The value at risk in euros on the asset's value, with the expected annual loss where the method is published
- The export per site, to bring into the company's own tables
With our choices declared
- The materiality threshold from class C upwards is our choice, to compare with the company's own
- Some methods are xNatura estimates, declared as such, not published methods
Stays with the company
- Transition risks
- The materiality assessment and the adaptation plan
- The disclosure and its assurance
FAQ
Questions on ESRS E1 and IFRS S2
Is the TCFD still the reference?
The TCFD completed its work in 2023 and its recommendations flowed into the ISSB standards: today the reference is IFRS S2.
Do you also compute transition risks?
No. The engine computes physical risks; transition risks, tied to rules, markets and technology, stay with the company.
Is the value at risk a balance-sheet figure?
No. It is an estimate on the asset value you give us, per risk, scenario and year: data for the analysis, not the carrying amount E1-11 asks the company to disclose.
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