The Task Force on Climate-related Financial Disclosures (TCFD) reporting requires the analysis of climate and financial risk across a range of sectors, not just banking and finance. We worked with a client with considerable land and asset holdings in Southeast Asia to prepare data for TCFD and other regulatory reporting. The client requested an analysis of the physical and financial risk posed to their hard assets, including mills and offices, and an assessment of the future risk to oil palm production.

Assessing the environmental and climate factors that influence oil palm production was fundamental to formulating an approach that was robust. This enabled us to bring climate model outputs into an agricultural production model for oil palm to test various third-party modelling solutions. It was necessary to test models that, while performing adequately with historical climate information, fell short in their capacity to manage future climate change projections for the range of variables required to model future oil palm production. As a result, we developed a hybrid solution that tested and validated well and could be applied using the historical yield and financial figures held by the client for plantations across diverse landscapes.

Using the different model runs and Shared Socioeconomic Pathways, we were able to generate a plausible range of future production scenarios alongside insights as to the economic impact of future climate scenarios on the business. This data was presented in an auditable format and prepared in a way that make it easy to use in TCFD and other regulatory and internal reporting.

The results opened dialogue with the client on the importance of adaptation planning and the opportunities in managing oil palm production in a way that could mitigate the risks posed by future climate risks while raising the company’s resilience to climate shocks.