This site uses cookies to provide you with a more responsive and personalised service. Please read our PRIVACY POLICY for more information on the cookies we use and how to delete or block them.
  • Climate Risk of Economic Sectors
Case Study:

Climate Risk of Economic Sectors

15 February 2023

Ákos Veisz , ESG Advisory | Managing director |

The risks associated with climate change are addressed in the paper, since they are already affecting business performance and operations and will have an even greater impact in the future. The paper aims to demonstrate how climate risk affects business operations across a variety of industries, and to outline the reasons why firms must manage climate risk. Different industries are impacted by climate change in various ways and to different extents, and there are variations in sectoral impacts by region as well. The study presents the results of the European Central Bank’s 2022 climate risk stress test, followed by an analysis of the effects of domestic sectors based on greenhouse gas emissions. Regulation change will have the greatest impact on high-emitting industries, making them the most vulnerable to the risk of carbon leakage. In Hungary, the sector most exposed to the risk of carbon leakage is manufacturing, followed by electricity, gas, steam and air conditioning, but also transport and storage, agriculture, construction, trade and motor vehicle repair. Physical risks mostly impact industries like agriculture, construction, food production and tourism, whose operations are directly impacted by the weather. A Holmen company example used in the study made clear the necessity for firms to consider long-term processes in business planning and to strive to switch to renewable energy sources. The financial effects of climate risks must be calculated to each industry, and industry players must actively monitor changes in the regulatory environment. Screening and monitoring of supplier partners is necessary, and it is important to engage with a wide range of stakeholders inside and outside the organization.