Strengthening Climate Resilience: EY Japan's New White Paper on Physical Risk Identification

In a world grappling with the intensifying effects of climate change, EY Japan, under the leadership of chairperson and CEO Masayasu Takita, has launched an important white paper titled "Practical Risk Analysis and Countermeasures for Natural Disasters for Private Companies: Identifying Significant Physical Risks." This document, published by the Climate Resilience Strengthening Council, aims to assist businesses in recognizing and tackling the critical physical risks that climate change poses.

As severe weather events such as heatwaves and torrential rains increasingly impact business operations, the importance of robust risk analysis has never been more paramount. According to the World Economic Forum's "Global Risks Report 2026," extreme weather phenomena are listed among the top risks for the next decade. Additionally, frameworks like the ISSB's "IFRS S2" and the SSBJ's sustainability disclosure standards have ramped up demands for climate-related analysis and transparency, necessitating a proactive approach to understanding and mitigating physical risks.

The challenges for many companies, particularly medium and small enterprises, are significant. With a diverse range of hazards that compound the effects of physical risks, these businesses often find themselves at a crossroads: unsure of where to begin or how to proceed with risk analysis. The new white paper seeks to address these challenges. Building on its predecessor, which outlined a four-step approach to physical risk analysis (1. Risk Importance Evaluation, 2. Scenario Definition, 3. Business Impact Assessment, 4. Countermeasure Definition), this edition focuses specifically on step one: the evaluation of risk importance.

By proposing a streamlined screening method to prioritize significant risks before a detailed assessment, businesses can better allocate limited resources to the most pressing issues. This practical methodology enables companies to pinpoint the risks that are critical to their operations, thereby facilitating effective strategies for analysis and countermeasures. Furthermore, the insights provided in this white paper can help investors understand how companies evaluate physical risks, fostering more meaningful dialogue and engagement aimed at enhancing resilience against climate impacts.

The Climate Resilience Strengthening Council, which comprises voluntary contributions from various private sector entities, aims to enrich knowledge regarding financial impacts and viable countermeasures to support economic activity in the face of escalating weather-related challenges. This organization anticipates that its efforts will contribute to both individual businesses' climate response initiatives and society's overall resilience.

Koichi Oyama, EY Japan's partner in Climate Change and Sustainability Services, commented on the urgency of this initiative: "In light of the escalating impacts of climate change manifesting as natural disasters, enhancing resilience to such occurrences is imperative for businesses aiming for sustainable practices and increased corporate value. Our council remains committed to sharing valuable insights that bolster the disaster resilience of participating companies."

The white paper is available for download here and provides valuable guidance for businesses aiming to navigate the challenges of climate variability.

The Climate Resilience Strengthening Council continues to welcome the participation of companies and organizations eager to contribute to climate resilience initiatives, fostering sustainable growth and enhancing societal resilience.

For inquiries concerning the Climate Resilience Strengthening Council, please reach out to:
Climate Resilience Strengthening Council Secretariat: [email protected]

About EY

EY is committed to creating sustainable value for clients, members, society, and the planet. By leveraging data, AI, and advanced technologies, our teams are dedicated to supporting clients in shaping their future with confidence while addressing pressing challenges today and in the future. With operations spanning across assurance, consulting, tax, strategy, and transactions, EY delivers services in over 150 countries, powered by industry insights and a network of diverse ecosystem partners.

All in to shape the future with confidence.