In the context of climate change, European companies are faced with many strategic questions about how to grow and plan for the future. Which city should they choose to set up a store? How can they comply with new regulations on disclosure of climate risk exposure? To help companies and answer their questions, Valentin COURQUIN, a doctoral student at LAMPA on the Arts et Métiers campus Arts et Métiers and research assistant atESSCA in Angers, is studying how climate change will impact European companies.
An industrial systems engineer specializing in meteorology and climate science, Valentin Courquin has been passionate about the climate since childhood. With 7 out of 10 companies worldwide exposed to climate hazards and a 35% increase in extreme weather events in Europe over the past 10 years, businesses are facing a major ecological and economic challenge.
"I realized that there was a real need to assess the impact of climate change on businesses as it accelerates. They will have to adapt and anticipate in order to avoid the worst-case scenario, which is the interruption of their business," explains Valentin.
This is the focus of his thesis, which requires preliminary research and reflection on the management of climate and financial data before building impact models. To do this, Valentin is relying on his thesis advisor Amine AMMAR, Deputy Director of LAMPA, and his thesis supervisor at ESSCA in Angers, Miia Chabot, professor of finance.
Searching for data... yes, but which data?
Working on the impact of climate on the economic activity of European companies also means, above all, searching for the right data! What weather conditions affect a company, what is the financial risk to which it is exposed... How can this risk be measured?
The core of Valentin's work is to assess the financial impact of climate hazards on businesses: anomalies (temperature deviations from 30-year averages) and extreme events such as storms or floods. This is known as physical climate risk...
We must help companies understand this risk in order to help them adapt and become more resilient over the coming decades. Itmay seem far off , but ultimately there is a severity to climate phenomena that is very much present today, explains Valentin.
Collecting climate and financial data: what for?
Collecting climate data (temperatures, precipitation, etc.) will enable the creation of climate indicators (e.g., the number of hot days in a year or the consecutive number of days of drought). Financial performance indicator data from companies will also be collected, such as data from annual reports. This will enable impact models to be established to link climate to the economy. Based on past data, the challenge will be to extrapolate future projections, also taking into account data from the IPCC, which assesses climate change. In terms of company data, Valentin will identify their specific characteristics at the level of a sector of activity or a territory. For example, a business will be exposed differently depending on whether it is located by the sea in France or in the mountains in Switzerland. Valentin will also use maps of company locations at the European level to select climate data appropriate to the specific activities of the companies. "I will use data from weather stations and grid data with very high resolutions and targeted geographical coordinates. For example, I work with resolutions of 20 km²."
Create a platform with the help of artificial intelligence
After this stage of data collection, analysis, and model creation, Valentin wants to build an IT platform with the help of artificial intelligence. This platform will enable companies to measure their climate risks and learn how to adjust their practices to better adapt.
Today, companies are required to assess their exposure to non-financial risks, as well as climate risks, with the emergence of new regulatory frameworks such as the CSRD (Corporate Sustainability Reporting Directive). Many companies are assessing their exposure and impact on transition risk (e.g., greenhouse gas emissions reporting or zero-carbon policies), but companies are not required to assess their exposure to physical risks. However, this will happen with the emergence of new regulatory frameworks based on recommendations such as those of the TCFD (Task Force on Climate-related Financial Disclosures)!"
Valentin therefore has his work cut out for him. See you in three years to test this new platform that will enable companies to emerge from the climate fog!
