1 Introduction

Climate change and its regional impacts have increased in significance and visibility in recent years (IPCC 2023; IPCC 2022; 2021; 2018; Umweltbundesamt (UBA) 2023; Jacob et al. 2021; Kahlenborn et al. 2021). For instance, the average near-surface air temperature has risen notably from 1881 to present, with temperatures in Germany surpassing the global average (IPCC 2021; Kaspar et al. 2020). Moreover, shifts in precipitation patterns have become evident. Specifically, there has been a rise in winter precipitation, which is less likely to fall as snow, along with drier summers (Deutschländer and Mächel 2017; DWD 2017). Another important impact of climate change is an increased occurrence of heavy rainfall events, already observable on a regional scale. The year 2018, in particular, witnessed a significant number of events, accompanied by prolonged periods of minimal precipitation and heightened evaporation due to rising temperatures (Jacob et al. 2021). The surge in heavy rainfall events aligns with the physical correlation that rising air temperatures enable higher moisture absorption by the atmosphere, leading to more convective precipitation. Additionally, it is to be expected that the frequency of consecutive dry days in summer increases, while a trend towards more intense heavy rainfall events emerges (Giorgi et al. 2019, 2011).

The impacts of climate change also extend to economic consequences, notably in terms of damage costs. A substantial part of this damage is attributable to extreme weather events, such as extreme heat, droughts, floods, or heavy rainfall, leading to infrastructure damage, rising healthcare costs, and crop failures (Trenczek et al. 2022a, 2022b). River floods, heavy rainfall, and flash floods have been the costliest extreme weather events in Germany to date, affecting not only buildings and transportation infrastructure but also disrupting industry and commerce, including flooded production facilities and disrupted supply chains (Trenczek et al. 2022a, 2022c).

Considering the expected impacts and challenges of climate change, it is evident that there is a pressing need to prioritize climate mitigation, adaptation, and sustainability at all levels. This transformation is necessary to achieve a resource-efficient, sustainable, climate-neutral, and climate-adapted society (Jacob et al. 2021).

Furthermore, companies face an increasing demand in non-financial reporting, such as the incorporation of climate change scenarios into risk analyses, and the need for substantial contributions to the environmental goals according to the EU Taxonomy Regulation (Attoh et al. 2022; Bals et al. 2022, European Parliament and Council of the European Union 2020; TCFD 2017).

Currently, companies primarily focus on disclosing historical CO2 emissions, leaving notable gaps in the incorporation of forward-looking climate data and scenarios into reporting and long-term planning strategies (Attoh et al. 2022; Lessmann and Schütze 2022; Schütze 2022; Loew et al. 2021; Hurrelmann et al. 2018; Freimann et al. 2014). Hence, alongside climate mitigation, a scientifically sound integration of potential future climatic changes and their related opportunities and risks is gaining higher importance. Additionally, methodologies have to be developed to combine this information with local data in order to integrate these different information into companies' risk management, strategic planning, and reporting (TCFD 2017; Mahammadzadeh 2011).

A main challenge in this context is to overcome the "Tragedy of the Horizon", as highlighted by Mark Carney already in 2015. Carney (2018; 2016; 2015) delves into this conflict between short-term and long-term planning horizons within the business context, linking this dilemma to the sustainability challenge of climate change. He summarizes that the devastating impacts of climate change will extend beyond the conventional planning horizons of most stakeholders, imposing costs on future generations for which the current generation lacks direct incentives to address.

Carney argues for the disclosure of forward-looking, qualitative and quantitative information that empowers investors to gauge how climate-related factors could impact a company. Additionally, he suggests assessing the resilience of corporate strategies through regularly carried out scenario analyses in order to facilitate the transition to a low-carbon and resilient financial system. Thereby a scientifically sound forward-looking disclosure of climate-related financial data is key (Carney 2018; 2016; 2015; Weber 2018; TCFD 2017; CDP Worldwide 2017).

Against this overall background, the paper presents and discusses the methodological development and concept of an innovative approach which has been developed in close collaboration with companies. Its aim is to empower decision-makers within companies to assess climate change-related impacts relevant for the company and to help them consider climate change information in decision-making processes. It addresses current need for research dealing with the complex interdependencies of environmental challenges, regulatory framework condition as well as microeconomic decision-making and management processes in companies. Based upon this approach, companies can identify suitable adaptation measures to prevent or mitigate potential harm from extreme weather events and other impacts of climate change. Hence, it addresses a current gap, as many decision-makers lack the methods and expertise required to integrate climate change information into their adaptation strategies and actions (Attoh et al. 2022; Loew et al. 2021; Hurrelmann et al. 2018).

The paper is structured as follows: Chapter 2 outlines the current framework conditions as well as need for research and action regarding the integration of climate change information and scenarios. Chapter 3 presents and discusses the transdisciplinary co-creation approach carried out together with decision-makers in companies. Chapter 4 highlights the results of this co-creation process by introducing a novel process model approach to integrate climate change information into corporate processes. Chapter 5 provides a summary and conclusion.

2 Regulatory framework conditions and corresponding need for research

Current research has predominantly focused on categorizing corporate strategies related to climate change and identifying the factors that drive or impede the integration of climate-related decisions into strategic planning. In the realm of forward-looking climate reporting, a fundamental distinction is drawn between physical risks and transitory risks. The former encompass the immediate and long-term repercussions of climate change, primarily stemming from extreme weather events and enduring shifts in precipitation patterns and seasons (Loew et al. 2021; Hurrelmann et al. 2018). In contrast, main parts of transition risks emerge as a result of evolving legal regulations as part of the transition towards a climate-friendly economy or due to changing customer demands for environmentally friendly products and services (Reisinger et al. 2020).

In 2021, a study analyzed to which extent climate-related risks are currently reflected in corporate reports and the accompanying disclosure of information in Germany. The analysis reveals that companies perceive themselves as more susceptible to transitory risks than to physical risks arising from climate change. The potential financial impacts of transitory risks and their likelihood of occurrence are generally assessed as being higher than the corresponding consequences of physical climate change impacts. This phenomenon is attributed to the fact that physical climate risks often manifest over a medium to long-term horizon and that the impacts of physical changes are complex to apprehend and challenging to predict (Loew et al. 2021). Klepper et al. (2017) also carried out surveys gauging subjective assessments of corporate vulnerability to climate change impacts, with the companies surveyed assigning greater significance to indirect compared to direct physical effects. The most substantial challenges were perceived in logistics, as well as in investment and financing sectors.

Another explanation for the influence of transitory risks is that, in the realm of political processes and reporting guidelines, physical risks have hitherto been accorded a relatively lower or balanced status compared to transitory risks (Loew et al. 2021). This is where new mandates for the evaluation and consideration of climate-related risks, stemming from recommendations and requirements issued by the Task Force on Climate-related Financial Disclosures (TCFD 2017), the EU Taxonomy Regulation (European Parliament and Council of the European Union 2020), and the Corporate Sustainability Reporting Directive (CSRD) (European Parliament and Council of the European Union 2022), come into play. The EU Taxonomy Regulation, operating under the umbrella of the European Green Deal, should be perceived as an integral component of a broader framework for fostering sustainability within the EU financial landscape (European Union 2023a, 2023b) (see Fig. 1).

Fig. 1
figure 1

The EU Taxonomy Regulation in the EU Sustainable Finance Framework (own illustration)

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The Sustainable Finance Disclosure Regulation (SFDR) governs disclosure obligations within the financial services sector, while the CSRD mandates sustainability information disclosure for companies. To ensure consistent definitions, the EU Taxonomy Regulation establishes a system for classifying environmentally sustainable economic activities and imposes disclosure requirements on both companies and financial market participants (European Union 2023b). Consequently, it serves as a bridge between these two realms.

Additionally, the CSRD underscores the concept of double materiality, encompassing two perspectives. First, the environmental and climate impacts of a company's operations, and second, the potential repercussions of sustainanability aspects and climate change on the company itself (European Parliament and Council of the European Union 2022). As Täger (2021) describes, this perspective expansion encompasses not only climate-related impacts on the company but also the company's impacts on the climate or any other facets of sustainability.

The CSRD underscores a growing demand for sustainability-related information, attributed to evolving climate-related risks for companies and increased investor awareness of the financial implications associated with these risks (European Parliament and Council of the European Union 2022). Hence, stakeholders have a strong interest in disclosures regarding physical and transitory risks, resilience, and a company's strategies for adapting to various future climate change scenarios (European Parliament and Council of the European Union 2022).

The EU Taxonomy Regulation provides a classification system applicable to the EU framework. It serves two primary purposes: a) providing clarity to companies and financial market participants on economic activities deemed as being environmentally sustainable, and b) enabling investors to identify and invest in sustainable assets.

Furthermore, it supports the transformation of the European economy and facilitates the achievement of the European Green Deal objectives, by incorporating six environmental objectives, including climate change adaptation, and four corresponding requirements for economic activities to be recognized as environmentally sustainable within the taxonomy framework (European Union 2023b; European Parliament and Council of the European Union 2020). Article 3 of the Regulation stipulates that the economic activity must:

  1. 1)

    Significantly contribute to at least one of the six environmental objectives outlined in Article 9 of the EU Taxonomy Regulation.

  2. 2)

    Avoid causing significant harm to the other environmental objectives.

  3. 3)

    Comply with specified minimum human rights and labor law protection standards.

  4. 4)

    Meet specified technical screening criteria.

Given that the future impacts of climate change extend beyond day-to-day operations, it becomes imperative to engage in a sound discussion about climate change's effects, taking into account various climate scenarios. Such an approach is key for securing the long-term sustainability of business models and strategic direction (Bundesministerium für Wirtschaft und Klimaschutz (BMWK), 2022; European Parliament and European Council 2022; Laranjeira et al. 2021). Nevertheless, there are still considerable impediments to the implementation of forward-looking reporting. Loew et al. (2021) highlight, that only four companies out of 20 analyzed DAX-companies incorporate climate change scenarios into their reporting, and none of these companies provide insights into their climate-related resilience based on scenario discussions. In fact, only a handful of companies are even using climate change scenarios, let alone a comprehensive array of scenarios.

Moreover, challenges associated with climate risk analysis required under the EU Taxonomy Regulation can be inferred from the findings of the EU Technical Expert Group on Sustainable Finance (TEG) during the development of the EU Taxonomy Regulation and technical assessment criteria. The final report on the EU Taxonomy Regulation (TEG 2020a), the annex on methods (TEG 2020b) as well as UBA (2022) offer recommendations and examples for reporting on the taxonomy-compliant share of corporate activities. The expert group acknowledges that an adaptation taxonomy, unlike climate change criteria, necessitates a process-oriented approach that takes into account context-specific factors to determine whether an economic activity genuinely contributes to adaptation (TEG 2020b). Furthermore, the TEG on the EU Taxonomy Regulation highlights the need for guidance on climate risk assessment, decision-making in the face of uncertainty, and the evaluation of various climate adaptation options, all of which should aid in implementing the taxonomy (TEG 2020b).

Both the Sustainable Finance Advisory Council of the German Federal Government and the TCFD have identified the issue of short-term reporting horizons, a concern similarly raised by Carney. Consequently, in addition to short-term disclosures, medium-term (1–5 years) and long-term (10–20 years) outlooks are recommended, especially concerning climate change and sustainable development (Loew et al. 2021; Sustainable Finance-Beirat der Bundesregierung 2020; TCFD 2017). This presents another reporting challenge, by considering the emergence of medium- to long-term impacts of climate change and the costs deferred into the future in the form of limited or depleted options for the use of resources (TEG 2020b).

The current situation that key figures and targets for climate change adaptation are yet to be factored into reporting (Loew et al. 2021) underscores the need for companies to receive support in addressing the impacts of climate change. Brüggemann/Grewenig (2023) emphasize that reliance on past experience for risk assessment can lead to an underestimation of the impacts of climate change for a company. This underscores the importance of engaging with future-related information to prevent such misjudgments.

3 Methodology

3.1 Methodological background regarding stakeholder interaction

Taking into account the climate change-related challenges for stakeholders described above, a combined research approach based on transdisciplinarity and co-creation has been applied as part of our work with stakeholders, which can be assigned to the field of climate services (Schuck-Zöller et al. 2023; Brasseur/Gallardo 2016; Vaughan/Dessai 2014). Thus, the general focus of these approaches is on understanding practical user requirements and orienting research around these needs, whereby an objective, neutral, and transparent approach based on key scientific principles is used. Two main concepts within the framework of so-called "integrative research" (Schuck-Zöller et al. 2023) are the concept of transdisciplinarity, which originates primarily in the environmental and sustainability sciences, and the approach of co-creation, which has been developed in economics (Schuck-Zöller et al. 2023). Mauser et al. (2013) bring both terms together and describe—rather implicitly—the ideational approach as transdisciplinary and the joint research activities as co-creation.

The approach of transdisciplinarity describes research that goes beyond disciplinary and interdisciplinary research and aims at practical phenomena, problems or challenges (Hirsch Hadorn et al. 2008; Jahn 2012) and their management (Biggs et al. 2021). The transdisciplinary discourse and research has developed since the 1990s (Vilsmaier/Lang 2014). The potential of this form of research is seen in capturing complex problems by taking into account different – scientific as well as lifeworld – perspectives and enabling a linkage of practical and scientific knowledge (Biggs et al. 2021).

The basic concept of co-creation goes back to Prahalad and Ramawamy (2000, 2004a, b) and has its roots in economics. There, it is understood as a process in which a company creates a competitive advantage together with its customers. There are different definitions and elaborations of the basic concept, but the following five points are key (Vorbach et al. 2017; Albinsson et al. 2016; Ramaswamy and Gouillard 2010): co-creation i) allows an active exchange with customers, ii) opens a new basis for innovation, iii) is a process initiated by the company, iv) enables a win–win situation for customers and company, and v) establishes a strong and sustainable relationship between customers and the company. In the last decade, the term has been increasingly adopted from economics into other research fields (Steger et al. 2021). Already in 2013, Mauser et al. transferred it to integrative research on global change. With regard to the field of climate services, this approach can be applied in different ways and focusing on different target groups. In each case, it is important that the work of groups of actors from practice and science at eye level ensures that the requirements of the practice partners are understood and also implemented accordingly in the scientific product development. The development process can take place in different steps. The joint methodological development by scientists and practice partners in general runs through the entire process in iterations. At the beginning, usually a needs assessment is carried out to determine which situations, processes and structures are or will be directly or indirectly affected by climate change. In the following steps, scientific findings, local knowledge and practice-relevant expertise should be linked in an application-oriented manner to finally develop a scientifically sound as well as practical and user-oriented climate service product (Groth and Seipold 2020).

As part of our cooperation with stakeholders from different companies – in more detail described in the following section – we mainly focused on workshops as – also for non-scientist — easily understandable and well accepted ways of transdisciplinary work with stakeholders (Steger et al. 2021).

Thereby we considered and addressed key obstacles to the integration of climate adaptation into strategic corporate processes already identified in the literature, including: i) knowledge gaps, ii) a lack of awareness, iii) insufficient human resources, iv) inadequate governance structures (Herrmann/Guenther 2017), and v) a dearth of information regarding the type, likelihood, and timing of climate change as well as the sustainability-related implications of climate change. We also referred to main phases common to most risk management guides, including: 1) identifying the problem, assessing impacts, vulnerabilities, or risks, 2) selecting potential adaptation measures, 3) evaluating measures (comprising four sub-phases: 3a. determining the assessment approach. 3b. establishing assessment criteria, 3c. collecting data, 3d. prioritizing measures), 4) implementing measures, 5) monitoring and evaluating (Hurrelmann et al. 2018).

An additional insight from the literature regarding the collaboration with practitioners shows that many barriers manifest between Hurrelmann et al.’s phases 1 and 2 (Groth et al. 2022; Groth and Seipold 2020, 2017). Additionally, identifying pertinent climate change impacts for specific locations or industries amid the multitude of possible consequences, and therefore subsequently devising and implementing appropriate measures is challenging for companies (Schlepphorst et al. 2023).

Regarding the requirements for climate risk and vulnerability analysis according to the EU Taxonomy Regulation, we considered the requirement, that these should be based on appropriate and state of the art climate information (European Commission 2021a, Annex II and Appendix A to Annex I and II). The assessment requires a robust analysis of available climate data and projections for future climate scenarios (The European Parliament and of the Council 2020; TEG 2020). Appendix A further stipulates that climate mitigation and impact assessments must adhere to best practices and available guidance as well as incorporate the best available science for vulnerability and risk analysis and related methodologies (European Commission 2021a).

3.2 Integrative process model development and evaluation

Taking these different aspects and methodological backgrounds into account, we focused on working in groups together with companies, as an effective method for tackling tasks collaboratively (Rehm 1994), whereby especially small group work can significantly boost the intrinsic motivation (Meffert 1998; Nonaka & Takeuchi 1995). Malik (1994) also advocates for "interactive learning" in moderated workshops as a practical approach for knowledge workers and managers. Probst et al. (2006) emphasize the value of joint workshops involving all relevant knowledge stakeholders.

The initial contact with the first company as part of the prototype development of a climate service product described in this paper, was established at an event organized by a business association. Communication was afterwards gradually strengthened through phone conversations, leading to the organization of an on-site workshop at the company's premises. This workshop has been carried out with decision-makers from a public transport company. It aimed to provide an overview of the potential physical impacts of extreme weather events. The detailed structure of the workshops has been developed together with the company stakeholders and consisted of the following steps:

  1. 1.

    Welcome and round of introductions (10 min.).

  2. 2.

    Presentation (20 min) to provide an overview of the topic and define the subject area

  3. 3.

    Group work regarding the operational consequences of climate change (60 min.) to identify extreme weather events in terms of precipitation and temperature, their physical consequences and possible operational effects. Thereby a joint brainstorming, individual work as well as a collection of results and additional small group work in three different groups has been carried out.

  4. 4.

    Presentation of results by the individual groups and evaluation (25 min.) to weight the different results regarding their operational relevance for the company. As a result from the evaluation the two operational impacts with the highest scores have been identified.

  5. 5.

    Derivation of possible options for action (20 min.) to deal with the two operational impacts with the highest scores.

  6. 6.

    Presentation (15 min.) regarding practical examples of utilizing regional climate change information.

  7. 7.

    Feedback round and end of the workshop.

Hence, based on the workshop, company leaders gained a comprehensive understanding of possible climate change effects on their operations. Following these insights, the company acknowledged the need to develop a more advanced yet straightforward method for utilizing climate change information to assess operational opportunities and risks in more detail. The draft concept developed by the scientist and commented by the practice partners aimed to analyze all functional areas of the company to identify which extreme weather events could directly or indirectly impact workflows and business processes. These impacts have been prioritized based on their relevance for the company judged by the knowledge of the decision makers involved – both within individual functional areas and across the organization. The goal of this moderated exercise was to pinpoint the impacts most likely to significantly influence the company's operations.

For the most critical impacts, climate parameters were selected on basis of the discussion between the scientists and the practice partners to best represent the future climatic changes. The available climate change information for these parameters have afterwards been visualized for an easy accessible use in practice and their usability evaluated by feedback of the practice partners from the corporate view. Also, a training was planned to ensure proper handling of this climate change information, forming the foundation for the subsequent development of company-specific measures. Finally, a methodical approach for the ongoing integration of climate change information into operational processes was identified as being highly relevant from both the scientific and the practical viewpoint. The following sub-processes outlined in the original draft concept have been transformed into a process model for simplified and clear presentation:

  1. 1a)

    analyzing the influence of climatic changes on the company by identifying already experienced or potentially possible impacts,

  2. 1b)

    analysis of current climate information to identify impacts that could arise for the company in addition to the previously known impacts from 1a,

  3. 2

    prioritization of all identified impacts in terms of their relevance for the individual functional areas and for the company as a whole,

  4. 3

    Identification and allocation of relevant climate parameters for the company that enable a statement to be made about the future occurrence of certain climatic changes in the region,

  5. 4

    provision of available regional climate change information,

  6. 5

    enabling decision-makers in the company to deal with climate information,

  7. 6a)

    development of measures to deal with the impacts of climate change,

  8. 6b)

    technical support for the development of measures,

  9. 7

    implementation of the developed approach in the company's operational processes.

A process model in general serves as a set of instructions for resolving specific issues in product development by identifying key action steps (Ponn/Lindemann 2008; Braun 2005). Daenzer and Huber (1999) also refers to process models as process principles and process plans Daenzer and Huber (1999). In operational management, process models are often used to model business processes, particularly in information technology (Kneuper 1998; Montenegro et al. 1997). They mainly provide a structured and concise approach for mapping entire procedures and individual work steps, making them suitable for this approach.

Through iterative review and updates with decision-makers from two additional companies – based on the workshop concept described above –, the model was refined into eight relevant phases, with a more flexible separation of sub-phases based on areas of responsibility. This enhanced model was again discussed and reflected in a transdisciplinary process with decision-makers from all three participating companies in a joint online workshop. As part of this workshop the overall procedure and each phase were step-by-step evaluated using criteria such as comprehensibility, usefulness, applicability, and appropriateness. The main result was that all decision-makers found the approach easy to understand, generally useful, and appropriate for addressing the most relevant challenges. They also highlighted its suitability to deal with the requirements from the EU Taxonomy and the TCFD.

4 Results – the process model approach

Based on findings from the literature as well as exchange with stakeholders from practice described above, it became clear, that companies have currently only inadequately addressed long-term climate-related developments and their implications for their business activities, models, and strategic orientations. At the same time, regulatory requirements are intensifying, driven by heightened interest from the public, customers, investors, and various stakeholders. This underscores the urgent need for research and action to integrate climate-related data into risk management and reporting processes. This results in a process model approach to take the regional and context-specific nature of adaptation to climate change within companies into account. Moreover, it addresses the need to expand the risk analysis process to encompass climate change information.

The approach methodologically aligns with structured frameworks of risk management (Porst et al. 2022; DIN ISO 31000; DIN ISO 14091; BMUV 2021; Loew et al. 2021). It recognizes that very few decisions are only influenced by changing climate signals. Therefore, the integration of climate change information into existing decision-making and risk analysis processes is one key element. The process model incorporates recommendations from DIN ISO 14091 and DIN ISO 31000, while also providing practical guidance on the use of climate change information for companies.

However, recognizing the unique challenges posed by climate change risks (such as handling uncertainties, direct/indirect impacts, cascading effects, and acute/chronic risks), the model goes beyond the DIN approach to risk analysis. It integrates the phases identified by Hurrelmann et al. (2018) and incorporates further the steps necessary for analyzing and managing climate-related risks, as well as identifying, considering, and leveraging pertinent climate change information.

Our focus extends to direct and indirect physical impacts (both acute and chronic). The objective of the procedure outlined below is to methodically assess susceptibility across various aspects of a company, considering both present and future climate changes and their associated impacts. This approach aims to bridge the gap between the existing knowledge about expected climate change and the awareness among decision-makers regarding the impacts of climate change on their own organizations. At the same time, it acknowledges the growing need for companies to prepare for the impacts of climate change and to disclose this information to investors, customers, and through mandatory reporting.

The outlined process model comprises the following eight phases (Fig. 2): i) inventory, ii) prioritisation, iii) identification, iv) availability, v) enablement, vi) derivation and implementation of measures, vii) evaluation, and viii) process reinforcement.

Fig. 2
figure 2

Phases of the process model approach (own illustration)

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Given the local or site-specific and context-dependent impacts of climate change, the tacit knowledge possessed by a company's decision-makers regarding the geographical setting, initial circumstances, as well as past climate-related vulnerabilities is summarized in the first step. The overall aim of the process model is to harmonize this knowledge with the available climate change projections. This empowers company decision-makers to take well-informed decisions concerning the development of a climate adaptation strategy or the selection of appropriate climate adaptation measures, all based on current and anticipated future impacts of climate change.

The process model presents a viable approach for companies lacking sustainability or established risk management frameworks to effectively engage with climate change adaptation. In accordance with the conceptual approaches to risk analysis outlined earlier, the process has been designed to incorporate references to the integration of climate change data in each phase.

4.1 Inventory

Phase 1 aims to identify potential events and associated damages, disruptions, and other failures at the company site or along the supply chain, logistics and market for the company’s products and services. This identification process draws upon past experiences, observations, meteorological data, and the knowledge of all relevant stakeholders in a company. Additionally, external sources of knowledge and sector-specific impact information should be considered.

Emphasis is placed on events directly affecting the company and linkable to impacts of climate change. Such events may manifest along the entire supply chain, within internal operations, or across distribution channels. Collaboratively with company representatives, documented and/or known events are cataloged. It is crucial to account for future impacts within this phase, aligning it with the risk identification step in risk management.

As previously highlighted, impacts of climate change include both physical and transitional risks for companies. Consequently, the inventory must encompass all conceivable impact levels of climate change, including physical, market, regulatory, and health-related implications for employees throughout the value chain. These impacts can have both direct and indirect repercussions on the company.

The inventory should not solely rely on management's knowledge but also tap into the insights of all relevant business units. This inclusiveness can be achieved through workshops in which historical data on weather- or climate change-related disruptions and damages, as well as foreseeable impacts based on current experiences, are compiled.

Moreover, the inventory encompasses existing data concerning the future development of climate parameters relevant to the company. External data and information, such as municipal heavy rainfall runoff or hazard maps, can also be integrated for an initial assessment of location-specific flooding risks. Urban climate analyses may further assist in evaluating heat-related risks.

For companies with limited or no prior consideration of climate change adaptation, the objective is to underscore the imperative of addressing the issue by highlighting potential impacts. In such cases, conducting a literature review can help identify plausible climate risks and impacts within the relevant sector and beyond.

Furthermore, it is often advisable to incorporate existing or develop new climate impact chains within the context of risk analysis. These climate chains, delineated for various sectors, provide a structured overview of all conceivable sector-specific impacts. They illustrate the relationships between individual climate impacts, corresponding impacts, and interrelationships among the impacts themselves. This visualization can help assessing the potential effects of climate change on business activities or sectors. Further developed for the individual company’s system components, it can give worthy insights on relations between the climate change effects and possible damages/disruptions and identify levers for adapting to climate change.

A minimum list of climate hazards to be evaluated in a risk and vulnerability analysis is provided in Appendix A to Annex I and II of the Delegated Regulation to the EU Taxonomy Regulation.

4.2 Prioritisation

The main objective of phase 2 is to evaluate the impacts identified in phase 1 in terms of their relevance and importance. This phase filters out which potential impacts are critical to the company's objectives and, consequently, of utmost relevance. Essentially, it identifies impacts with the potential to significantly affect the company's operations, productivity, and performance concerning strategic, political, and stakeholder-related goals. To achieve this, a weighted decision table or matrix is recommended, aligning with the risk analysis step as part of the risk management.

In this process, essential criteria are predefined and assessed with a scale of 1 to 10 according to their relevance. Additionally, certain criteria may be weighted higher than others based on the company's perspective, particularly emphasizing impacts that need avoidance or mitigation to align with its own objectives. Following this, a priority ranking for impacts will be achieved.

The evaluation of the most critical potential impacts can also be conducted using a risk matrix, considering factors like probability of occurrence and extent of damage. This approach visually categorizes impacts with a high probability of occurrence and significant damage. Such visualization aids in presenting results to individuals not directly involved in the process.

Regarding the EU Taxonomy Regulation, the specified climate hazards to consider are outlined in Appendix A to Annex I and II of the Delegated Regulation to the EU Taxonomy Regulation. Prioritization should not be misconstrued as neglecting less immediately relevant climate hazards. Climate hazards deemed irrelevant due to their spatial occurrence or other factors must also be documented and justified. The process of documenting potential climate hazards and their impacts on company activities enables a structured assessment and documentation of climate hazards.

4.3 Identification

In a next step, the key climate parameters for conducting a more detailed analysis of the identified impacts and the highly relevant climate hazards outlined by the EU Taxonomy Regulation have to be determined. The identification of crucial climate parameters can be based on information depicting potential future developments in climate parameters, taking into account different climate scenarios derived from all regional climate model simulations (Pfeifer et al. 2021). These pertinent climate parameters encompass various aspects, such as current and anticipated air temperatures, the frequency of heat days and tropical nights, the duration and frequency of droughts, frost days, humid days, and days with heavy rainfall. It's worth noting that combinations of these climate parameters can also be significant, as, for instance, a single tropical night may not have severe consequences, but a sequence of tropical nights combined with a specific number of heat days could be impactful. If necessary, these parameters can be tailored or supplemented to suit specific company needs.

Methodologically, this phase can serve to indicate trends in the evolution of climate parameters. These trends can be incorporated into existing tables documenting affectedness and potentially color-coded to visualize where an increase in frequency or intensity is expected. This phase aligns with the risk assessment step in the overall risk management process.

The EU Commission emphasizes the importance of considering a minimum list of climate hazards within the scope of a risk and vulnerability analysis, incorporating the best available scientific knowledge (European Commission 2021a, b, Appendix A to Annex I and II). These specified climate parameters can be seamlessly integrated into the process model and being operationalized. This approach aligns with the requirement stated in the Delegated Regulation for an assessment using the highest resolution, state-of-the-art climate projections for the existing set of future scenarios with the climate scenarios, as elaborated in the footnote: The future scenarios include the representative concentration pathways used by the Intergovernmental Panel on Climate Change, RCP2.6, RCP4.5, RCP6.0 and RCP8.5 (European Commission 2021a).

4.4 Availability

The next crucial step involves compiling, preparing, and the provision of tailored climate change information designed to meet the specific needs of the company. During this phase, companies gain a comprehensive understanding of the available climate change information and its quality, ensuring they have access to the relevant data necessary to assess anticipated climate impacts today and in the future, particularly their significance for the identified system components prone to the effects of climate change within the company and along the supply chain.

One example of this data basis could be climate outlooks highlighting climate changes at the most regional scale (Pfeifer et al. 2021). These climate outlooks can be pooled at the county, district, regional district or city level, and summarize the results for important climate parameters such as temperature, heat days, dry days, wind speed or heavy rain days on several pages. The results show projected development trends in climate parameters over the course of the twenty-first century: for a scenario with sufficient climate protection, a scenario with moderate climate protection and a scenario without effective climate protection on a global level. The data show how the climate may change in the individual German regions. This provides not only citizens but also decision-makers in business and politics with a factual basis for long-term decisions.

At this stage, it is hence of great importance to incorporate both current and future developments in climate parameters, aligning them with the company's requirements. Depending on the availability of climate expertise within the company, it might be advisable to seek external knowledge and expertise in utilizing and evaluating climate scenarios and climate change information. This phase can also be linked to the risk assessment step, serving as the foundation for subsequent risk management.

4.5 Enablement

Following phases 1–4, which aim on identifying, analyzing, and assessing the impacts of climate change, phases 5–8 shift the focus towards internal integration, facilitation, and evaluation of risk management.

Phase 5 is centered on empowering decision-makers within the company to effectively use climate change information. Tailored formats for end-users ensure that the provided information can be understood by company representatives and translated into a coordinated action plan. This, in turn, enables its integration into the company's decision-making processes. During this phase, it's advisable for companies to train multiple employees in using the relevant data, ensuring they remain well-equipped to harness available climate change information even in the event of personnel changes. Depending on the specific criteria relevant for the company, various formats such as guides, lectures, or workshops can be used.

To foster learning about the use of climate change information, the development of guided instructions for recreating best practice examples or conducting case studies based on the company's context can be a time-intensive yet highly illustrative task. These approaches provide practical support for using climate change information in either fictional or real planning situations.

The choice between a best practice example or a case study depends on whether a successful instance within the company's sector or organization is available (for best practice) or if the aim is to demonstrate how climate change information can be integrated into a specific location or process within the company, particularly where conversions or changes are already planned (for case studies).

4.6 Derivation and implementation of measures

Phase 6 focuses on deriving, prioritizing, and implementing measures that address the impacts identified based on climate change information. The implementation of these measures can enhance a company's resilience to the impacts of climate change, effectively making management, employees, locations, logistics, and products more resilient or climate-proof or improve the adaptive capacities existing within the company to cope with the effects of climate change. This influences the company's strategic direction, site selection, and investments. The development and implementation of adaptation measures are critical to avoid the risk of stranded assets, which rapidly depreciate due to environmental or climate-related factors. Consequently, specialized expertise within the company is vital to identify measures and support for their implementation. This phase falls under risk management as part of risk treatment, where strategies may include risk avoidance, risk reduction, risk transfer, and acceptance of residual risk.

Initiating this phase, exploring established databases of known measures offers an initial reference point to become acquainted with sector-specific adaptation measures. Furthermore, prioritizing measures and addressing climate change impacts is focused.

A structured approach is recommended, using tools such as an assessment matrix. To prevent the risk of misalignment or the shifting of risk from one sector to another, a compilation of measures should be developed internally for various areas of the company's operations and categorized into short-, medium-, and long-term actions. Additionally, measures with a potential for synergies or a positive impact even without climate-related events (no-regret measures) should be identified. Measures can be prioritized based on several factors, including synergies with other measures, intrinsic value regardless of climate impacts, contribution to risk reduction, environmental, social, and economic impacts, feasibility, implementation time, effectiveness, costs, maintenance requirements, flexibility, life cycle assessment performance and more.

Subsequently, the identified measures are implemented within the company, accounting for standard company procedures. Action planning holds significant importance in line with the Technical Assessment Criteria of the EU Taxonomy Regulation for the environmental objective adaptation to the impacts of climate change. Appendix A to Annex I and II of the Delegated Regulation mandates the evaluation of adaptation solutions that can mitigate the identified physical climate risks and the development and execution of an adaptation plan to implement these measures (European Commission 2021a).

4.7 Evaluation

Phase 7 is crucial for reviewing the success of the measures through an evaluation process, as well as assessing the process itself in an iterative and recursive manner. Evaluating adaptation measures entails certain considerations due to the uncertain, non-linear, and long-term nature of climate change. Challenges include attributing success to implemented measures, establishing baselines, and setting targets for adaptation actions. Measuring the success of climate adaptation measures, especially in the short term, poses difficulties compared to evaluating climate change mitigation efforts. Predicting the occurrence of extreme weather events and gradual climate changes, along with their associated impacts, with spatial and temporal accuracy is challenging. Consequently, assessing the effectiveness of locally implemented adaptation measures in terms of damage prevention is also challenging. Simple before-and-after comparisons may overlook other influences affecting on-the-ground metrics. Additionally, adaptation measures are often components of larger strategies, and their effectiveness can only be comprehensively and conclusively evaluated in a broader context (Bours et al. 2015; Dinshaw et al. 2014).

Previous research on the evaluation of climate adaptation measures or concepts indicates that monitoring and evaluation are frequently overlooked, and operationalizing the impact of a measure into concrete, measurable indicators can be problematic. To address these challenges, Dinshaw et al. (2014) recommend employing a mix of qualitative and quantitative evaluation methods. This approach allows for flexibility by including optional indicators alongside core indicators, considering the local context. Predefined objectives can be verified using indicators, and the measure's impact, disruptions in the supply chain, and associated costs can be documented (Lühr et al. 2014). This process may reveal the need for improvements or additional measures to achieve objectives. Evaluations can also include assessing awareness within the company regarding climate change adaptation, which can be documented through surveys (Hurrelmann et al. 2018).

Despite existing knowledge and experience gained from evaluation research, these resources are often underutilized (Bours et al. 2015). Therefore, it can be beneficial to collaborate with stakeholders from academia, consulting, or measurement technology during this phase to conduct an impact analysis that aligns with current best practices and research. This analysis is crucial for the company and the direction of its climate adaptation strategy.

In addition to evaluating the actual adaptation measures or strategies (outcome evaluation), it's important to assess the process itself. This involves determining the extent to which all relevant internal and external stakeholders have been involved and opportunities for further optimization in the incorporation of new or additional climate change information have been identified. Thereby the evaluation can encompass transdisciplinary cooperation. This would pertain to the dialogue-oriented process in which local-specific information and existing company knowledge are integrated with research findings, or climate information is incorporated into company processes for risk analysis. Evaluating transdisciplinary research requires ongoing reflection within the interdisciplinary team. However, an evaluation can also be conducted retrospectively after the joint process of integrating climate change information into corporate processes and strategy has concluded (Schuck-Zöller et al. 2018).

4.8 Process reinforcement

Finally, it is important to seamlessly embed the process model into the organizational structures and procedures of the company to ensure that all key aspects of the entire procedure are regularly updated. The process model can be harmonized with existing quality management cycles within the company, such as the PDCA (Plan-Do-Check-Act/Adjust) cycle (Musayelyan et al. 2020).

One of the key factors identified by the World Economic Forum (2022) in enhancing resilience within organizations is to view resilience not merely as an endpoint but as an ongoing journey. This perspective underscores the importance of continuous learning and adaptation, drawn from stress tests and real-life crises, to emerge stronger and better equipped to respond to evolving circumstances. Embracing this outlook facilitates regular self-assessment, the identification of blind spots, and the implementation of necessary additional measures (World Economic Forum 2022). Moreover, it is advisable to integrate a learning process into the framework, allowing for a flexible and iterative approach that fosters reflection and refinement throughout the process (Dinshaw et al. 2014).

Considering the demands of the EU Taxonomy Regulation, there lies a potential competitive advantage in earnestly embracing the process and reporting. By proactively incorporating future-oriented climate change information into corporate operations, businesses can identify and harness opportunities stemming from the repercussions of climate change, thus leading to innovations in business models and the development of new products.

5 Conclusion

The paper deals with the interplay between the lacking future-oriented approach in entrepreneurial activities, the new EU-level regulations imposing additional financial and sustainability reporting requirements, and the integration of climate change information into risk management processes. The primary focus is to present the development and concept of a novel process model for seamlessly integrating future-focused climate change information across the phases of a risk management process, effectively bridging the identified gap between problem identification and the development and identification of actionable measures.

This conceptual process has been developed and prototypically tested in close transdisciplinary co-creation collaboration with stakeholders in various companies. The primary objective is to bring together the implicit knowledge of company decision-makers regarding site, supply chain and processes in the company and observed impacts with contemporary observational data as well as climate change information concerning potential future climatic changes. This collaborative process aims to systematically analyze various company domains for potential impacts stemming from both current and forthcoming climate change. It also empowers decision-makers to formulate well-informed and scientifically sound climate strategies as well as the development and implementation of suitable adaptation measures.

To align corporate investments more closely with climate change mitigation and future climate risks, the EU Taxonomy Regulation has introduced an economic activity classification system (TEG 2020a, 2020b). Consequently, financing for European companies shall be influenced, incentivizing companies to disclose the extent to which their business activities contribute to adaptation efforts as well as to the other five environmental objectives. This disclosure may potentially enhance capital flow into companies actively engaged in adaptation initiatives (Kind and Kahlenborn 2020).

The application of the process model offers several advantages for companies. It enables them to address the operational impact of climate change, which is of high importance in the context of complying with the sustainability-focused economic activity classification system. This not only contributes to standardizing climate-related reporting but also aligns with measure 12 of the German Sustainable Finance Strategy, by supporting the real and financial economy in improving the risk management of physical climate risks (BMF/BMU/BMWI 2021). Beyond damage prevention and mitigation, the insights derived from applying the process model can foster the transition toward a resource-efficient, sustainable, climate-neutral, and climate-resilient society, thereby addressing Sustainable Development Goals 9, 11, and 13, among others.

As previously mentioned, the process model currently is a prototype, allowing for adaptability in practical applications based on the existing knowledge base, data availability, and observation data. It may also incorporate feedback loops from one phase to another. Up to this point, several success factors have been identified. Successful application of the process model hinges on close, trust-based cooperation between internal and external stakeholders right from the outset. Moreover, its effectiveness relies on engaging all relevant experts within the company, leveraging their experience and implicit knowledge for evaluating and prioritizing areas of action and the development of appropriate adaptation measures.

Additionally, the process model delivers added value by advancing the development of transformative adaptation solutions to the impacts of climate change. This includes new forms of collaboration, adopting cross-organizational thinking and action, reimagining adaptation requirements with systemic perspectives, and engaging other pertinent stakeholders in addressing climate risks, embedded in a framework of a transdisciplinary co-creation process.