how do I determine climate risks for my company

Physical and transition risks mapped together, per location

Climate risk consists of two categories: physical risks (flooding, drought, heat, storm damage to your premises or those of suppliers) and transition risks (costs from CO2 pricing, changing regulations, shifting customer demand toward low-emission alternatives). EFRAG's VSME module does not require an extensive climate scenario analysis as the CSRD does, but it does require a qualitative assessment: does the company face material risk, and if so, what type. In practice, this means a list per location: what risk applies there, and has anything been done about it (drainage, emergency power, alternative suppliers).

For the transition side, it is useful to align with your own emission figures. A company with a large share of scope 1 emissions from its own combustion faces different transition risks than a company whose emissions are mainly in the supply chain. If you have not yet made a scope 1, 2 and 3 breakdown according to the GHG Protocol, that is the first step before you can fill in anything about transition risk — without that breakdown, you do not know which part of your footprint is vulnerable to CO2 pricing or changing customer preferences. Those working with this breakdown for the first time can find the explanation per scope at the question on indirect emissions from purchased energy and at the question on emissions in the value chain.

Where this follows from the VSME structure

The VSME module treats climate risks as a separate section alongside energy and emission figures: first you map emissions and energy consumption, then you assess whether reduction targets exist — see also the question on whether an objective has been set to reduce emissions — and only then does the risk assessment follow. That order is not coincidental: without figures on scope 1, 2 and 3 you have no basis to say which part of your operations is exposed to transition risk. The breakdown into scope 1, 2 and 3 itself comes from the GHG Protocol, which EFRAG adopts as an international standard.