Prepare today or pay tomorrow: the climate debt of companies

 

The European summer should set off alarm bells on this side of the world. I am not talking about distant headlines, but about realities that give us a glimpse of what is to come: forest fires devastating France, Italy, Greece, Turkey, Montenegro, Albania, and Spain; record heat in Rome (42°C) and Seville (45°C); storms in Paris with winds of 140 km/h. These are not isolated phenomena; they are a reminder that climate threats are no longer hypotheses but concrete facts.

Here's the point: “climate risk” is not an ethereal concept. It arises when these threats interact with exposed systems and people, with weakened infrastructure, with dependent economies. In Chile, we know this: world-class fires, sinkholes that undermine the safety of coastal infrastructure, droughts that have left thousands of hectares unproductive and caused millions in losses. These impacts are not an abstract environmental problem: they are an economic, social, and governance problem.

The Intergovernmental Panel on Climate Change warned in 2018 that climate risk is the sum of threat, exposure, and vulnerability. What used to be confined to technical reports is now written into financial statements and investment decisions. And this is where IFRS S2 comes in, putting the spotlight where it hurts most: at the heart of corporate governance.

The new international standard requires boards of directors to move beyond the comfort of general statements and take responsibility, with data and processes, for how they manage climate risks. It is not a checklist; it is a paradigm shift. IFRS S1 requires reporting on the effects of sustainability on the business in the short, medium, and long term. IFRS S2 goes further: it requires companies to show how they govern and monitor climate risks and opportunities.

This means that we will have to talk in detail about current and future financial effects, the methodologies used, the scenarios selected, and action plans, using specific metrics such as emissions, asset vulnerability, investments aimed at mitigating climate risks, and dependence on carbon credits. Above all, it means being transparent about how priorities are defined in a world where climate phenomena overlap and multiply their impacts.

It is no longer acceptable to respond with “not applicable” or “we haven't worked on it yet.” Each line of reporting must be justified, with traceability and accountability from the highest level. The timeline is also tight: the Financial Market Commission has established that mandatory implementation will be in 2027 with data from 2026. That means 2025 is the key year to prepare: establish indicators, assign responsibilities, and define monitoring processes.

The question is direct and brooks no evasion: are boards prepared to tackle climate risks with robust information and strategic decisions, or will they wait for the headlines to arrive before calculating losses and offering explanations?