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Climate Change Scenario Analysis

Sector/s: Agribusiness

An ASX-listed agribusiness company operating in Australia and New Zealand needed to understand and quantify the financial impacts of climate change on their grain and livestock production. A collaborative working group was formed, including sustainability, finance, strategy, technical services experts, and climate specialists, to tackle this challenge. Our role involved providing advanced statistical modelling and analysis of climate change scenarios.

Problem

The company faced increasing uncertainty around how climate change would impact its grain and livestock production. To mitigate these risks, they needed a reliable model to analyse environmental changes and forecast their effects on operational performance.

Key Challenges:

  • Uncertainty around the financial impacts of climate change, particularly on grain and livestock production.

  • Requirement of a robust model to analyse the effects of changing weather patterns, temperature extremes, and environmental conditions on operational efficiency and sales.

  • Need for Strategic Planning to simulate potential future outcomes under different climate change scenarios.

Solution

To tackle the challenge, Data Sagacity was engaged to develop a two-part solution: a detailed regression model to analyse climate impacts and an advanced Power BI suite for real-time data visualisation and scenario planning.

Regression Model:

  • Built a single linear regression model to assess the link between sales, operations, and climate data over 10 years.

  • Integrated key environmental factors like temperature, rainfall, and El Niño/La Niña events.

  • Iteratively refined the model based on feedback and new data.

Power BI Suite:

  • Developed interactive dashboards for real-time insights by region, product, and environmental conditions.

  • Conducted workshops and training for staff on using and maintaining the dashboards.

  • Integrated continuous feedback to improve dashboard accuracy and usability.

Benefits

The delivered solution provided the company with actionable insights to assess and plan for climate-related risks, driving strategic decision-making.

Key Outcomes:

  • Provision to explore a variety of climate change forecasts, including detailed scenario planning for impacts up to the years 2030 and 2050, offering a dynamic and long-term strategic vision.

  • Enabled data-driven analysis of climate change impacts on financial performance.

  • Informed board-level sustainability with robust financial insights.

  • Equipped staff with the tools and knowledge to maintain and enhance the dashboards independently.

Conclusion

By providing a comprehensive solution that combined advanced statistical modelling with interactive data visualisation, we enabled the company to better understand and prepare for the financial impacts of climate change. Our two-part approach, encompassing both a regression model and a Power BI suite, empowered the company to make data-driven decisions and long-term strategic plans. The insights gained through this process not only supported immediate sustainability reporting but also provided the tools and capabilities for ongoing scenario analysis and operational resilience in the face of climate uncertainty.

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