How to Perform a Climate Risk Assessment for EU Taxonomy Compliance

A Climate Risk and Vulnerability Assessment (CRVA) is required where a building activity's applicable technical screening criteria invoke Appendix A. This includes the current climate-adaptation DNSH criteria for new construction (7.1), renovation (7.2), and acquisition and ownership (7.7). Many companies still face the practical question: how do you carry out the assessment?

This guide maps Appendix A's legal assessment to six practical work stages. Those stages are implementation guidance, not six additional statutory steps.

What the Regulation Requires

Appendix A sets out three assessment steps:

1 - Screening: Consider as a minimum Appendix A's indicative, non-exhaustive list of 28 physical climate hazards and identify which may affect the activity during its expected lifetime.

2 - Materiality assessment: Where one or more hazards may affect the activity, assess the materiality of those physical climate risks.

3 - Adaptation-solution assessment: Assess solutions that can reduce each identified physical climate risk. An adaptation plan is then drawn up for their implementation.

The assessment must be proportionate to the activity's scale and expected lifespan. Activities expected to last under 10 years use climate projections at least at the smallest appropriate scale. All other activities use highest-available-resolution, state-of-the-art projections across an existing range of future scenarios consistent with the expected lifetime; major investments include at least 10–30-year scenarios.

Step 1: Define the Scope

Before screening hazards, establish the assessment boundaries:

• Asset type and location - a single building, a development site, or a portfolio of assets. Location determines which climate data sources are relevant.
• Expected lifetime - this determines the applicable projection rule. Under 10 years, use at least the smallest appropriate scale; otherwise use the highest available resolution across scenarios consistent with the actual expected lifetime. Major investments include at least 10–30-year scenarios.
• Activity code - which taxonomy activity is being assessed (7.1, 7.2, 7.7, etc.). This determines the specific DNSH criteria that apply.
• Assessment boundary - define the asset and dependencies whose performance is being assessed, and record assumptions about construction, operation, and surrounding infrastructure.

Step 2: Consider the Indicative Appendix A Hazard List

Appendix A categorises physical climate hazards into four groups:

Temperature-Related

Chronic: changing temperature, heat stress, temperature variability, permafrost thaw Acute: heat wave, cold wave/frost, wildfire

Water-Related

Chronic: changing precipitation patterns and types, precipitation or hydrological variability, ocean acidification, saline intrusion, sea level rise, water stress Acute: drought, heavy precipitation, flood (coastal, fluvial, pluvial, groundwater), glacial lake outburst

Wind-Related

Chronic: changing wind patterns Acute: storms (including blizzards, dust, sand), cyclones, tornadoes

Solid Mass-Related

Chronic: coastal erosion, soil erosion, soil degradation, solifluction Acute: avalanches, landslides, subsidence

For each hazard, assess whether it is relevant to the asset's location and type. Not every hazard applies everywhere - permafrost thaw is irrelevant in Mediterranean cities, and coastal flooding does not affect inland sites. But the screening must be explicit and documented. Simply omitting hazards without explanation does not satisfy the requirement.

Key principle: screen broadly, then narrow. It is better to screen in a hazard and conclude it is not material than to skip the screening entirely.

Step 3: Obtain Climate Projections

For hazards identified as potentially relevant, select an existing range of future scenarios consistent with the expected lifetime. Appendix A's footnote identifies these RCP pathways:

• RCP 2.6 - lower radiative forcing pathway
• RCP 4.5 - intermediate radiative forcing pathway
• RCP 6.0 - intermediate-to-higher radiative forcing pathway
• RCP 8.5 - very high radiative forcing pathway

Appendix A does not prescribe a fixed mandatory trio, or state that every assessment must run every named pathway. Document why the chosen range is consistent with the asset's lifetime and captures the uncertainty material to the decision.

Data Sources

Several sources provide climate projections for European locations:

• Copernicus Climate Data Store (C3S) - free, gridded climate data at various resolutions
• Euro-CORDEX - regional climate model ensemble providing downscaled projections for Europe
• National climate services - many EU member states provide country-specific high-resolution projections
• IPCC WGI Interactive Atlas - useful for initial screening, though not at building-level resolution

The Resolution Question

This is where many CRVAs fall short. For activities expected to last under 10 years, Appendix A requires at least the smallest appropriate scale. For all others, it requires the highest available resolution. It sets no universal numeric grid threshold; regional products may, for example, use 12.5 km cells (Euro-CORDEX), while national products can offer 1–5 km data.

For most rural and suburban locations, this resolution is adequate. But for urban buildings, particularly in dense city centres, regional data misses the Urban Heat Island effect, street-canyon wind effects, and localised flood risk from impervious surfaces.

For an urban building where heat stress is material, the assessment should test whether regional data captures local conditions. Microclimate simulation can be one source of site-specific supporting evidence, but the regulation neither requires CFD nor guarantees that a particular model will be accepted on review.

Step 4: Assess Vulnerability and Exposure

For each material hazard, evaluate:

Exposure - the degree to which the asset is physically exposed to the hazard. A ground-floor commercial space is more exposed to pluvial flooding than a fifth-floor apartment. A south-facing facade is more exposed to heat stress than a north-facing one.

Sensitivity - how susceptible the asset is to damage or disruption from the hazard. A building with single-glazed windows is more sensitive to heat waves than one with high-performance solar control glazing.

Adaptive capacity - the extent to which existing features or systems reduce the impact. A building with a green roof and natural ventilation has greater adaptive capacity for heat stress than one relying solely on mechanical cooling.

The combination of exposure, sensitivity, and adaptive capacity determines vulnerability. This is not a numerical score (though some methodologies use scoring matrices) - it is a reasoned assessment of whether the hazard poses a material risk to the asset.

Step 5: Identify Adaptation Solutions

For each material risk, define adaptation measures that reduce vulnerability to an acceptable level. The taxonomy explicitly states that solutions should "consider the use of nature-based solutions or rely on blue or green infrastructure" where feasible.

Examples of adaptation measures for common building hazards:

Nature-based solutions are particularly effective because they often address multiple hazards simultaneously: a green roof reduces heat stress, manages stormwater, and supports biodiversity - contributing to DNSH across several objectives.

Step 6: Document and Plan

Document the CRVA so that the applicable reviewer or auditor can assess the evidence. A useful record includes:

1. Scope definition - asset description, location, expected lifetime, activity code
2. Hazard screening matrix - the 28 listed hazards, plus any other locally relevant hazards, with a relevance assessment and justification
3. Climate data sources - which projections were used, at what resolution, for which time horizons
4. Vulnerability assessment - exposure, sensitivity, and adaptive capacity for material hazards
5. Adaptation plan - specific measures for each material risk, with implementation timeline
6. Monitoring plan - how the effectiveness of adaptation measures will be tracked

The adaptation plan should include cost estimates and integration with the building's design or renovation programme. Adaptation measures identified after construction are far more expensive to implement than those integrated during design.

Common Mistakes

Screening only obvious hazards. A CRVA that assesses only flooding because the site is near a river, without considering temperature, wind, and solid-mass hazards, is incomplete. Appendix A describes its 28-hazard list as indicative and non-exhaustive and requires it to be considered as a minimum.

Using one scenario without justification. Appendix A calls for an existing range of future scenarios consistent with the expected lifetime. Its footnote names RCP 2.6, 4.5, 6.0, and 8.5; it does not prescribe a fixed trio.

Relying on historical data alone. Historical climate data tells you what happened. The taxonomy requires projections of what will happen. Past performance does not predict future climate.

Ignoring the urban microclimate. For urban buildings, regional climate data underestimates heat exposure. If heat stress is identified as a material hazard in an urban context, the assessment should address whether regional data adequately captures local conditions.

Treating the CRVA as permanently static. Appendix A does not prescribe a general reassessment interval. For long-lived assets, periodic review is prudent practice when climate projections, the asset, or its exposure materially changes.

Tools and Resources

• EU Taxonomy Compass - interactive tool for exploring activities and criteria
• Appendix A hazard list - the 28 hazards in the regulation's indicative, non-exhaustive minimum list
• CRVA process overview - our detailed breakdown of the CRVA methodology
• UBA Climate Risk Assessment Guidance - German Environment Agency methodology guide
• EU Technical Guidance on Adapting Buildings - 2023 Ramboll/EC JRC guidance

For urban buildings where the UHI effect is material, CFD-based microclimate simulation may provide useful site-specific evidence where proportionate. It is an optional method, and its suitability depends on the model, inputs, documentation, and review context.