Responsible Business Report 2024 - Flipbook - Page 20
RESPONSIBLE BUSINESS REPORT CONTINUED
We respect the environment continued
Best-case climate scenario
IEA Net-Zero Emissions (NZE) by 2050
Scenario narrative & context
Under this scenario, the global energy sector reaches net-zero emissions of CO2 by 2050 by deploying a wide portfolio of clean energy technologies and
without offsets from land-use measures. It also depends on a high degree of fair and effective global co-operation and collaboration. All countries are
required to contribute to deliver the desired outcomes.
This scenario assumes that all regions introduce pricing of CO2 emissions alongside other policies designed to bring about clean energy transitions in the
NZE Scenario. For advanced economies the assumed carbon price by 2030 is $140 per tonne of CO2.
Intermediate climate scenario
IPCC RCP 4.5 pathway
Scenario narrative & context
Emissions start declining by approximately 2045 to reach roughly half of the levels of 2050 by 2100.
Global temperatures rise between 2°C and 3°C, by 2100, sea levels rise and many plant and animal species are unable to adapt.
Worst case climate scenario
IPCC RCP8.5 / SSP5
Scenario narrative & context
Limited efforts are made by governments and businesses to reduce greenhouse gas emissions, leading to temperature rises of 4°C above pre-industrial
levels by 2100.
In this scenario, the emphasis turns to protecting the population and operational assets from the catastrophic impact of the changing climate as opposed
to reducing the emissions themselves.
We chose this scenario to assess the potential physical risks on our business and supply chain, as it is supported with long-term data ranges on temperature,
precipitations and rise in sea-levels. The data from the scenario extends to 2100 and allows us to take long-term views on risks, considering the impact
of market change in the locations of our own assets and at the origin of our key materials.
Assessing risks
Our Group risk register guidelines provide the
framework for defining financial and strategic
impacts on our business. This framework applies
equally to climate-related risks and categorises
five levels of risk impact: “insignificant”, “minor”,
“moderate”, “major” and “critical”.
The Group risk register guidelines also
include definitions for the likelihood of the risks,
including: “rare”, “unlikely”, “possible”, “likely”
and “almost certain”.
Gross risk impacts that fall in the categories
of “moderate”, “major” or “critical” would be
deemed to be material.
From a financial perspective, a “moderate”
impact is defined as impacting financial
turnover or profit by between 3% and 10%, a
“major” impact is defined as impacting financial
turnover or profit by more than 10% and less
than 25%. A financial impact of 25% of more on
turnover or profit would be deemed as “critical”.
Different parameters are taken into account when
assessing the potential impact of a risk, including
financial aspects, environmental aspects and
other aspects such as health and safety and
corporate reputation. Each risk is given a risk
rating before and after mitigating actions.
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Managing risks
Metrics & targets
The resolution of moderate impacts requires the
input from our Executive teams. The resolution
of major and critical impacts requires the input
from the Board and/or its sub-committees.
The mitigating actions for our key climaterelated risks, identified through our ESG
Committee and our multi-functional and
business-wide risk management process,
are being managed primarily through our
No Time To Waste environmental sustainability
programme. This programme has identified
a number of long-term climate-related goals,
with the key deliverables being the achievement
of our science-based targets and the ultimate
delivery of our net-zero by 2050 commitment.
Other climate-related targets and KPIs,
including those related to packaging, waste and
water are detailed within our long-term goals
and non-financial key performance indicators
on page 4.
The Group Risk Committee reports back to the
Audit and Risk Committee, attended by Board
Directors. Similarly, the ESG Committee reports
to the Board on the material climate-related
risks identified.
Mitigating actions are developed for each risk
and their effectiveness is reviewed on an ongoing
basis. New actions are triggered in order to
further reduce the net score of each risk,
especially for those risks that sit outside of the
Board risk appetite. Functional risk registers are
reviewed in depth by the Group Risk Committee
according to an annual schedule to ensure that
risks are well represented and that actions are
taken to reduce the level of risk for the business.
Our metrics and targets focus primarily on
the reduction of Scope 1, 2 and 3 greenhouse
gas emissions, identified as a cross-industry,
climate-related metric category.
