Annual report and accounts 2023 - Flipbook - Page 51
Strategic Report
We believe that our strategic actions are currently
providing an acceptable degree of long-term resilience,
taking into consideration different climate related
scenarios as set out below.
Risk Management
Identifying risks
Each department or function in the Company has its
own risk register that is reviewed on a regular basis.
Climate-related risks, including those associated with
existing and emerging regulatory requirements, are
identified and assessed alongside other business risks
during the departmental reviews. Departmental risk
registers feed into the corporate risk register, which
is reviewed by our Group Risk Committee every
two months.
Corporate Governance
Accounts
The Emerging Risks and Opportunities Group,
as already detailed in the Governance section, is
responsible for the Group‘s emerging risk register,
with a longer-term horizon than that considered
by the departmental units. The Group Risk Committee
will retain oversight of emerging risks going forward.
The ESG Committee owns, and is responsible for
monitoring and updating, our material risks and
opportunities related to climate change, as already
detailed in the Strategy section. The ESG Committee
is supported by a cross-functional group of senior
executives who help input into this process both in
terms of risk identification and assessment aligned
to worst-case and best-case climate scenarios, as
detailed here.
Best-case climate scenario
IEA Net-Zero by 2050
Worst-case climate scenario
IPCC RCP8.5 / SSP5
Scenario narrative & context
Under this scenario, global warming is limited to below
1.5°C above pre-industrial levels by 2100 through
global collaboration and policy intervention to reduce
greenhouse gas emissions and reach net-zero emissions
by 2050.
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.
For example, this scenario foresees the implementation
of a carbon price/tax that could start at $75 per tonne
CO2e in 2025 for developed countries, rising to $205
per tonne CO2e in 2040.
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 medium and 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.
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 transition risks
and because its time horizon aligns with the UK
Government’s pledge to achieve net-zero by 2050,
therefore offering a plausible pathway for our
local authorities.
The climate-related risks considered material to our business are detailed on pages 47 and 48, however this scenario planning process identified a range of other risks
and opportunities.
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