Building a climate resilient business

Building a Climate Resilient Business: Managing Risks & Exploit Opportunities in a Climate

Changing World

Christian Petrangelo, Senior EHS Regulatory Consultant at Enhesa

Giel Linthorst, Programme Leader Science-based Targets at Ecofys

Sarah Hendel-Blackford, Senior Consultant at Ecofys

Compliance is our Business. Enhesa is the

market leader in global environmental, health and

safety assurance providing support to businesses

worldwide.

GLOBAL COVERAGE.

EXPERT ANALYSIS.

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Building a Climate

Resilient Business:

Risks & Exploit

Opportunities in a

Changing Climate

Webinar Agenda

• Regulatory landscape of climate change policy

& initiatives

• Mitigation measures

– Aligning your GHG reduction targets with a 2°C climate

goal

– What internal and external carbon prices are driving

mitigation actions of companies

• Adapting to Climate Change

– Physical, legal, financial and transitional risks

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Today’s Presenters


Christian Petrangelo

Sr. EHS Consultant

Enhesa

Giel Linthorst

Programme Leader

Science-based

Targets

Ecofys

Sarah Hendel-Blackford

Senior Consultant

Ecofys

Building a Climate

Resilient Business:

Risks & Exploit

Opportunities in a

Changing Climate

Webinar Agenda

Regulatory landscape of

climate change policy &

initiatives

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Regulatory Landscape of Climate Change Policy & Initiatives


Goal: Emissions Reduction Targets

Carbon Tax

Emission Trading Schemes

GHG InventoriesRenewable Energy

Incentives

Energy Efficiency

Incentives

Mandatory Measures Voluntary Measures

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Mandatory GHG Inventories


What?

Reporting of GHG emissions from broad

sectors of the economy

Why?

Provides necessary data to set economy-

wide emission reduction targets

How Many?

40 countries

(as of Oct. 2015)

Government parties to the UN Framework

Convention on Climate Change (UNFCCC)

must submit annual inventories of GHG

emissions

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Mandatory GHG Inventories


USA: Tracks facility-level

emissions from the

largest sources of

GHGs

European Union: Compiles annual GHG inventory

impacting 6 sectors across member

countries: energy, industrial

processes, solvent and other product

use, agriculture, land use, and waste

Australia: Tracks GHG emissions according

to facility and corporate group

thresholds

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Emissions Trading Schemes


United States: Regional programs

include:

• California Cap-and-

Trade Program

• Regional Greenhouse

Gas Initiative (RGGI)

encompassing 9

Northeastern states

European Union: • The first and biggest

international system for

trading GHG emission

allowances.

• It regulates over 11,000

industrial manufacturing

facilities and power

stations in 31 countries.

China: • National-level ETS

launching in 2017 will

cover “key industry sectors

such as iron and steel,

power generation,

chemicals, building

materials, paper-making,

and nonferrous metals”

• Existing pilot program

covers 7 provinces

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Carbon Taxes


Governments put a price

on carbon dioxide and

other GHG’s

GHG price is tax

intended to reduce

emissions

15 countries

Differs from ETS

in that there is no

defined cap on the

amount of GHG’s

that may enter

into the

atmosphere

Often used on the

national level to

supplement regional

ETS plans

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Mandatory Carbon Taxes


Mexico:

Covers import,

sales, and use of

fossil fuels

France:

Applies to the use

of gas, heavy fuel

oil, and coal,

transport fuels, and

heating oil not

covered by EU

ETS.

Japan:

Tax on fossil

fuel use

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Renewable Energy Incentives (Voluntary)


USA:

President Obama’s Clean Energy Incentive Program:

A voluntary “matching fund” program for states to incentivize

solar or wind projects that generate carbon-free mWh

India:

Regional governments (Delhi, Gujarat, Tamil Nadu) provide tax

breaks and other financial incentives to companies that manufacture or install solar

infrastructure

Netherlands:

Private sector companies may deduct 36-41.5% of their

renewable energy investment from their taxable profit

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Energy Efficiency Incentives (Voluntary)


Australia:Emissions Reduction Plan

provides financial assistance for

projects to reduce GHG

emissions, including energy

efficiency in buildings and

industrial energy efficiency.

South Africa: Allows any entity with a

taxable income to claim a

deduction based on the

amount of energy saved

through energy efficiency

standards

United States/

Italy/Netherlands: Tax incentives to retrofit existing

buildings with energy efficiency

technology

Germany: Preferential loan and grant

program to retrofit existing

buildings with energy efficiency

technology

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Regulatory Landscape of Climate Change Policy & Initiatives


Goal: Emissions Reduction Targets

Carbon Tax

Emission Trading Schemes

GHG InventoriesRenewable Energy

Incentives

Energy Efficiency

Incentives

Mandatory Measures Voluntary Measures

Building a Climate Resilient Business

Giel Linthorst, Sarah Hendel-Blackford

November 2015

© ECOFYS | | Building a climate resilient business05/11/2015

Mitigating climate change

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© ECOFYS | |

GHG emissions accelerate despite reduction efforts. Most emission

growth result from fossil fuel combustion and industrial processes

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Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014

Building a climate resilient business19

© ECOFYS | |

Companies are responsible for large share of the global emissions

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© ECOFYS | |

Without more mitigation, global mean surface temperature might

increase by 3.7° to 4.8°C over the 21st century

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> To prevent the most severe impacts of climate change, parties to the United Nations Framework Convention on Climate Change (UNFCCC) agreed in 2010 to commit to a maximum temperature rise of 2 °C above pre-industrial levels.

> Limiting global temperature rise to 2 °C corresponds according to the scientific

community with a carbon budget of about 1,000 Gtonnes CO2 from 2011 onwards.


© ECOFYS | |

0

10

20

30

40

50

60

2010 2015 2020 2025 2030 2035 2040 2045 2050

GtC

O2eq

Global 2 oC scenario

From global carbon budget to company targets: two

methodologies already existed

05/11/2015 Building a climate resilient business

ABSOLUTE REDUCTION1

ECONOMIC ALLOCATION2

> Apply global or OECD/non-OECD

absolute emissions reduction

pathway to each company, or

> Apply linear absolute reduction

per year towards 2050 (1.5% p.y.)

> Apply global or OECD/non-OECD

intensity reduction pathway to

each company (2.2% p.y.)

0%

50%

100%

150%

200%

250%

300%

350%

400%

0

10

20

30

40

50

60

2010 2015 2020 2025 2030 2035 2040 2045 2050

GD

P g

row

th

GtC

O2eq

Global 2 oC scenario

GHG (GtCO2eq)

GHG intensity (GtCO2eq / GDP contribution)

GDP index

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© ECOFYS | |

New methodology was developed to translate global carbon

budget to company targets based on sectoral approach


> For the Science Based Targets initiative, Ecofys

developed with CDP, WRI and WWF a new

methodology, called the Sectoral

Decarbonization Approach (SDA)

> The SDA methodology is based on the least-cost

modelled 2oC scenario (2DS) developed by the

International Energy Agency (IEA) as part of

its publication, Energy Technology Perspectives

2014

> Development of the SDA methodology involved

intensive stakeholder consultation

> The SDA methodology is freely available

> Scientific backing published in Nature Climate

ChangeSource: www.sciencebasedtargets.org, 2014/2015

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http://www.sciencebasedtarget.org/

© ECOFYS | |

Current sectoral coverage of the SDA methodology


Currently, over 60% of the global GHG

emissions are covered by the methodology.

However, not covered and related to corporate

emissions are:

> Other Energy, e.g. fossil fuel extraction and

production

> Agriculture, forestry and Land Use

(AFOLU). However a methodology for 10

major agriculture and forestry commodities is

being developed by Ecofys, University of

Aberdeen and PBL Netherlands

Environmental Assessment Agency

AFOLU

Transport

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Key benefits of setting science-based targets and signing up for Science Based

Targets initiative:

1. Demonstrate leadership and

influence policy

2. Build credibility and reputation

and get potential recognition by NGOs

3. Drive innovation and transform

business practices

4. Save money and increase

competitiveness

Key benefits of setting Science-based Targets

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Source: We Mean Business, The climate has changed, 2014


More and more measures to mitigate emissions are becoming

feasible and mitigation provides many business opportunities

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Management and behavior change Energy efficiency

Renewable energy Low carbon innovations

Photographs: krysztof-baranski/Freeimages, scanrail/Fotolia, rudy-tiben/Freeimages


However carbon pricing is crucial to drive emissions mitigation

action of companies on large scale

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Source: The World Bank, State and Trends Carbon Pricing 2015


Next to mandatory schemes for heavy emitting sectors, more

and more companies are using internal carbon pricing

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Source: The World Bank, State and Trends Carbon Pricing 2015


Towards COP21 in Paris bold commitments from companies and

investors on climate action is growing rapidly

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Source: CDP, Road to Paris map 26 10 2015


Adapting to climate change

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© ECOFYS | |

Adapt to what?

• Average temperature changes of 0.8°C/1.4°F have occurred since 1880s

• We are locked into 1.5°C temperature change

• Is your business resilient to today’s weather…and tomorrow’s climate?

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Infographic: the World Bank 2014

Building a climate resilient business

© ECOFYS | |

Risks to business: Electronics and automotive industries

Case study: Flooding in Thailand 2011 has a global impact on electronics and

automotive industries

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Satellite photographs showing flooding in Thai provinces: Left Before flooding July 2011, right, after flooding October 2011. ©Wikimedia Commons

Impacts: Global supply shortages and prices increases

• Honda: moved to a three day week at its UK plant in November 2011

• Toyota: the floods in Thailand contributed to their drop in one year from first to third in the ranking of the world's biggest car manufacturers.

• Sony: delayed launch of a new camera was due to the floods.


http://upload.wikimedia.org/wikipedia/commons/e/ec/2011_flooding_in_Ayutthaya_Province-EO-1_merged.jpg

http://upload.wikimedia.org/wikipedia/commons/e/ec/2011_flooding_in_Ayutthaya_Province-EO-1_merged.jpg

© ECOFYS | |

Risks to business: chemicals industry

Operations:

> Greater risks of fire

> Increased risks of floods,

accelerated corrosion

> Water scarcity, increase

in commodities prices:

water efficiency,

recycling and re-use

becomes a priority

> Temporary work

suspension

Supply chain /product

delivery disruption

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Photograph: ©Ecofys


© ECOFYS | |

Potential legal liabilities of not adapting?

> Private Sector: Fiduciary

duty on companies to

take into account

environment

> Public sector: statutory

duties on local

authorities to extend

their civil protection duty

beyond emergency

planning to address risks

to local businesses

> Examples of international

case law

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Photograph: ©Africa/Fotolia


© ECOFYS | |

Being prepared to realize market opportunities

• Diversify networks of suppliers:

2011 Thailand floods Nissan diversified

its suppliers: so whilst it was also hit by

the floods it was able to respond more

quickly and recover more quickly.

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• Build resilience to safeguard raw

materials:

GSK teamed up with research sector to

develop a blackcurrant crop for the

drinks brand Ribena, which is resilient

to erratic weather patterns faced over

the next 70 years to secure its supply.


Photograph: ©bgoode/Fotolia

© ECOFYS | |

Solutions to build in resilience: an integrated approach

> Understand your current vulnerabilities

and risks –and how these change over

time.

> Identify critical points of intervention to

build in adaptation measures and

resilience: within your company and

between your key stakeholders.

> Diversified supply chains, logistics and

markets can build in flexibility and

resilience for faster recovery to realise

new market opportunities.

> Have an integrated strategy: low carbon,

and climate resilient!

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Photograph: ©Simonlaprida/Fotolia


Building a climate resilient business

Technology

Transcript of Building a climate resilient business