GRI GOLD Roundtables

Climate Change

BENELUX – 30th March 2017

Presenters

• Juliette Gaussem, Manager Corporate & Stakeholders Relations

• Claudia Stracchi, Manager Knowledge Unit

• Jenny Greenop, Sustainability Analyst

• Sebastiaan De Ronde Bresser, Group CSR and Sustainability Director

• Charbel Moussa, Senior Manager, Climate Change & Sustainability

GRI

Expert invited

Hosting Company: SBM Offshore

Climate change

GOLD Roundtables BENELUX 2017 program

30 March 20171

SDGs 6 June 20172

21 Sept. 20173

2 Nov. 20174

Value creation and

sustainability integration

Sustainability and risk

management

• Review the latest

developments in climate

change, including

international agreements.

• Discuss the role of business

in contributing to climate

change, as well as achieving

climate-related targets.

• Introduce the need for

companies to provide high-

quality information on

climate-related topics.

Main objectives

Discuss the main challenges

organizations face when

reporting on topics related to

climate change, including:

• Carbon reporting boundary

and influence on actors

operating in the value chain

• Carbon reduction targets

• Moving beyond carbon:

identifying the links between

climate change and other

effects, as well as company’s

adaptation strategy

SECTION 1 SECTION 2

What do you expect to gain

from today’s roundtable?

Main objectivesYour expectations

• To encourage openness and

information sharing, Chatham House

Rules will apply: neither the identity

nor affiliation of any speaker at this

roundtable may be revealed.

• When speaking, please use real

examples from your own company’s

experience rather than generalizing.

• As much as possible, use open

questions to encourage feedback and

reflect on the group process.

• Respect the diversity of opinions and

experiences in the room.

Rules of engagement

Agenda

Time Duration Content Details

13.00 10 min Introduction to the GRI

GOLD Roundtable

Logistics, objectives and introductions

13.10 55 min SECTION 1

Climate change: What’s

happening and what is the

role of business?

• Climate change context

• Outcomes of the main international climate

change agreements and how business has

responded

• The relationship between business and

climate change

• An introduction to reporting on climate

change: The SBM Offshore case study

14.05 30 min Break

14.35 2hr 10 min SECTION 2

Reporting on climate:

Exploring the main

challenges

• The status of climate reporting and the main

challenges:

• Carbon reporting boundaries

• Carbon reduction targets

• Moving beyond carbon

16.45 10 min Conclusions and wrap-up Open discussion

Climate change: What’s happening

and what is the role of business?

Climate change

2015 was the hottest year on record and 2016

was even hotter.

Evidence of rapid climate change

NASA's Analysis of 2016 Global Temperature

The global risk landscape

Climate change

• Extreme weather

events is the likeliest

risk and second in

terms of impact

• Failure of climate

change mitigation

and adaptation is

the fifth risk in terms

of impact

• Water crisis is the

third risk in terms of

impact and the ninth in

terms of likelihood

Economic

Environmental

Geopolitical

Social

Technological

Environment Societal

“The Global Risks Report 2017”, World Economic Forum, Switzerland, 2017

Global action on climate changeThe Paris Agreement (COP21)

A pact signed in December 2015 by 195 countries to keep global

temperature increase well below 2C and, if possible, below1.5C.

WHAT IS IT?

To reach the goal, parties agreed to do different things, including:

• bringing about a significant reduction in greenhouse gas emissions

• devoting USD100 billion annually by 2020 for mitigation and

adaptation.

HOW DOES IT WORK?

• 55 countries, or enough to bring total global emissions to 55%.

• The agreement has officially come into force.

WHAT WAS REQUIRED FOR IT TO COME INTO FORCE?

Global action on climate changeCOP21 – Intended Nationally Determined Contributions

The Intended Nationally Determined Contributions (INDC) plan

developed in the Benelux is the same for all European members states:

- The binding target of an at least 40% domestic reduction in

greenhouse gas emissions by 2030 compared to 1990

- The scope: All greenhouse gases not controlled by the Montreal

Protocol: Carbon Dioxide (CO2)

- Sectors: Energy, Industrial processes and product use, Agriculture,

Waste, Land Use, Land-Use Change and Forestry set out in

Decision 529/2013/EU

How important is the new climate change agreement to

your business?

Global action on climate changeCOP21 – The business perspective

“The State of Sustainable Business 2016”, BSR & Globescan

42

29

18

13

25

21

35

40

47

28

46

49

13

22

29

40

21

24

6

4

4

15

8

6

4

5

2

4

Europe 2016

Europe 2015

North America 2016

North America 2015

Other regions 2016

Other regions 2015

Very important Moderately important Not very important Not at all important Don't know

“The State of Sustainable Business 2016”, BSR & Globescan

43

23

16

10

6

A global commitment to decarbonization

National climate action plans

Regulatory incentives for business action

Policy certainty

Nothing

What are the most important outcomes of the new

international climate agreement agreed in Paris (UNFCC

COP21)?

Global action on climate changeCOP21 – The business perspective

UNFCCC, Science Based Targets initiative

• > 600 major international corporations have already

factored the Paris Agreement in their business plans,

according to CDP data.

• 200 companies with a combined market cap of $4.8

trillion have committed to aligning emissions

reduction targets with keeping global temperature

increase below 2°C.

• 40 major multinational companies with a combined

market cap of $1.5 trillion have internalized the cost

of carbon.

Global action on climate changeCOP21 – How has business responded?

Global action on climate change

COP22

Moving the Paris Agreement forward

• Many global partnerships were announced at COP22 — a

sign governments, companies, cities and NGOs are shifting

towards the implementation phase.

• Companies and investors are key implementation partners.

• Several major financial pledges were announced:

• $50m for capacity building

• $23m for technology

• Over $80m for the Adaptation Fund.

“Climate Policy Debrief for WBCSD Members COP 22 Highlights”, WBCSD, 2016

COP22 – Main outcomes

Global action on climate changeYour company’s response

How has your company

responded to these recent

international developments in

climate change?

Climate change and business

What is the relationship?

ACTIVITIES OF THE COMPANY OR OTHER

ENTITIES IN ITS VALUE CHAIN

IMPACTS RELATED

TO CLIMATE

CHANGE

CLIMATE RISKS

AND

OPPORTUNITIES

EFFECTS ON CLIMATE CHANGE, IMPACTING

NATURAL AND HUMAN SYSTEMS

Effects

ON the

company/

its value

chain

Impacts

OF the

company/

its value

chain

Climate change and business

Case study 1: Volkswagen

VOLKSWAGEN’S SALE OF CARS

WITH “DEFEAT DEVICE”

NOX EMISSIONS

OF CARS ALMOST

40 TIMES THE

ALLOWABLE LIMIT

Effects

ON the

company/

its value

chain

Impacts

OF the

company/

its value

chain

EFFECTS ON CLIMATE CHANGE, IMPACTING

NATURAL AND HUMAN SYSTEMS

• Payment of $15.3bn

to customers and

regulators

• Drastic drop in the

stock price

• Reputational damage

• TRANSITION RISKS

• REPUTATIONAL RISKS

• LIABILITY RISKS

• PURE FINANCIAL RISKS

Climate change and business

Case study 2: Banks financing oil and gas

BANKS FINANCING OIL AND GAS

COMPANIES

IMPACTS RELATED

TO CLIMATE

CHANGE FROM

OIL AND GAS

ACTIVITIES

EFFECTS ON CLIMATE CHANGE, IMPACTING

NATURAL AND HUMAN SYSTEMS

Effects

ON the

company/

its value

chain

Impacts

OF the

company/

its value

chain

RISKS

• REPUTATIONAL

• STRANDED ASSETS

• PURE FINANCIAL RISKS

Negative effects on

revenues and

liabilities

The private sector has a critical role to play

in responding to climate change.

There is a growing and widely identified need for companies

to provide high-quality information on climate-related topics

material to their business.

Reporting on climate changeHow does reporting help companies respond to climate change?

Transparency is one of the main ways to improve

performance on climate. Sustainability reporting is not only a

communication tool, but a way to move the world towards a

low-carbon economy.

Reporting on climate changeEU Directive

• Belgium

The official full legal transposition for Belgium has not taken place yet. There

is less information regarding the current draft for Belgium.

• Netherlands

The official full legal transposition for the Netherlands has not taken place

yet. looked at the present draft that hopefully will be 'officially' transposed

soon. There is unfortunately nothing on Climate Specific Disclosures that

deviates from the environmental considerations explicated already in the

directive. The scope stays the same as the directive, explanatory text

mentions that 115 companies will be impacted by the transposition.

• Luxembourg

The transposition has been fully completed. There are no additional

disclosure requirements for climate related matters other than the

environmental considerations mentioned in the directive.

• A rise in global temperatures of six degrees between 2016 and

2100 would inflict $43 trillion in losses to investment

portfolios discounted to present day value (~30% of the entire

stock of manageable assets)

• If the temperature rise is restricted to below 2°C, these

projected losses would be considerably reduced.

Reporting on climate changeThe investors’ perspective

“Seeing beyond the tragedy of horizons – an investor perspective”, Aviva, 2016

The role of transparency in understanding climate risk

• Investors will need to develop a comprehensive picture of the

climate risks in their portfolio.

• Unfortunately, many companies still fail to divulge the sort of

detailed information that would make this possible.

In May 2016, Total released the report, “Integrating Climate

into our Strategy”, to clearly explain to stakeholders how the

company’s goals, decisions, actions and investments reflect how it

is responding to climate change.

The report:

1. Shares Total’s goals for 2035

2. Specifies how the 2°C scenario impacts the company’s

decision-making process.

3. Reviews what the company has already implemented, the

initiatives it is currently undertaking, the investments it is

planning to secure and the indicators it uses to track its

performance.

Reporting on climate changeCase study: Total

“Integrating Climate into our Strategy”, Total, 2016

Reporting on climate changeYour company’s approach

How does your company

consider stakeholder information

requests in its approach to

climate reporting?

SBM Offshore

Reporting and climate change

• Sebastiaan De Ronde Bresser, Group CSR and

Sustainability Director

• Jenny Greenop, Sustainability Analyst

Reporting on climate:

Exploring the main challenges

Carbon reportingKPMG study results

4 out of 5 G250 companies identify climate change

and carbon as material issues and

report their carbon emissions

1 in 5 large companies in high carbon sectors,

such as mining and chemicals, do not

report their carbon emissions

85%of the companies that do not report

their carbon emissions are based in

the US or Asia Pacific nations, including

China

“KPMG Survey of Corporate Sustainability Reporting 2015”, KPMG

Carbon reportingKPMG study results

Inconsistent information:

• The carbon information published by the world’s largest

companies in their annual financial and/or CSR reports

are not consistent.

• This makes it almost impossible to accurately compare

the carbon performance of different companies.

of companies that report on carbon

include carbon data in their annual

financial or integrated reports52%

“KPMG Survey of Corporate Sustainability Reporting 2015”, KPMG

With the GRI Standards, companies can disclose climate

change impacts and effects in four main ways:

1. Using the management approach (GRI 103:

Management Approach) for material climate-related topics

2. Using topic-specific Standards to report impacts

contributing to climate change (GRI 302: Energy and

GRI 305: Emissions)

3. Using certain disclosures to report the risks and

opportunities arising from climate change

4. Using other topic-specific Standards to report on

sustainability issues related to climate change

Reporting on climate changeGRI Standards

GRI Standards

Key impacts, risks and

opportunities

Disclosure

102-15

Disclosure

201-2

Financial implications and

other risks and

opportunities due to

climate change

Reporting on climate changeGRI Standards: Disclosures 102-15 and 201-2

GRI 102: General Disclosures 2016; GRI 201: Economic Performance 2016

GRI 201: Economic Performance

GRI 102: General Disclosures

“Linking GRI and CDP: How are the GRI Sustainability Reporting Standards and CDP’s 2017

climate change questions aligned?”, GRI

Reporting on climate changeGRI Standards and CDP

There is a clear need for improvement and global reporting guidelines on carbon could

help to address this problem.

In KPMG views, it should not be left to companies alone to figure this out: industry bodies,

regulators, standard setters, investors and others all have a role to play.

One of the initiative underway is the Financial Stability Board Task-Force on Climate-

related Financial Disclosures (TCFD), aiming to develop consistent climate-related

disclosures for companies.

The TCFD had developed 7 principles for

effective disclosure:

Reporting on climate changeTask Force on Climate-Related Financial Disclosures

“Recommendations of the Task Force on Climate-related Financial

Disclosures”, TCFD December 2016

How to translate the 7 principles into decision-useful forward-looking

reporting?

4 core thematic areas: Governance; Strategy; Risk management; Metrics & targets.

Increase focus on the risks and opportunities related to a transition to a lower-carbon

economy

Issue for Board attention

Thorough assessment, ideally through scenario planning

Reporting on climate changeTask Force on Climate-Related Financial Disclosures

“Recommendations of the Task Force on Climate-related Financial

Disclosures”, TCFD December 2016

Disclose key inputs and assumptions

related to the disclosures to allow users

to understand the process and its

limitations.

Data users and data preparers to work

together to develop effective and

decision-useful reporting metrics.

Setting the carbon reporting boundaryUNEP study

Main observation: GHG emissions are reported more

consistently than other environmental topics, but since they

can be calculated in different ways, there are some variations

in how data is calculated and presented.

“Raising the Bar – Advancing Environmental Disclosure in Sustainability Reporting”, UNEP

Recommendations:

• Companies should put more emphasis on reporting GHG

emissions in the value chain (Scope 3).

• Companies should report the methods used to convert

energy use or direct GHG emissions into reporting

metrics, such as CO2 equivalent.

Setting the carbon reporting boundaryKPMG study results

“KPMG Survey of Corporate Sustainability Reporting 2015”, KPMG

Reporting GHG emissions

84%

79%

50%

7%

Scope 1

Scope 2

Scope 3

upstream

Scope 3

downstream

23

19

18

14

12

6

5

Difficulties achieving changes throughout the value chain

Weak regulatory incentives

Difficulty understanding and communicating the business case

Limited budget to manage climate change risks

Lack of commitment by senior management to address climate change

Lack of relevant climate data specific to our company

Lack of awareness of climate-related risks

What are the main barriers keeping your company from

taking more action on climate change?

Setting the carbon reporting boundaryThe main barriers to taking action on climate change

“The State of Sustainable Business 2016”, BSR & Globescan

Setting the carbon reporting boundaryWorld café

Objective

To reflect on the barriers to addressing two main carbon

reporting boundary challenges (data gathering and data quality)

and discuss possible solutions.

World café (45 min)

Setting the carbon reporting boundaryWorld café

Instructions

1. Break into two teams and select a chairperson. Each team will discuss one

of the main challenges to setting a carbon reporting boundary:

• Data gathering

• Data quality

2. Each group will identify and discuss the barriers to addressing the

challenge, writing/drawing their ideas on the tablecloth

3. Then, they will discuss possible solutions to these barriers, drawing on the

tablecloth using another color.

4. Then, participants will move to another table. They will look at what

others have written and incorporate that into their discussion.

5. Finally, chairpersons will summarize the thoughts and conclusions related

to the two challenges to the entire audience.

World café (45 min)

Setting the carbon reporting boundaryGRI Standards: Climate-related impacts of the value chain

Disclosure

305-3Other indirect (Scope 3)

GHG emissions

GRI 305: Emissions

GRI 302: Energy 2016; GRI 305: Emissions 2016

Disclosure

302-5

Reductions in energy

requirements of

products and services

Energy consumption outside

the organizationDisclosure

302-2

GRI 302: Energy

A four-pronged approach to creating a sustainable value chain

Setting the carbon reporting boundaryCase study 1: Woolworths Holdings

CDP Web TV – A best practice case study: Woolworths Holdings, CDP

Setting the carbon reporting boundaryCase study 2: Ford

Sustainability Report 2014/15, Ford

We can’t control which

vehicles people buy or

how people drive, which

greatly impacts actual fuel

economy and use phase

GHG emissions.

We have limited ability

to track precisely or

influence the GHG

emissions of our direct

suppliers, and this ability

decreases throughout the

sub-tiers of our supply

chain.

Setting the carbon reporting boundaryCase study 3 - Philips

Philips Annual Report 2016

Not included in the footprint:

• Commuting by employees

• Upstream distribution

• Outsourced activities

• Produce use by customers

Challenges:

Business trips by taxis and chauffeur driven

cars

Trucking from sites and distribution centers

to ports and airports

Mode of transport of express shipments

Sea shipments

Emission factors

Reporting on carbon reduction targetsKPMG study results

of the companies that publish targets to reduce

carbon explain in their reports why they have

chosen those targets35%

average timeframe for corporate carbon

reduction targets11 years

“KPMG Survey of Corporate Sustainability Reporting 2015”, KPMG

of the world’s largest companies do not

publish targets for carbon reduction47%

of companies are currently publishing data on the

progress they’ve made on their carbon reduction targetsminority

Reporting on carbon reduction targetsCDP Report

CDP Press release: Global business has begun transition to low-carbon world, but large numbers risk being

left behind, October 2016

of companies have set goals for 2030 or

beyond14%

have committed to aligning their targets with

the latest climate science for a 2˚C limit9%

Achieving their current targets would amount to one-quarter of

required emissions reduction to stay on the path of keeping global

warming below 2˚C.

Reporting on carbon reduction targetsCase study 1: Kellogg Company

“2015/2016 Corporate Responsibility Update”, Kellogg Company

Reduction targets for the Kellogg Company and its suppliers

15%

65%

50%

absolute reduction in emissions by 2050 using

2015 as a base year (Scope 1 and 2)

reduction of direct supplier emissions from

2015–2050 (Scope 3)

reduction in emissions intensity (tonne of

CO2e per tonne of food produced) by 2020

using 2015 as a base year (Scope 1 and 2)

Targets are in line with the reduction levels required to keep global

temperature increase below 2˚C.

Reporting on carbon reduction targetsCase study 2: British Telecom

By 2020, we aim

to help customers

cut their carbon

footprints by three

times our end-to-end

carbon emissions.

That’s a 3:1 net

positive impact.

Reduction targets for customer emissions

“Delivering our purpose – update on our progress 2015/2016”, BT

Reporting on carbon reduction targetsCase study 3 - Statoil

Our reduction target for 2017 is to

save another 144,000 tonnes of CO2.

We expect to achieve these

reductions through targeted projects

to improve energy efficiency and

reduce flaring.

For our operations at the Norwegian Continental Shelf, we

are committed to delivering energy efficiency measures

achieving a total effect of 800,000 tonnes CO2 saved from

2008 up to 2020, as part of the oil and gas industry’s

collaborative Konkraft target.

Between 2008 and 2015, we reduced direct CO2 emissions by 1 million

tonnes, largely achieved through energy efficiency measures and flaring

reductions. For 2016, our target was to save 220,000 tonnes of CO2.

Through systematic work in our internal energy efficiency network and

progress in stopping routine flaring, we managed to implement initiatives

accounting for nearly 325,000 tonnes of CO2.

Statoil Annual Report 2016

Reporting on carbon reduction targetsGroup exercise

Objectives

• To analyze which information related to carbon reduction

targets would be useful to disclose

• To discuss participants’ present and future approach to

disclosing this information

Group exercise (25 min)

Reporting on carbon reduction targetsGroup exercise

Instructions

1. Break into three teams.

2. Each team will identify targets and the information they would

like to find in a sustainability report as a stakeholder (e.g. for

benchmarking purposes), writing a list on the group’s flipchart.

3. The teams will exchange flipcharts and check whether they

have already included this information in their report and if

they are ready/willing to publish it. If not, they should discuss

the reason why.

4. Each team will share the results of the discussion with the

rest of the participants.

Group exercise (25 min)

Mapping the relationships between global risks

Moving beyond carbon

• On average, 21.5 million

people have been

displaced by climate- or

weather-related events

each year since 2008

• Water stress could

cause extreme societal

stress in regions such as

the Middle East, putting

at risk 6% of GDP by

2050

Economic

Environmental

Geopolitical

Social

Technological

Environment Societal

“The Global Risks Report 2017”, World Economic Forum, Switzerland, 2017

Moving beyond carbonSDGs

United Nations Sustainable Development Goals

Moving beyond carbonGRI Standards

GRI 303: Water

GRI 201: Economic Performance

GRI 403: Occupational Health

and SafetyGRI Standards

“Linking GRI and CDP: How are the GRI Sustainability Reporting Standards and CDP’s 2017

water questions aligned?,” GRI

Moving beyond carbonGRI Standards and CDP

Moving beyond carbon

Climate change as a threat to business operations

Case study 1: Viña Concha y Toro

One of the main threats

to the wine industry

worldwide is climate change,

which by making global

temperature to rise it might

cause droughts that will

directly affect the time of

ripening of the grapes and

their quality.

Anticipating this

problem and seeking to

make a contribution to

solving it, Concha y Toro

is developing a research

line on how to adapt to

climate change, from the

perspective of irrigation

and water resources

optimization.

“Sustainability Report 2015”, Viña Concha y Toro

Moving beyond carbonCase study 2: Coca-Cola

Water Sugar & Corn Bottles

“Sustainability Update 2015/2016”, Coca-Cola

Resource scarcity due to climate change

Shrinking water

supplies

Agricultural

threats

Scarce or

expensive inputs

Moving beyond carbonCase study 3 - BHPBilliton

We are accelerating the development and

deployment of low-emissions technologiesWe are adapting to climate

change impacts

We are supporting mechanisms to

finance global emissions reductions We are working with others to

enhance the global response to

climate change

The portfolio is tested against a range of scenarios

and shock events

Moving beyond carbonGroup discussion

Objectives

• To reflect on climate change effects that could affect business

• To discuss the challenges in identifying, analyzing and reporting

these impacts

Group discussion (15 min)

Moving beyond carbonGroup discussion

Topic linked to

climate changeSDGs GRI disclosure

Group discussion (15 min)

Conclusions and wrap-up

Conclusions and wrap-up

Take a few moments to reflect on the following:

• Were your expectations met?

• What three things will you take back to

your company’s reporting team?

Thank you

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