sustainability & climate change - who cares?€¦ · source: the global risks report 2018 (13th...

Sustainability & Climate Change- Who Cares?

Hannes ReinischPartner, PwC Consulting

Responsible Care: The Competitive Advantage

Climate Change and Sustainability?

Climate Change &

Sustainability

?


Let’s think of Sustainability as being about Economics instead…

GCCGDP($)

We found it!

futurepresentpast

2030?

2050?


…about sustaining Quality of Life…


…and about new income beyond Crude Oil

Tourism

Finance

Advanced manufacturing

Research & Development

Downstream:Petrochemicals

Real Estate & Tourism

Renewable Energy


…which are all embedded into the GCC’s Economic Long Term Diversification Strategies


But who cares about climate Change?


The World Economic Forum suggests businesses do:“Top 4 business risks are Climate Change risks”

1. Extreme Weather Events

2. Natural Disasters

3. Failure of Climate Change mitigation & adaptation

4. Water Crises

5. Cyber Attacks

6. Etc

Source: The Global Risks Report 2018 (13th Edition)

World Economic Forum


Almost 80 % of businesses involved in UN Sustainable Development Goals prioritise Climate Change

of global companies address SDGs in public reporting 62%

choose SDG 13 – Climate Action79%

Source: PwC Analysis of 470 international companies


…and we observe a major shift observed in Global CEO perceptions 2018


400 of the world’s largest Company’s CEOs say they are “extremely concerned” with Climate Change…

• Top Issues: Regulation, Terrorism, Geopolitics, Taxes, Populism, Climate Change and Environmental Damage

• Exceeds CEO’s concerns over: Forex, Infrastructure, Eurozone, Cost of Capital, Unemployment, Economic growth, Social Instability, Protectionism…

Source: PwC, 21st Annual Global CEO Survey

41

35

4236

31

40


Why are companies aligning with SDGs and Climate Goals ?

• “Improve trust in society, brand and customer awareness”

• “Increase corporate awareness of risks & externality costs”

• “Reduce regulatory risk (license to operate)”

• “Identify new growth markets & product opportunities”

• “Prepare for integrated reporting”

• “Collaborate in public private partnerships”

Source: PwC Analysis of 470 international companies


Addressing Brand Perception & Consumer Concern

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Top opportunity:new sustainable products/services

for conscious customers

Top 3 Risks:new regulation & standards

changes in temperature consumer behaviour

PwC Research on 96 Global Chemicals Companies in Carbon

Disclosure Project (CDP)

Global Chemical Industry Research shows clear awareness of riskdss and opportunities:


Investors & Regulators “care”

• 2015 – Development of Task Force on Climate-related Financial Disclosure (TCDF)

• 2016 – The European Commission introduces Directive 2014/95/EU to require companies to disclose non-financial information

• June 2017 – Release of TCDF Recommendations on climate disclosure (150 financial institutions responsible of US$ 82 trillion assets have committed to implement them)

• January 2018 – BlackRock’s CEO sent a warning letter to CEOs of public companies outlining his expectation of they starting accounting for their effect on society

2012/13 UAE Green Growth Strategy

2014 onwards: Water, Electricity & Fuel Subsidies phasing out across region

2015 onwards

• 100% of MENA countries now have Renewable Energy Targets

• 81% MENA Countries submit INDCs under Paris Agreement

• UAE establishes Ministry of Climate Change & Environment

• MENA Countries sign up to UN Sustainable Development Goals

• Green Finance and Funding Mechanisms launched (NBAD, DGF)

• 62% 2017/18 MENA Countries ratify Paris Climate Agreement

• Saudi Ministry of Economy & Planning adopts ownership of SDGs for KSA

Globally? MENA?


“Caring” by recognizing Climate Change as a board room issue

Revenues Profits Assets Long Term Expectations

Customer Expectation

Investor Expectations

Regulator Expectations

Employee Expectations

Brand Perception

Customer Behaviour

Technology Change

New Business Opportunities

Environment & Carbon Taxes Long-term

Asset Value

Asset Lifetime & Depreciation

Stranded Assets?

Pricing, Volumes, Market Share

Cost Efficiency in Operations

Asset Value, Utilisation & Returns

Supply Chain & Logistics impacts

Growing resource cost

$$$

Import duties


The Emphasis is on financially quantifying Impacts to drive improvement, business resilience and new opportunities


So how do Leading Companies build

Climate Risks & Opportunities into corporate strategy?

CEO &Board Decisions

Impact Mitigation Strategies

& New Business Opportunities

(into corporate Strategy)

Company-Relevant

Outcomes?Physical Climate

Change?Temperature

HumiditySea level & salinity/acidityExtreme Weather Events

Etc.

Financial &Economic

Value?Impact?Climate Policy

Changes?Carbon taxes

Fossil Fuel taxesRE Quotas

Phase-out subsidiesProduct Bans

Brand

Customer & Demand

Production

Logistics & Supply Chain

Investor & Lender Relations

Value @ Risk

P&L

B/S

Share Price

GDP & Jobs?

2020/30/50


Measuring financial success and climate performance

• Climate AND Financial Performance• Benchmark within industry and outside• Preparedness in low carbon transition?• Risk Management & Governance of carbon related risk?• Market opportunities in low carbon transition?


Self-check… comparing against global Petrochemicals benchmarks

of revenues from sustainable products20%

tCO2e /MT product (average emissions intensity)0.8

integrate climate change issues into risk management processes90%

have emission reduction or renewable consumption targets 92%

provide monetary incentive at Board/C-suite level44%

Source: PwC, Climate Performance Analytics: Chemicals Industry facts (96 Companies)

provide corporate incentives for managing climate-related issues 89%


PwC Contact details

Hannes Reinisch – Sustainability and Climate change Partner

Franck van Dellen – Sustainability and Climate change Manager

Email: [email protected]: 00971 (0) 56 682 0609

mailto:[email protected]

Thank youwww.gpca.org.ae

sustainability & climate change - who cares?€¦ · source: the global risks report 2018 (13th...

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