Sustainability & Climate Change - Who Cares?€¦ · Source: The Global Risks Report 2018 (13th...
Transcript of 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
?
Responsible Care: The Competitive Advantage
Let’s think of Sustainability as being about Economics instead…
GCCGDP($)
We found it!
futurepresentpast
2030?
2050?
Responsible Care: The Competitive Advantage
…about sustaining Quality of Life…
Responsible Care: The Competitive Advantage
…and about new income beyond Crude Oil
Tourism
Finance
Advanced manufacturing
Research & Development
Downstream:Petrochemicals
Real Estate & Tourism
Renewable Energy
Responsible Care: The Competitive Advantage
…which are all embedded into the GCC’s Economic Long Term Diversification Strategies
Responsible Care: The Competitive Advantage
But who cares about climate Change?
Responsible Care: The Competitive Advantage
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
Responsible Care: The Competitive Advantage
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
Responsible Care: The Competitive Advantage
…and we observe a major shift observed in Global CEO perceptions 2018
Responsible Care: The Competitive Advantage
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
Responsible Care: The Competitive Advantage
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
Responsible Care: The Competitive Advantage
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:
Responsible Care: The Competitive Advantage
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?
Responsible Care: The Competitive Advantage
“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
Responsible Care: The Competitive Advantage
The Emphasis is on financially quantifying Impacts to drive improvement, business resilience and new opportunities
Responsible Care: The Competitive Advantage
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
Responsible Care: The Competitive Advantage
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?
Responsible Care: The Competitive Advantage
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%
Responsible Care: The Competitive Advantage
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
Thank youwww.gpca.org.ae