Governance
Disclose the organisation's governance around climate-related risks and opportunities
Leadership
- Climate action is an integral part of business strategy and risk management, driven by the board, with implementation through an organisation-wide governance structure.
- The board has capacity and competence (through the use of board committees or similar arrangements) to respond to climate-related risks and opportunities effectively (including connected issues of technology and innovation), involving senior members of the board and executive function. This enables the board members to set the organisation’s climate strategy, including targets and periodic progress reviews.
- The risk management and audit committee reviews group level climate-related risks periodically.
- The organisation acts as a positive agent for regulatory and policy change, playing an active role in environmental policy development forums, assisting the government in its rationale and responding on any policy consultations.
- Board and management are committed to transparency on climate lobbying activities, both in respect of direct advocacy and indirect representation via trade associations; and ensure alignment between those practices and expectations of the board and shareholders.
Implementation
- Cross-functional teams including members from across the supplier’s functional groups work collaboratively on the detailed delivery of the climate strategy and to review implementation of projects.
- The supplier has established governance structures focussed on carbon abatement across its projects and has developed systems for prioritisation of climate projects, carbon pricing and benefits, and reviewing implementation of projects.
- Remuneration and financial incentives for executives are linked to progress towards achieving short, medium and long-term climate targets.
Risk
- Have a system in place for internal controls, to ensure any emerging risks and uncertainties are taken into account in the company’s accounting judgments, disclosures, processes, audit and financial statements.
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Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where such information is material
Leadership
- Obtain verification by the Science Based Targets initiative (SBTi).
- Describe and publish the resilience of the supplier’s strategy to deal with different climate-related scenarios, including a 2°C or lower scenario.
- Provide extensive data on performance through public submissions to Climate Disclosure Project (CDP), and any other ESG disclosures, to investors. This will include data on climate change, as well as both water and supply chain management.
- Lead and support technology pilots for use of hydrogen, carbon capture and storage in manufacturing process.
- Be a role model for others through vocal advocacy for action on climate change and collaboration with peers and other stakeholders to achieve change.
- Transparent disclosure of direct and indirect CO2 emissions and energy use by source.
Implementation
- Progress short-term activities on a high priority and consistent basis and have short-term activities updated regularly to maintain focus and ensure progress.
- Implement plans for and invest in the progression of medium-term activities on a high-priority and consistent basis and have medium-term activities updated regularly to maintain focus and ensure progress.
- Plan for achieving long-term deep decarbonisation of the end to end business to ensure ability to operate in a net zero operating environment including, as appropriate, (a) advanced materials and green methodologies (b) use of hydrogen and carbon capture technology. Use this to update short and medium-term priorities on an ongoing basis.
- Transitioned to wholly renewable power sources and low emission HGV vehicle fleet.
- Identify and start to implement specific mitigation measures required to deal with climate risk and opportunities and to strengthen resilience across key operating locations.
- Support action plan to strengthen climate resilience at asset level including design strengthening at key locations.
- Support the circular economy, as appropriate to the business, through investment in plants and processes which enable higher levels of recycled materials to be used.
- Use an internal carbon price in relevant capital expenditure approval and strategic planning processes, with the aim of directing investments towards efficiency, optimisation and lower-carbon solutions.
- Invest in research, development and testing of more sustainable manufacturing methodologies and green materials.
- Engage, support and incentivise supply chain to make significant carbon reductions through a sustainable procurement programme.
- Have a dedicated team focusing on the ongoing reduction of environmental impact of the business and its assets and not just the reduction to net zero.
Risk
- Update and maintain the short, medium and long-term priorities, plans and activities identified to deal with climate-related risks and opportunities.
- Integrate scenario analysis outcomes into process for updating investment strategy and business plan and test resilience of investments and portfolios to cope with selected scenarios.
- Identify the financial investment that the business is going to make in managing climate-related risks and opportunities over the short, medium and long-term.
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Risk management
Disclose how the organisation identifies, assesses and manages climate-related risks
Leadership
- Ensure all climate-related risks are registered on the risk register, updated on an ongoing basis and fully integrated into the organisation’s overall risk management and governance processes.
- Consider transition risks and ensure that they are factored fully and consistently into future financial long-term forecasts for those areas of the balance sheet whose recoverability is assessed based on expected future cash flows, including property, plant and equipment, expansion assets in the course of construction, intangible assets, investment properties and deferred tax assets.
- Consider the potential impact of different scenarios, including a 4°C, a 2°C, and a 1.5°C scenario, on the organisation’s businesses, strategy, and financial planning (qualitative and quantitative).
Implementation
- Introduce climate component to procurement processes with pre-acquisition due diligence and in vendor reports prior to exit.
- Implement ERM process for managing climate-related risks on an ongoing basis across the supplier's operations, including through the training of staff and the integration of early warning indicators and mitigation strategies into risk management governance procedures.
- Outline in strategy plans, all-risk management actions and an execution plan for each of the identified risks.
- As appropriate to key markets, pass cost of carbon taxes to customers in the form of an additional surcharge which will be adjusted when carbon costs change, driving awareness and action in the value chain towards innovation and investments in a decarbonised future.
Risk
- Identify ongoing approach for measuring how climate-related risks are prioritised using risk assessment tools.
- Complete risk analysis and continue to monitor specific climate change at key operating locations (covering major upstream sites, manufacturing facilities and ports), using globally accepted climate change scenarios.
- Complete risk analysis and continue to monitor transition risks impacting the business (including capacity for green materials, impact of carbon pricing on profitability, risk of increased regulation and potential for non-compliance with net zero carbon operating environment).
- Identify climate change induced physical risks in the form of supply chain disruption including potential delays due to adverse weather conditions as well as capital project delays including unplanned costs and loss of production.
- Assess financial impact of executing actions for addressing climate-related risks as identified in strategy over time horizons that allow for appropriate financial planning.
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Metrics & targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material
Leadership
- Adhere to the United Nations Science Based Targets initiative and follow guidance from Intergovernmental Panel on Climate Change (IPCC).
- Utilise metrics to assess climate-related risks and opportunities in line with the organisation’s strategy and risk management process.
- Refine and update appropriate targets to manage climate-related risks and opportunities, including use of science-based targets, which take account of the specific profile of the supplier’s business and refine and update a methodology to monitor performance against these targets.
- Become an approved Environmental Product Declaration (EPD) programme operator, with the ability to create product-specific EPDs that comply with relevant international standards.
Implementation
- Assign likelihood, impact, and velocity scores for each of the identified risks, including scenario planning.
- Provide assurance of reported GHG emissions against International Standards on Assurance Engagements.
- Implement ISO 14001-certified Environmental Management System and Environmental Sustainability Standard.
- Measure and report in accordance with the World Resources Institute and World Business Council on Sustainable Development Greenhouse Gas Protocol.
- Ensure regular verification of methodology for measurement of emissions against relevant best industry standards applying to all aspects of business.
- 100% of Scope 1, 2 and 3 emissions independently assured against ISAE 3410 Assurance Engagements on Greenhouse Gas Statements.
- Collect and report data complying with the UK government’s Streamlined Energy and Carbon Reporting (SECR) requirements, or other relevant best industry reporting standard(s) relevant to the business.
- Implement systems to enable supplier’s global supply chain to track, collect and share emissions data.
Risk
- Research, monitor and analyse the financial impact of climate risks, including water risk, on the supplier’s own manufacturing processes and those of its global supply chain.
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