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CDP Climate Change 2022 Reporting Guidance

(C3.3) Describe where and how climate-related risks and opportunities have influenced your strategy.

Question dependencies

This question only appears if you select any option except “No, and our strategy has not been influenced by climate-related risks and opportunities” in response to column 1 of C3.1.

Change from last year

Revised question dependency

Rationale

Investors and data users are interested to know how climate-related risks and opportunities may have affected organizations’ strategies. Answers to this question may be used to inform expectations about the future performance of an organization and on how resilient its strategy is to climate-related risks and opportunities.

Connection to other frameworks

TCFD

Strategy recommended disclosure b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.

SDG

Goal 12: Responsible consumption and production

Goal 13: Climate action

Response options

Please complete the following table:

Business area Have climate-related risks and opportunities influenced your strategy in this area? Description of influence

Products and services

Select from:

  • Yes
  • No
  • Evaluation in progress
  • Not evaluated

Text field [maximum 2,400 characters]

Supply chain and/or value chain

Investment in R&D

Operations

Requested content

General

  • Each row in the table corresponds to a possible area of impact in a company’s business. For each row, select how climate-related risks and opportunities have affected your strategy in this area.
  • This question is intended to focus on the group business strategy – meaning the full corporate body on which you are reporting. However, if it is more appropriate, you may wish to comment on divisional (business unit) strategies. If you are responding to the request from a supply chain member, please also include information specific to your requesting member, i.e. relevant business units.

Description of influence (column 3)

  • Describe how your strategy in this area has been influenced by climate-related risks and opportunities and the time horizon(s) it covers;
  • Specify if this includes any climate change adaptation and mitigation activities.
  • Include the most substantial strategic decision(s) in this area to date that have been influenced by the climate-related risks and opportunities;
  • If a certain strategic decision was informed by the climate-related scenario analysis, please specify that.
  • If your strategy in this area has not been influenced by climate-related risks and opportunities, explain why not.
  • If the evaluation of influence is still in progress, include a company-specific description of the evaluation process used, and when it is expected to be completed.

Note for oil & gas companies, electric utilities, automotive and automotive component manufacturers, and companies with coal reserves:

  • Please refer to the sector specific guidance for the risks and opportunities questions before answering this question.
  • The guidance contains a number of issues that investors want these sectors to consider in answering the risks and opportunities questions and you may wish to draw together some of these issues in your answers to questions on the integration of climate change into business strategy.
  • Please provide a complete answer to these questions on business strategy in the input fields provided. Do not cross-refer to the risks and opportunities answers in your response to this question.

Note for oil & gas sector companies:

  • Discuss, if relevant, your methodology for the integration of regulatory and physical climate change risks into the company strategy, investment decisions and risk management, including the assumptions used.
  • Where possible, provide illustrative examples of the assumptions made in specific investment decisions.
  • You should also discuss - again if relevant - the diversification of your portfolio into lower-carbon and non-fossil fuel products (e.g. natural gas, biofuels, renewable energy) and strategy for development of carbon capture and sequestration technology, including technology areas of focus, and distinctive areas of strength your company believes it holds.
  • Please give the methodology used for the integration of future carbon prices into your hydrocarbon exploration strategy and investment decisions, with the assumptions used. Where possible, provide illustrative examples of the assumptions made in specific investment decisions.

Note for electric utility sector companies:

  • Discuss any work to incorporate renewable energy, carbon capture & sequestration, cleaner coal technologies and energy storage into your strategy.

Note for transport OEMs sector companies:

  • Discuss the impact on your strategy for your products at group level and, where relevant, for specific markets, including any related targets for GHG emissions performance (expressed as gCO2e/unit distance) and include a reference to any regulatory drivers and the baseline against which performance is measured.
  • Discuss expansion into hybrid/fully electric vehicles and fuel cell technology, if relevant.

Note for companies with coal reserves:

Note for financial services companies:

  • The climate-related risks and opportunities to be considered in this question refer to lending, financial intermediary, investment and/or insurance underwriting activities of your organization, in addition to your operational activities.
  • Banks:

- Describe the potential impacts of climate-related risks and opportunities on your core businesses, products and services, including:

- Information at the business division, sector or geography, credit quality and average tenor levels;

  • Asset managers/Asset owners:

- Under” Supply chain and/or value chain” describe how climate-related risks and opportunities are factored into your investment strategies and investee selection.
- Also describe how each product or investment strategy may be affected by the transition to a lower-carbon economy.

  • Insurance companies:

- Describe the potential impacts of climate-related risks and opportunities on your core businesses, products and services, including:

- Information at the business division, sector or geography levels;

- As asset owners, insurance companies should describe how climate-related risks and opportunities are factored into relevant investment strategies – in the business’ value chain. This could be described from the perspective of the total fund or investment strategy or individual investment strategies for various asset classes.

Example response

Business area Have climate-related risks and opportunities influenced your strategy in this area? Description of influence
Products and services Yes Risks and opportunities related to the growing demand from customers for transparency, naturality, and food and drinks with low carbon footprint, (as reported in C2.3a Risk 6 and C2.4a Opportunity 8) have influenced our product-related strategy and product portfolio. In June 2019, our Board of Directors made a Global Transparency and Sustainability Pledge, committing to increasing the share of plant-based products in the portfolio, using more natural ingredients in our flagship brands such as Pantheon Peanut Butter, Red Rose Beetroot Paste, Gracious Hummus and increasing transparency on our packaging (e.g. disclosure of the presence of any synthetic or GMO ingredients on product labels). This gives consumers a greater variety of products and improved ability to choose them, while providing a high-quality product offering, benefiting the producers as well as preserving natural resources, promoting biodiversity, improving soil health and water quality, and reducing carbon emissions. We aim to have implemented changes to our products and packaging in line with the pledge by December 2020, prioritizing our consumer base in North America and Europe.
Supply chain and/or value chain Evaluation in progress Since we source 80% of our raw materials from drought-prone India and severe water stress is increasing every year, we have started placing more emphasis on conducting risk assessments for extreme weather events. In December 2019, the Board decided to employ a team of external consultants to work on developing a supply chain transparency tool. This tool will allow us to gather important information about our supply network (including sub-tier suppliers), so that we can better assess our vulnerability to natural disasters and other risks across our global supply chain. The supply chain transparency tool is expected to be fully functional by September 2020 and will be central in informing our supply chain strategy going forward.
Investment in R&D No Climate-related risks and opportunities have not yet influenced our R&D investment strategy, as we are initially focused on evaluating the risks and opportunities relating to our operations, supply chain and existing products and services, ensuring our business strategy is aligned in accordance with these. We expect to begin evaluating the impact of risks and opportunities on our R&D expenditures in 2020.
Operations Yes National and sub-national jurisdictions that account for about half of the global economy now have carbon pricing systems (as disclosed in C2.3a Risk 2). This trend is on the rise and could result in increased operational costs for our company. For example, a carbon price of €32/ton would increase our operational costs to €25.1m in Europe. This has led to our Board's strategic decision to join RE100 and commit to transition to 100% renewable electricity by 2030, with an intermediary step of 40% by 2022. In 2019, 38 of our production sites in Europe ran on 100% renewable energy and we purchased 37% of our total electricity from renewable sources such as wind farms and hydropower plants (compared with 22% in 2018). As part of this strategy, all our new plants will have renewable power generation facilities on site.