Risks arising from environment, climate as well as plant and equipment
As a company with global production operations, we are exposed to risks of possible damage to personnel, goods and our reputation. These include physical risks stemming from exposure to droughts, storms, and floods. Mitigation measures such as audits, consultations and trainings on environmental protection, occupational health and safety minimize these risks to people as well as the environment. In order to ensure the continuity of plant and equipment, we monitor these risks both at our own sites as well as at suppliers and contract manufacturers. By adhering to high technical standards, our rules of conduct, and all legal requirements in environmental protection as well as occupational health and safety, we ensure the preservation of goods and assets.
We have taken sufficient appropriate accounting measures for the environmental risks known to us. We monitor regulatory risks in connection with the transition to a low-carbon economy, which could materialize in the mid- and long-term through rising carbon prices through emissions trading systems, taxes or energy legislation. We mitigate those risks with our energy and CO2 management measures. Mainly, we classify these as possible risks with moderate impacts. However, a critical impact on EBITDA pre or operating cash flow cannot fully be ruled out.
Risks due to climate change
In 2022, we performed a qualitative climate risk and vulnerability assessment to identify transitional and physical climate-related risks that are material to our activities. In 2023, in accordance with TCFD recommendations, we conducted a quantitative climate scenario analysis to identify climate-related risks and opportunities. Consequently, we conducted an evaluation in relation to impacts of transition risks and the exposure related to physical hazards.
During this assessment, we utilized two climate pathways (1.5°C and 4°C) considering different time horizons (2030 and 2050) to identify climate-related risks and opportunities. Based on our findings, we determined the potential effects of physical risks on our key sites and evaluated the impact of transitional risks on our business.
In line with our ongoing dedication to risk mitigation, we continuously develop innovative and sustainable approaches. As a result, we foresee no significant deviations from our expectations regarding impacts on EBITDA pre or operating cash flow.
For further details on climate-related risks, please see “Increased uncertainty due to climate risks” in the “Notes to the Consolidated Financial Statements”.