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 from droughts, storms, floods, extreme heat, and wind. Mitigation measures such as audits, consultations and training on environmental protection, occupational health and safety minimize these risks to people and the environment. We monitor these risks at our sites and those of our suppliers and contract manufacturers, ensuring continuity of plant and equipment. By adhering to high technical standards, our rules of conduct and all legal requirements in environmental protection and occupational health and safety, we preserve goods and assets, with comprehensive insurance policies providing further financial protection.
We continuously monitor regulatory risks associated with the transition to a low-carbon economy, which could materialize through rising carbon prices via emissions trading systems, taxes or energy legislation. We aim to mitigate these risks through comprehensive strategies, including our energy and CO2 management initiatives and efforts to reduce process emissions, all of which are included in the implementation of our inaugural transition plan. Mainly, we classify these as likely risks with moderate impacts. However, a critical impact on EBITDA pre or operating cash flow cannot be fully ruled out.
In 2022, we performed a qualitative climate risk and vulnerability assessment covering upstream and downstream activities and our own operations. In 2023 and 2024, in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we conducted quantitative climate scenario analyses focusing on upstream activities and our own operations. These assessments identified climate-related risks and opportunities considering two climate pathways: the Paris Agreement-aligned 1.5°C scenario and the Representative Concentration Pathway (RCP) 8.5, which corresponds to a 4°C scenario, across different time horizons (2030 and 2050). We evaluated the potential effects of physical risks on our key sites, assessing vulnerabilities and implementing necessary safeguards.
In line with our commitment to risk mitigation, we continue to develop innovative and sustainable approaches, foreseeing no relevant short-term deviations from our expectations regarding impacts on EBITDA pre or operating cash flow.
For further details on climate-related risks, please see our “TCFD Report”.