Climate change is affecting business’ bottom line globally. Big business recognises the need to both adapt to become resilient to today’s weather and tomorrow’s climate and plan for opportunities, as well as to reduce carbon emissions through mitigation. Enhesa, in partnership with Ecofys, hosted a complimentary webinar that highlighted recent regulatory developments and policy challenges worldwide, focused on how climate change impacts are already affecting big business and the associated costs, as well as the opportunities, changing policy frameworks and potential legal liabilities of not taking climate actions. During this webinar we explored: -The regulatory landscape of climate change policy and initiatives worldwide -Examples of global changes in weather and climate affecting businesses today -Risks of not adapting -Physical, legal, financial and transitional risks if a company does not adapt -Case law on legal liabilities -Market opportunities that can be optimized when companies improve their resilience -Science-based GHG targets while learning how to align your GHS reduction targets with a 2°C climate goal -Reasons why companies are setting ambitious GHG reduction targets -Mitigation measures -What internal and external carbon prices are driving mitigation actions of companies -Case studies of companies setting science-based GHG reduction targets and their climate actions

1. Building a Climate Resilient Business:
Managing Risks & Exploit Opportunities in a Climate
Changing World

2. Building a Climate Resilient Business:
Managing Risks & Exploit Opportunities in a Climate
Changing World
Christian Petrangelo, Senior EHS Regulatory Consultant at Enhesa
Giel Linthorst, Programme Leader Science-based Targets at Ecofys
Sarah Hendel-Blackford, Senior Consultant at Ecofys

3. Compliance is our Business. Enhesa is the
market leader in global environmental, health and
safety assurance providing support to businesses
worldwide.
GLOBAL COVERAGE.
EXPERT ANALYSIS.

4. 4
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©2015 Enhesa. All rights reserved.

5. Building a Climate
Resilient Business:
Risks & Exploit
Opportunities in a
Changing Climate
Webinar Agenda
• Regulatory landscape of climate change policy
& initiatives
• Mitigation measures
– Aligning your GHG reduction targets with a 2°C climate
goal
– What internal and external carbon prices are driving
mitigation actions of companies
• Adapting to Climate Change
– Physical, legal, financial and transitional risks
5

6. 6
Today’s Presenters
©2015 Enhesa. All rights reserved.
Christian Petrangelo
Sr. EHS Consultant
Enhesa
Giel Linthorst
Programme Leader
Science-based
Targets
Ecofys
Sarah Hendel-Blackford
Senior Consultant
Ecofys

7. Building a Climate
Resilient Business:
Risks & Exploit
Opportunities in a
Changing Climate
Webinar Agenda
Regulatory landscape of
climate change policy &
initiatives
7

8. 8
Regulatory Landscape of Climate Change Policy & Initiatives
©2015 Enhesa. All rights reserved.
Goal: Emissions Reduction Targets
Carbon Tax
Emission Trading Schemes
GHG Inventories
Renewable Energy
Incentives
Energy Efficiency
Incentives
Mandatory Measures Voluntary Measures

9. 9
Mandatory GHG Inventories
©2015 Enhesa. All rights reserved.
What?
Reporting of GHG emissions from broad
sectors of the economy
Why?
Provides necessary data to set economy-
wide emission reduction targets
How Many?
40 countries
(as of Oct. 2015)
Government parties to the UN Framework
Convention on Climate Change (UNFCCC)
must submit annual inventories of GHG
emissions

10. 10
Mandatory GHG Inventories
©2015 Enhesa. All rights reserved.
USA:
Tracks facility-level
emissions from the
largest sources of
GHGs
European Union:
Compiles annual GHG inventory
impacting 6 sectors across member
countries: energy, industrial
processes, solvent and other product
use, agriculture, land use, and waste
Australia:
Tracks GHG emissions according
to facility and corporate group
thresholds

11. 11
Emissions Trading Schemes
©2015 Enhesa. All rights reserved.
United States:
Regional programs
include:
• California Cap-and-
Trade Program
• Regional Greenhouse
Gas Initiative (RGGI)
encompassing 9
Northeastern states
European Union:
• The first and biggest
international system for
trading GHG emission
allowances.
• It regulates over 11,000
industrial manufacturing
facilities and power
stations in 31 countries.
China:
• National-level ETS
launching in 2017 will
cover “key industry sectors
such as iron and steel,
power generation,
chemicals, building
materials, paper-making,
and nonferrous metals”
• Existing pilot program
covers 7 provinces

12. 12
Carbon Taxes
©2015 Enhesa. All rights reserved.
Governments put a price
on carbon dioxide and
other GHG’s
GHG price is tax
intended to reduce
emissions
15 countries
Differs from ETS
in that there is no
defined cap on the
amount of GHG’s
that may enter
into the
atmosphere
Often used on the
national level to
supplement regional
ETS plans

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Mandatory Carbon Taxes
©2015 Enhesa. All rights reserved.
Mexico:
Covers import,
sales, and use of
fossil fuels
France:
Applies to the use
of gas, heavy fuel
oil, and coal,
transport fuels, and
heating oil not
covered by EU
ETS.
Japan:
Tax on fossil
fuel use

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Renewable Energy Incentives (Voluntary)
©2015 Enhesa. All rights reserved.
USA:
President Obama’s Clean Energy
Incentive Program:
A voluntary “matching fund”
program for states to incentivize
solar or wind projects that
generate carbon-free mWh
India:
Regional governments (Delhi,
Gujarat, Tamil Nadu) provide tax
breaks and other financial
incentives to companies that
manufacture or install solar
infrastructure
Netherlands:
Private sector companies may
deduct 36-41.5% of their
renewable energy investment
from their taxable profit

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Energy Efficiency Incentives (Voluntary)
©2015 Enhesa. All rights reserved.
Australia:
Emissions Reduction Plan
provides financial assistance for
projects to reduce GHG
emissions, including energy
efficiency in buildings and
industrial energy efficiency.
South Africa:
Allows any entity with a
taxable income to claim a
deduction based on the
amount of energy saved
through energy efficiency
standards
United States/
Italy/Netherlands:
Tax incentives to retrofit existing
buildings with energy efficiency
technology
Germany:
Preferential loan and grant
program to retrofit existing
buildings with energy efficiency
technology

16. 16
Regulatory Landscape of Climate Change Policy & Initiatives
©2015 Enhesa. All rights reserved.
Goal: Emissions Reduction Targets
Carbon Tax
Emission Trading Schemes
GHG Inventories
Renewable Energy
Incentives
Energy Efficiency
Incentives
Mandatory Measures Voluntary Measures

17. Building a Climate Resilient
Business
Giel Linthorst, Sarah Hendel-Blackford
November 2015

18. © ECOFYS | | Building a climate resilient business05/11/2015
Mitigating climate change
18

19. © ECOFYS | |
GHG emissions accelerate despite reduction efforts. Most emission
growth result from fossil fuel combustion and industrial processes
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Building a climate resilient business19

20. © ECOFYS | |
Companies are responsible for large share of the global emissions
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
Building a climate resilient business20

21. © ECOFYS | |
Without more mitigation, global mean surface temperature might
increase by 3.7° to 4.8°C over the 21st century
05/11/2015
Source: IPCC AR5 WGIII Mitigation of Climate Change, 2014
> To prevent the most severe impacts of climate change, parties to the United
Nations Framework Convention on Climate Change (UNFCCC) agreed in 2010 to
commit to a maximum temperature rise of 2 °C above pre-industrial levels.
> Limiting global temperature rise to 2 °C corresponds according to the scientific
community with a carbon budget of about 1,000 Gtonnes CO2 from 2011 onwards.
Building a climate resilient business21

22. © ECOFYS | |
0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GtCO2eq
Global 2 oC scenario
From global carbon budget to company targets: two
methodologies already existed
05/11/2015 Building a climate resilient business
ABSOLUTE REDUCTION
1 ECONOMIC ALLOCATION
2
> Apply global or OECD/non-OECD
absolute emissions reduction
pathway to each company, or
> Apply linear absolute reduction
per year towards 2050 (1.5% p.y.)
> Apply global or OECD/non-OECD
intensity reduction pathway to
each company (2.2% p.y.)
0%
50%
100%
150%
200%
250%
300%
350%
400%
0
10
20
30
40
50
60
2010 2015 2020 2025 2030 2035 2040 2045 2050
GDPgrowth
GtCO2eq
Global 2 oC scenario
GHG (GtCO2eq)
GHG intensity (GtCO2eq / GDP contribution)
GDP index
22

23. © ECOFYS | |
New methodology was developed to translate global carbon
budget to company targets based on sectoral approach
05/11/2015 Building a climate resilient business
> For the Science Based Targets initiative, Ecofys
developed with CDP, WRI and WWF a new
methodology, called the Sectoral
Decarbonization Approach (SDA)
> The SDA methodology is based on the least-cost
modelled 2oC scenario (2DS) developed by the
International Energy Agency (IEA) as part of
its publication, Energy Technology Perspectives
2014
> Development of the SDA methodology involved
intensive stakeholder consultation
> The SDA methodology is freely available
> Scientific backing published in Nature Climate
Change
Source: www.sciencebasedtargets.org, 2014/2015
23

24. © ECOFYS | |
Current sectoral coverage of the SDA methodology
05/11/2015 Building a climate resilient business
Currently, over 60% of the global GHG
emissions are covered by the methodology.
However, not covered and related to corporate
emissions are:
> Other Energy, e.g. fossil fuel extraction and
production
> Agriculture, forestry and Land Use
(AFOLU). However a methodology for 10
major agriculture and forestry commodities is
being developed by Ecofys, University of
Aberdeen and PBL Netherlands
Environmental Assessment Agency
AFOLU
Transport
24

25. © ECOFYS | | Building a climate resilient business05/11/2015
Key benefits of setting science-based targets and signing up for Science Based
Targets initiative:
1. Demonstrate leadership and
influence policy
2. Build credibility and reputation
and get potential recognition by NGOs
3. Drive innovation and transform
business practices
4. Save money and increase
competitiveness
Key benefits of setting Science-based Targets
25
Source: We Mean Business,
The climate has changed, 2014

26. © ECOFYS | | Building a climate resilient business05/11/2015
More and more measures to mitigate emissions are becoming
feasible and mitigation provides many business opportunities
26
Management and behavior change Energy efficiency
Renewable energy Low carbon innovations
Photographs: krysztof-baranski/Freeimages, scanrail/Fotolia, rudy-tiben/Freeimages

27. © ECOFYS | | Building a climate resilient business05/11/2015
However carbon pricing is crucial to drive emissions mitigation
action of companies on large scale
27
Source: The World Bank, State
and Trends Carbon Pricing 2015

28. © ECOFYS | | Building a climate resilient business05/11/2015
Next to mandatory schemes for heavy emitting sectors, more
and more companies are using internal carbon pricing
28
Source: The World Bank, State
and Trends Carbon Pricing 2015

29. © ECOFYS | | Building a climate resilient business05/11/2015
Towards COP21 in Paris bold commitments from companies and
investors on climate action is growing rapidly
29
Source: CDP, Road to Paris map
26 10 2015

30. © ECOFYS | | Building a climate resilient business05/11/2015
Adapting to climate change
30

31. © ECOFYS | |
Adapt to what?
• Average temperature changes of 0.8°C/1.4°F have occurred since 1880s
• We are locked into 1.5°C temperature change
• Is your business resilient to today’s weather…and tomorrow’s climate?
05/11/201531
Infographic: the World Bank 2014
Building a climate resilient business

32. © ECOFYS | |
Risks to business: Electronics and automotive industries
Case study: Flooding in Thailand 2011 has a global impact on electronics and
automotive industries
05/11/201532
Satellite photographs showing flooding in Thai provinces: Left Before flooding July 2011, right,
after flooding October 2011. ©Wikimedia Commons
Impacts: Global supply
shortages and prices
increases
• Honda: moved to a
three day week at its
UK plant in November
2011
• Toyota: the floods in
Thailand contributed
to their drop in one
year from first to
third in the ranking of
the world's biggest
car manufacturers.
• Sony: delayed launch
of a new camera was
due to the floods.
Building a climate resilient business

33. © ECOFYS | |
Risks to business: chemicals industry
Operations:
> Greater risks of fire
> Increased risks of floods,
accelerated corrosion
> Water scarcity, increase
in commodities prices:
water efficiency,
recycling and re-use
becomes a priority
> Temporary work
suspension
Supply chain /product
delivery disruption
05/11/201533
Photograph: ©Ecofys
Building a climate resilient business

34. © ECOFYS | |
Potential legal liabilities of not adapting?
> Private Sector: Fiduciary
duty on companies to
take into account
environment
> Public sector: statutory
duties on local
authorities to extend
their civil protection duty
beyond emergency
planning to address risks
to local businesses
> Examples of international
case law
05/11/201534
Photograph: ©Africa/Fotolia
Building a climate resilient business

35. © ECOFYS | |
Being prepared to realize market opportunities
• Diversify networks of suppliers:
2011 Thailand floods Nissan diversified
its suppliers: so whilst it was also hit by
the floods it was able to respond more
quickly and recover more quickly.
05/11/201535
• Build resilience to safeguard raw
materials:
GSK teamed up with research sector to
develop a blackcurrant crop for the
drinks brand Ribena, which is resilient
to erratic weather patterns faced over
the next 70 years to secure its supply.
Building a climate resilient business
Photograph: ©bgoode/Fotolia

36. © ECOFYS | |
Solutions to build in resilience: an integrated approach
> Understand your current vulnerabilities
and risks –and how these change over
time.
> Identify critical points of intervention to
build in adaptation measures and
resilience: within your company and
between your key stakeholders.
> Diversified supply chains, logistics and
markets can build in flexibility and
resilience for faster recovery to realise
new market opportunities.
> Have an integrated strategy: low carbon,
and climate resilient!
05/11/201536
Photograph: ©Simonlaprida/Fotolia
Building a climate resilient business

37. © ECOFYS | |
A selection of organisations that we served
10/11/201537

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