Task Force on Climate-Related Financial Disclosures
We conducted a climate scenario analysis aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) and have published our TCFD climate scenario risks and opportunities matrix. These steps are important signals of our ongoing commitment to transparency and disclosure.
In 2020, we announced our intent to align our climate-related disclosures with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). By aligning with the TCFD recommendations, we can expand our existing risk management practices to incorporate the analysis of medium (2025 – 2030) to longer-term (2031 – 2050) climate-related risks and opportunities under various climate scenarios, which better positions us to manage future risks as well as capture new business opportunities.
A Phased Approach to Implementing TCFD Recommendations
We have taken a phased approach to aligning our actions with the recommendations under TCFD. Through this approach, we strive to build more resilient climate and business strategies that meet our business needs and support transparent disclosures for our stakeholders.
In 2021, we piloted a process to assess options to improve our existing business risk identification, evaluation, and reporting processes. The overall approach used
during the pilot was aligned with the TCFD recommendations and ISO 31000 risk management standard. It also incorporated chemical industry best practices for
identifying risks and opportunities, selected climate scenarios, and time horizons.
Peer benchmarking and gap analysis
During the discovery phase, our Senior Vice President of SH&E and Chief Sustainability Officer, along with an external consultant, convened a cross-functional working group of internal representatives from our business segments as well as key functions, including finance, investor relations, risk management, research and development, supply chain, manufacturing, legal, safety, health, and environment. The working group completed a gap analysis of our existing climate-related disclosures against the TCFD recommendations and benchmarked our disclosure reporting against peer companies within and outside the chemical industry sector.
Refresh of our risks and opportunities
In a series of workshops, the working group refreshed and categorized our list of climate risks and opportunities.
Climate scenario selection
The working group reviewed publicly available and widely accepted climate scenarios to identify the most appropriate options for the climate scenario analysis. These scenarios are based on the Intergovernmental Panel for Climate Change (IPCC) analysis of climate impacts under different levels of future emissions and global average temperatures. The working group identified two different climate scenarios: RCP 2.6 (Aggressive mitigation scenario) and RCP 6.0 (Intermediate mitigation scenario), to assess the potential impacts and opportunities to our businesses.
Climate scenario analysis
The working group participated in a series of workshops to qualitatively assess potential impacts of the climate risks and opportunities identified. They developed and ranked a comprehensive list of potential climate risks and opportunities relevant to our businesses. The key risks and opportunities were prioritized and categorized according to the TCFD guidance, as illustrated in our TCFD Climate Scenario Risks and Opportunities Matrix and TCFD index.
For more information on our TCFD climate scenario risks and opportunities, download our matrix.
TCFD Main Areas
TCFD has developed recommendations for voluntary climate-related financial disclosures. These recommendations provide useful information to guide decision-making and promote consistency and comparability.
The TCFD recommendations include 11 climate-related disclosures in four main areas.