Caring for the Planet Integrated Annual Report 2024 SECTION 5 • DELIVERING SUSTAINABLE VALUE FOR OUR STAKEHOLDERS 141 Transition Risks Transition risks refer to the changes that an organisation is expected to encounter and navigate as society transitions to a low-carbon economy. Potential Risks Implications Potential Opportunities IPCC RCP 8.5 IPCC RCP 2.6 Type of Transition Risk: Regulatory Category: Environmental regulations • Increased costs and production halts when adapting processes to new regulations. • Suspension of operations, fines, or penalties for non-compliance. • Greater regulatory and reporting requirement scrutiny. • Increased raw material costs and strategic impacts from carbon tax implementation. • Medium risk associated with climate change policy and legislation in view of a lenient approach by the regulators towards climate-related issues. • Medium risk associated with less pressure and urgency to develop internal carbon price leading to less competitive bidding and reduced interest in carbon pricing within the market. • High risk associated with meeting expectations and commitments to adhere to stringent policies and regulations, which necessitates more investment in low-carbon technology and heightened monitoring and analysis of climate-related risks. • Boosting lowcarbon economy and contributing to circular economy. • Premium pricing for lower carbon-content products. Category: Carbon pricing • Increased raw material costs and strategic impacts from carbon tax implementation. • Medium risk associated with less pressure and urgency to develop internal carbon price leading to less competitive bidding and reduced interest in carbon pricing within the market. • High risk is linked to the widespread adoption of carbon pricing mechanisms in the market, impacting the supply chain and increasing OPEX, such as rising raw material prices and excessive logistics costs. • High risk associated with failure to comply with the Carbon Border Adjustment Mechanism potentially resulting in the inability to export to the EU. • Adopting internal carbon pricing to enhance adaptability. • Leveraging incentives for low-carbon technologies. • Incentives from carbon pricing implementation to develop low-carbon technology.
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