Categories related to climate risks and opportunities linked to potential transition events |
Transition risk / Opportunity / Physical risk |
Description of potential business impacts arising from transition events |
Strengths(+) and weaknesses(-) in existing plans for climate change adaptation and mitigation |
Next steps for risk-based improvements and actions |
Shift of market and technology |
Reduced demand for products and services with high climate impact.
Shift in customer preferences.
Increased demand for products and services with lower climate impact.
Availability of new technologies at competitive cost levels.
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Transition risk In an IEA NZE scenario with a rapid transition, increased awareness of climate change is expected to lead customers to a greater extent to choose products and services with lower climate impact from companies that enjoy high levels of trust. At the same time, climate related legislation is expected to increase significantly.
Transition risk / Opportunity
Opportunity
Opportunity
This accelerates product development and the deployment of new technologies, which then become more readily accessible.
As fossil fuels remain an important energy source in many of the production countries, this will collectively result in increased transition requirements for suppliers. Combined with higher investment needs to develop more sustainable materials for our products, this leads to increased production and handling costs.
The financial effects primarily concern exposure to interest rate risk, currency risk, and liquidity and credit risks that may arise if shifts in the external environment lead to increased financial uncertainty and instability.
Being at the forefront with a more sustainable and transparent customer offering, provides an opportunity to attract more customers and generate new revenue streams by developing new circular business models.
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+ Ongoing process to develop more sustainable products and materials.
+ Strong local presence through own sourcing offices, enabling a high proportion of direct purchasing without intermediaries.
+ Is not expected to require any significant reallocation of the workforce.
- Due to our broad supplier base and typically low share of individual suppliers’ volumes, our leverage to set requirements or incentivize investments is limited.
- Circular business models have not yet been established.
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Discuss objectives aligned with a rapid transition scenario.
Gradually increase supplier requirements for phasing out coal and transitioning to renewable energy.
Increased support to suppliers for decarbonization / transition.
Discuss establishing circular business models.
Increase and intensify training initiatives.
Increase the share of recycled materials and processes to address gaps in technology, infrastructure, raw materials, and financing to commercially scale up recycled fibers through industry collaboration and commitments.
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The Group’ s repuation |
Shift in customer preferences.
Opportunity to improve reputation and value creation.
Increased concern among stakeholders.
Risk of diminished trust in the Group’ s management and Board.
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Transition risk / Opportunity
Opportunity
Transition risk / Opportunity
Transition risk
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In an IEA NZE scenario with increased awareness of climate change, there is also a risk of declining trust and negative impacts on the perception of the Group’ s brands if we do not live up to our communicated targets and actions. At the same time, this represents a significant opportunity if we meet or exceed the expectations of customers and other stakeholders, including investors. |
Relatively cautious in our communication, while maintaining strong trust in the systematic work being carried out.
- IT infrastructure for data – lack of data integrity and inconsistent information management across systems.
- Incentive programs linked to the sustainability area.
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Ongoing implementation of system support( PLM, traceability systems) to increase transparency and provide clear customer information.
Discuss incentive programs for senior roles linked to the sustainability area.
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Legalislation |
Higher costs associated with high emissions activities.
Increased reporting requirements / emissions reporting.
Regulation of existing products and services.
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Transition risk
Transition risk /
Opportunity
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Under the IEA NZE scenario with a rapid transition, general transition risks, such as legislation, carbon taxes, or import tariffs on manufactured products, are expected to affect total production costs. It may also entail fines if emission reduction targets are not met or if various sustainability standards are not complied with. This can represent both a risk and an opportunity, depending on the Group’ s ability to phase out fossil fuels in the supply chain and transition to more sustainable products. |
+ Established networks and collaborations enabling early access to information and dialogue on emerging regulations, in an early stage.
- Slow digitalization of processes( traceability, emissions reporting).
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Ensure allocation of resources for compliance with legislation in an early stage.
Prioritization of the digitalization of processes( traceability, emissions reporting).
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Regulation of existing production processes. |
Transition risk / |
Increased costs associated with reporting are anticipated( CSRD, Taxonomy, ESPR, etc.). |