Climate-related information - risks and opportunities

For several years, Addtech has reported to the Carbon Disclosure Project (CDP) to ensure transparency in climate-related reporting. Another voluntary framework, that we partly report according to is The Task Force on Climate-related Financial Disclosures (TCFD). By following the framework we increase transparency and relevance in our reporting on climate-related risks and opportunities and how this can affect profitability.

Assessment of climate risks

For Addtech, the management of climate-related issues is an important parameter for future business development. Addtech comprises some 140 companies and there are considerable variations within the Group, which represents a challenge in the implementation of climate-related risk and opportunity analysis. We have both producing companies and companies that focus on technical support and sales. Our reporting of climate-related risks and opportunities is important to us and our stakeholders, and we will ensure that climate analysis forms an integral part of our business to ensure long-term profitability.

Analysis of climate impact

Although Addtech is not a member of the TCFD, we do view it as important to report inspired by the TCFD’s recommendations to secure relevant information. Our reporting is not fully in line with the framework, and we consider estimating the financial impact from the climate impact to be challenging. Over the year, we conducted scenario analyses (RCP 8.5 and RCP 2.6) to support our organisation in future decision-making processes.

RCP 2.6 – is a scenario in which the world has managed to limit the temperature increase to 1.5-2 0C, that is, "achieves the Paris Agreement".

RCP 8.5 - is a business-as-usual scenario, in which the world has not changed but greenhouse gas emissions continue to increase at the current rate.

Climate scenario (RCP 2.6) "The world achieves the Paris Agreement"

  • Greenhouse gas emissions halved by 2050
  • Temperatures increase by 1.5–20C
  • Renewable energy technology dominates
  • Low energy intensity
  • Major adjustments have been made to society, infrastructure and buildings
  • Joint global initiatives have been successful
  • Political decisions, regulations and taxes have been introduced regarding greenhouse gases
  • Increased regulations for producing companies and follow-up of products
  • Changed requirements from customers and investors
Risks
  • Increased regulations, taxes and fees for greenhouse gas emissions
  • Older technologies may become outdated
  • Requirements for zero greenhouse gas emissions throughout the value chain and circular economy require major changes to business models
  • Price increases for transportation, energy and raw materials
  • Volatile and more expensive energy prices
  • Increased investments in new technology for properties owned
Opportunities
  • Increased production of renewable energy
  • Increased demand for energy-efficient solutions
  • Increased electrification
  • Increased demand for climate-friendly infrastructure solutions

Climate scenario (RCP 8.5) “Business as usual”

  • Greenhouse gas emissions continue to increase at the same rate as today
  • Temperatures increase by 2-40C
  • Rising sea levels
  • Increased frequency of extreme weather
  • Increased frequency of forest fires and floods
  • Unchanged requirements from customers and investors
  • High energy intensity and continued high dependence on fossil-based energy
  • Global initiatives and collaborations fail
  • Increased proportion of refugees, due to climate effects
Risks
  • Increased investment due to damage from extreme weather or adaptation to protect against extreme weather
  • Investments in solutions and products for a transition to a more energy-efficient industry will be unattractive
  • Disruptions in value chains, caused by extreme weather and other effects of climate change
  • Increased competition from actors lacking a sustainable agenda
Opportunities
  • Increased production of renewable energy
  • Increased demand for infrastructure solutions, caused by damage from extreme weather
  • Good relations in the value chain with parties that have strengthened their operations’ resilience to climate change