Sustainability
3 minute read
How does climate change affect your business?
How does climate change affect your business? As awareness of climate change increases, being able to answer that question and take necessary action may well shape the future of your venture.
As effects of climate change are becoming more and more apparent, the market is increasingly interested in ways businesses deal both with emerging risks and possibilities.
Task Force on Climate-related Financial Disclosures (TCFD) is a voluntary framework initiated in 2017 to help businesses identify, measure and report on the financial implications of climate change. TCFD helps companies to assess risks and opportunities related to climate change and shape their strategies and operations accordingly.
TCFD centers on four core elements:
governance
strategy
risk management
and metrics and targets.
With the introduction of TCFD, I am pleased to witness also the financial sector putting more emphasis on climate change. For example, Varma, the Finnish Mutual Pension Insurance company, has stated that it aims for a climate neutral investment portfolio by 2035. We have also witnessed investors taking stand on climate as BlackRock decided to exit investments that present a high sustainability related risk.
Shifting the attention on the impact of climate on business
The emergence of TCFD is emblematic of the state of the world. Previously, companies were focusing more on the impact their operations can have on climate. With TCFD, the attention is also on the impact of climate on businesses.TCFD has been initiated not only to make companies and investors conscious of risks but also to encourage sustainable investments.
Truly, a transition towards a lower-carbon economy is well under way. New ways and innovations to help lower greenhouse gas emissions are very much sought after. Investors and stakeholders are paying closer attention not only to businesses that are able to offer powerful solutions to rein in climate change, but also to those deeply committed to reducing their carbon footprint.
Over the years, Neste has had solid rapport with investors, analysts and stakeholders also thanks to transparent and universally recognized reporting frameworks. Committing to TCFD is the latest example. For Neste, implementing TCFD entails, for example, further clarifying and strengthening our governance on climate related issues. This includes how they are coordinated with different teams in Neste and how risks and opportunities are linked to the Neste strategy creation process.
Linking the money to climate performance
TCFD deepens Neste´s commitment to fighting climate change and puts into practice our mindset of linking our money to our climate performance. To a similar vein, Neste recently signed a new revolving credit facility worth up to 1.2 billion euros. The facility margin is adjusted based on our success in meeting our greenhouse gas emission reduction target. By 2030, we aim to reduce our customers’ emissions by at least 20 million tons CO2eq annually, equalling the annual carbon footprint of 3 million average EU citizens.
There's no two ways about it. Climate is already at the core of several businesses, and will increasingly affect the operational environment of many more companies. Therefore it is imperative to have tools that are helping others find out how well companies have understood this. TCFD is one such tool to help navigate the pitfalls and seize the opportunities of a new lower-carbon economy.