RESPONSIBLE BUSINESS CONDUCT

Nolato and TCFD

The Task force on Climate-related Financial Disclosures

The Task force on Climate-related Financial Disclosures (TCFD) is a market-based initiative that was launched in 2017. The aim is to develop recommendations for voluntary and consistent reporting of climate-related financial risks and opportunities. TCFD’s guidelines encompass governance, strategy, risk management, metrics and targets.

For Nolato, this is specifically about having financial control over how the Group is affected by climate change over time, and how operations are impacted by mechanisms aimed at limiting carbon dioxide emissions. On page 25 of our Sustainability Report for 2021, there is a table which indicates where the central TCFD recommendations are addressed in the annual report. The Group’s climate-related work is focused on these areas, but there is still work to do before the recommendations are complied with in full.

Supporting TCFD is voluntary, and the scheme is open to all. Around a thousand companies and organizations are officially affiliated with TCFD, and Nolato is now taking the initial steps towards following the guidelines. TCFD outlines four key areas that investors and market operators are keen to be informed about. 

Governance:

Nolato’s Board has assigned one of its members special responsibility for following up sustainability work, including climate-¬≠related risks and opportunities. This Board member, the CEO and Head of Sustainability together constitute Nolato’s sustainability committee. The Board receives regular updates about how climate work is progressing, and it has ultimate responsibility for the format and implementation of the Group’s emissions targets.

Strategy:

Climate change creates risks and opportunities for Nolato, and these issues are part of the company’s overall sustainable development strategy. If we imagine a scenario in which society decides to make dramatic changes in order to reduce emissions of fossil-based carbon dioxide, the company will be affected by both increased costs (taxes, fees) and various kinds of regulation, such as legislation. The transition towards reducing the Group’s carbon footprint is ongoing, but will demand significant resources for many years to come. And if we also imagine a scenario in which there are significant temperature rises, the Group will be affected by physical risks that will likely impact the entire value chain. Our current risk analyses factor in flooding, extreme weather events and drought. To meet TCFD guidelines, the Group needs to work more on possible scenarios in order to quantify how earning capacity could be affected by these situations. 

Risk management:

To reduce the risks, the Group is moving away from fossil-based energy. Furthermore, opportunities are being created via the development of products containing bio-based and recycled raw materials. Find out more about risks and risk management on pages 59–61 in Nolato's Annual Report 2021.

Metrics and targets:

For many years, the Group has been reporting its carbon dioxide emissions and KPIs on how emissions change over time. A new, ambitious emissions target was introduced for the Group in 2020. These targets are continually evaluated, and the aim is for them to be consistent with the Paris Agreement’s ambition to limit global warming to 1.5 degrees.