Environment
While the amount of material gassed in our two main manufacturing sites, Croydon, UK, and Walton, USA, increased by 5%, our energy usage for these sites increased by only 1.5%.
Productivity improvements were achieved through the application of Overall Equipment Effectiveness (OEE) methodologies, with targeted initiatives to reduce cycle times and optimise reload sequences. Best practices and operational learnings were systematically shared across all sites to drive consistent performance improvements. Notwithstanding higher levels of activity during the year, further efficiencies were realised in both water consumption and waste management, reflecting continued progress in operational sustainability. These improvements reflect our continued focus on operational excellence and disciplined investment to support growth while reducing environmental intensity.
Key metrics
2025 | 2024 | |
|---|---|---|
Internally recorded environmental incidents: | ||
Level 1 | 0 | 0 |
Level 2 | 0 | 0 |
Company metrics (UK only) | ||
Energy usage (MWh) | 44,710 | 44,448 |
| Specific Energy Consumption (kWh/kg) | 6.48 | 7.02 |
| Calculation shown as mix-neutral assessment of energy usage per kg of polymer processed. | ||
Group metrics | ||
Energy usage (MWh) | 69,328 | 68,128 |
Energy usage (GJ) | 249,581 | 245,259 |
Proportion of energy from grid electricity (%) | 43 | 45 |
Proportion of energy from renewable sources (%) | ||
UK site | 44 | 45 |
USA sites | 42 | 42 |
Poland site | 45 | 47 |
China site | 28 | 28 |
Group | 43 | 44 |
There were no significant environmental incidents in 2025 (2024: none). Previous years have been analysed against an internal categorisation introduced in 2018, guided by the environmental reporting guidelines.
Environmental incidents are categorised as follows:
Level 1 – Reported to Environment Agency (e.g. polluting incident)
Level 2 – Reported to local authority (e.g. waste concerns)
Level 3 – Internal report only (e.g. small granule spills)
The Company is committed to ensuring that all environmental incidents are reported promptly, thoroughly investigated and addressed in a manner proportionate to their actual or potential impact, with appropriate corrective actions implemented where necessary. Eight internally reported Level 3 incidents (2024: 11) relating to minor machine oil spills and plastic granule spills were recorded during the year, all of which were contained. The incidents are captured by daily inspections and actioned as required. The continued yearly decrease is attributed to ongoing high levels of safety observations, employee education and ongoing implementation of the 5S method to reduce waste and increase productivity.
Key targets
Our sustainability targets, set in 2022, support the reduction of Scope 1, 2 and use-phase carbon emissions, as well as reducing raw material consumption and polymer waste.
Objective | Key performance indicator (KPI) | Target | Achievement | Score | |||||
|---|---|---|---|---|---|---|---|---|---|
1 | Achieve a 10% reduction in the energy used to manufacture our products by 2026 | Reduce the energy used per unit of revenue from a baseline of 0.74 kWh/£ in December 2021 | 2022 | 0.73 kWh/£ | 0.66 kWh/£ |
| |||
2023 | 0.72 kWh/£ | 0.56 kWh/£ |
| ||||||
2024 | 0.70 kWh/£ | 0.51 kWh/£ |
| ||||||
2025 | 0.68 kWh/£ | 0.45 kWh/£ |
| ||||||
2026 | 0.66 kWh/£ | ||||||||
2 | Further develop our product portfolio by designing and developing new products which offer our customers more sustainable solutions such that, by 2026, they will account for 5% of revenue | Share of sales from products introduced from 2021 which are designed for use-phase efficiency (% of revenue) | 2022 | 0.5% | 1.2% |
| |||
2023 | 2.0% | 1.1% |
| ||||||
2024 | 3.0% | 0.5% |
| ||||||
2025 | 4.0% | 1.2% |
| ||||||
2026 | 5.0% | ||||||||
3 | Halve the polymer purchased that is not used in the end product (through internal waste and/or oversized materials) by the end of 20261 | Reduction in the mass of excess polymer purchased to that sold (% reduction) from a baseline at the end of 2021 | 2022 | 2.5% | 4.7% |
| |||
2023 | 7.5% | 10.8% |
| ||||||
2024 | 15.0% | 12.8% |
| ||||||
2025 | 30.0% | 18.5% |
| ||||||
2026 | 40.0% | ||||||||
1 The objective to halve the polymer purchased that is not used in the end product is calculated on a running rate at the end of 2026, whereas the KPI provides intermediate targets for the full year.
Specific Energy Consumption (SEC) – UK
In October 2009, the Company entered into a Climate Change Levy (CCL) agreement, which involves meeting specific voluntary targets to increase energy efficiency and reduce carbon dioxide (CO2) emissions. We re-signed the CCL agreement in 2025, continuing to receive a rebate on electricity bills and also be exempt from the Carbon Reduction Commitment Scheme for the plastics sector; the scheme is run by BPF Energy Limited, to which unadjusted SEC figures are reported quarterly.
The Company measures energy efficiency by taking energy consumption and dividing it by the amount of material (in kg) that passes through high-pressure autoclaves. The increase in production of our HPP foams, which generally require more processing energy than polyolefin foams, prompted us to update these metrics to be product-mix neutral in 2018. In 2025, our adjusted energy efficiency measure, Specific Energy Consumption (SEC), decreased 7.7% to 6.48 kWh/kg (2024: 7.02 kWh/kg), continuing a downward trend initiated in 2015. In 2025, the Company continued with Phase Three of the Energy Saving Opportunity Scheme (ESOS).
The SEC value has been reported in the Annual Report as a mix-adjusted value since 2018. This allows a product-mix-neutral assessment of energy efficiency improvements made.
Global carbon emissions
Zotefoams’ products are utilised globally across a wide range of applications that enhance quality of life and contribute to reduced energy consumption, most notably through insulation performance and weight reduction. The Group’s proprietary manufacturing processes enable the use of less raw material and the production of lighter foams compared with alternative technologies, supporting improved resource efficiency and lower life-cycle carbon impacts.
Energy consumption, comprising both gas and electricity, represents the principal source of operational carbon emissions across the Group’s manufacturing facilities, and therefore remains a key focus area for ongoing efficiency and decarbonisation initiatives.
The methodology we have used is in accordance with the guidance published by the Department for Environment, Food and Rural Affairs in June 2013. In 2025, we implemented a dedicated carbon accounting platform, marking a significant step forward in the maturity of our environmental data management. This transition enabled us to enhance the quality and accuracy of our data collection processes across the organisation. As a result of this continuous improvement process, our 2024 emissions data have been revised to establish a robust and comparable baseline against which 2025 performance can be measured.
During 2025, we also further advanced our carbon management approach by conducting a thorough assessment of our Scope 3 emissions for the first time. This represents a significant expansion of our reporting boundary, providing a more comprehensive view of emissions across our value chain. These calculations were completed using 2024 data to establish a baseline to measure progress against moving forwards. The inclusion of Scope 3 emissions enhances transparency and strengthens our understanding of indirect impacts associated with our operations, including upstream and downstream activities. Establishing this broader inventory enables more informed decision-making and supports the identification of targeted reduction opportunities.
As with our overall carbon reporting framework, we will continue to refine data quality, methodologies, and supplier engagement processes to improve the accuracy and completeness of Scope 3 reporting over time.
Task Force on Nature-related Financial Disclosures (TNFD) response
In 2025 we ran our TNFD study, establishing a 2024 baseline. Through this process, Zotefoams is strengthening its understanding of nature-related risks and opportunities to inform decision-making, enhance resilience, and support the transformation of business activities towards a more nature-positive future. This approach builds on our existing ESG data management process and internal controls framework, which embed TCFD, the SASB Chemical Framework and other disclosure standards across our operations.
Double Materiality Assessment
In 2025, Zotefoams conducted a Double Materiality Assessment (DMA), a structured process used to identify and prioritise the sustainability topics that are most significant, in terms of both the Company’s impact on society and the environment, and the external risks and opportunities that could affect the business. The DMA combined a stakeholder survey with in-depth interviews involving key groups including customers, suppliers and employees to gather a broad range of perspectives. This approach enabled the company to better understand how its operations influence nature and communities, while also assessing how external factors such as climate change, geopolitics and economic conditions may impact long-term business performance and resilience.
Group: carbon emissions (tonnes CO2e)
2025 | 2024 | |
|---|---|---|
Group: carbon emissions (CO2 tonnes) | ||
Scope 1 emissions (direct emissions from our operations, which includes fuel)1 | 7,458 | 7,189 |
Scope 2 emissions (indirect emissions from purchased energy, primarily electricity) | 8,740 | 9,327 |
Total Scope 1 & 2 emissions (tonnes CO2e)* | 16,198 | 16,516 |
Scope 1 & 2 Carbon emissions (kg CO2e) per material gassed (kg) | 1.6 | 1.7 |
Scope 3 emissions (indirect emissions from all other sources in our value chain)** | – | 63,401 |
1 We do not generate our own energy.
* 2024 emissions data revised due to improved data quality.
** 2025 Scope 3 emissions will be published at a later date.
Global pollutant emissions (tonnes)
2025 | 2024 | |
|---|---|---|
NOX (excluding N2O) | 2.5 | 2.4 |
SOX | 0.0 | 0.0 |
VOCs | 1.1 | 1.0 |
| HAPs | 0.0 | 0.0 |
NOX and SOX calculated from fuel consumption data.
Volatile Organic Compounds (VOCs) and Hazardous Air Pollutants (HAPs) measured on several typical production days at factory emission points and scaled for total annual production volumes.
Water consumption
While none of our sites are located in regions where water is scarce, we recognise that water usage is a key environmental metric which supports our sustainability proposition. Our water consumption is metered and we have specific programmes to improve efficiency and reduce water usage. Our overall water consumption has not changed despite an increase in productivity in Croydon, resulting in greater water consumption in that area. Work continues to monitor and improve water usage.
Water consumption (000m3) | 2025 | 2024 | 2023 | |
|---|---|---|---|---|
UK site | 41.0 | 39.6 | 48.4 | |
USA sites | 5.0 | 6.3 | 7.9 | |
Other sites | 4.8 | 5.0 | 2.5 | |
Global consumption | 50.8 | 50.9 | 58.8 |
Percentage in regions with Baseline Water Stress1 | 2025 | 2024 |
|---|---|---|
High | 81% | 78% |
Extremely High | 0% | 0% |
1 Our Croydon, UK plant represents 81% of the water used by the Group. Although Croydon is identified as an area of high Baseline Water Stress by the Water Resource Institute, our plant is not at high risk of water scarcity or of impacting local communities’ water supply. No water was withdrawn and not consumed.
Waste
In 2021, Zotefoams put in place a Group-wide waste hierarchy framework to support decision-making on waste management. The waste hierarchy ranks options on the basis of environmental outcomes and seeks to encourage the alignment of operating improvements with minimising the impact of waste on the environment. The Group has made sustained progress through the waste hierarchy framework. Waste recycled or reused has increased from 27% in 2021 to 49% in 2025. Of the waste we were unable to recycle, 67% now goes to an energy recovery facility, compared to 20% in 2021. This has significantly reduced the waste we send to landfill, to 16% in 2025.Targeted recycling training through staff briefings has greatly helped gain traction and engagement at all levels.
Hazardous waste constituted 1.2% of the total Group waste in 2025.
Group waste metrics1
2025 | 2024 | 2023 | |
|---|---|---|---|
Waste recycled or reused (tonnes) | 1,367 | 1,725 | 1,387 |
Waste not recycled or reused (tonnes) | 1,418 | 1,386 | 1,413 |
Total waste (tonnes) | 2,785 | 3,111 | 2,800 |
Total hazardous waste (tonnes) | 34 | 15 | 13 |
Percentage of hazardous waste recycled | 0% | 0% | 0% |
1 Excludes India, where waste generated is not material.
Sustainability Accounting Standards Board (SASB) disclosures
SASB standards identify the subset of ESG issues that are reasonably likely to have a material impact on the financial performance of the typical company in an industry. The following table summarises our response to the sector-specific standards for chemicals companies.
Topic
Greenhouse gas emissions
Accounting metric
Gross global Scope 1 emissions, percentage covered under emissions limiting regulations
Category
Quantitative
Unit of measure
Metric tonnes (t) CO2 Percentage (%)
Code
RT-CH-110a.1
Supporting disclosure
Refer to our Group carbon emissions table. 0% of Scope 1 emissions were covered under emissions-limiting regulations
Accounting metric
Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets
Category
Discussion and analysis
Unit of measure
n/a
Code
RT-CH-110a.2
Supporting disclosure
Refer to our Group carbon emissions table and Key targets section
Topic
Air quality
Accounting metric
Air emissions of the following pollutants: (1) NOX (excluding N2O), (2) SOX, (3) volatile organic compounds (VOCs) and (4) hazardous air pollutants (HAPs)
Category
Quantitative
Unit of measure
Metric tonnes (t)
Code
RT-CH-120a.1
Supporting disclosure
Refer to our Group carbon emissions table
Topic
Energy management
Accounting metric
(1) Total energy consumed
(2) Percentage grid electricity
(3) Percentage renewable
(4) Total self-generated energy
Category
Quantitative
Unit of measure
Gigajoules (GJ) Percentage (%)
Code
RT-CH-130a.1
Topic
Water management
Accounting metric
(1) Total water withdrawn
(2) Total water consumed
(3) Percentage of each in regions with high or extremely high baseline water stress
Category
Quantitative
Unit of measure
Thousand cubic meters (m³) Percentage (%)
Code
RT-CH-140a.1
Supporting disclosure
Refer to our Water consumption table
Accounting metric
Number of incidents of non-compliance associated with water quality permits, standards and regulation
Category
Quantitative
Unit of measure
Number
Code
RT-CH-140a.2
Supporting disclosure
None
Accounting metric
Description of water management risks and discussion of strategies and practices to mitigate those risks
Category
Discussion and analysis
Unit of measure
n/a
Code
RT-CH-140a.3
Supporting disclosure
Refer to our Water consumption table and TCFD response
Topic
Hazardous waste management
Accounting metric
Amount of hazardous waste generated and percentage recycled
Category
Quantitative
Unit of measure
Metric tonnes (t) Percentage (%)
Code
RT-CH-150a.1
Supporting disclosure
Refer to our Waste data table
Topic
Product design
for use-phase efficiency
Accounting metric
Revenue from products designed for use-phase resource efficiency
Category
Quantitative
Unit of measure
Reporting currency
Code
RT-CH-410a.1
Supporting disclosure
Refer to our Key targets section
Topic
Safety and environmental stewardship of chemicals
Accounting metric
(1) Percentage of products that contain Globally Harmonized System of Classification and Labelling of Chemicals (GHS) and Category 1 and 2 Health and Environmental Hazardous Substances
Category
Quantitative
Unit of measure
Percentage (%) by revenue
Code
RT-CH-410b.1
Supporting disclosure
Less than 5% of revenue is generated from substances that are regulated1 or are considered to be of international concern2. 100% of goods purchased and sold undergo hazard assessments. The hazardous substances, such as flame retardants and low levels of stabilisers, are non‑hazardous in the finished products as they are bound into the polymer matrix
Accounting metric
(2) Percentage of such products that have undergone a hazard assessment
Unit of measure
Percentage (%)
Accounting metric
Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with reduced human and/or environmental impact
Category
Discussion and analysis
Unit of measure
n/a
Code
RT-CH-410b.2
Supporting disclosure
Refer to Our approach to environmental sustainability section
1 Substances of very high concern under REACH and the EU’s Restriction of Hazardous Substances Directive or substances listed under California Prop 65.
2 Substances controlled by the Montreal Protocol, Stockholm and Rotterdam Conventions, GHS category 1 and category 2 health hazards.
Task Force on Climate-related Financial Disclosures (TCFD) response
We have complied with the requirements of UKLR 6.6.6R by including climate-related financial disclosures that are consistent with the four TCFD pillars and the eleven recommended disclosures that are set out here. Our climate-related financial disclosures additionally comply with the requirements of the Companies Act 2006, as amended by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022.
Governance
a. Describe the Board’s oversight of climate-related risks and opportunities
b. Describe management’s role in assessing and managing climate-related risks and opportunities
The Board sets the strategic aims of the Group, ensures that the necessary resources are in place to achieve the Group’s objectives and reviews management performance. The Board has oversight of climate-related matters (which include risks and opportunities) and is updated on these matters as necessary through:
- the Audit Committee, which is responsible for keeping under review the adequacy and effectiveness of the Group’s internal control and risk management systems, which consider climate-related risks by the appropriate Control Committees; and
- bi-annual business unit presentations, which consider both the physical and transition risks of climate change and opportunities arising from climate change and are made by the executive function head to the Board.
The sustainability targets linked to climate change that we have set were incorporated into the 2024 corporate objectives. The Executive team reviewed and discussed progress towards the objectives throughout 2025. Further work carried out by the Company on sustainability is disclosed in this section of the 2025 Annual Report.
Strategy
a. Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term
b. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning
c. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario
Risks
Our risk exposure to climate change is partly mitigated through operating foam manufacturing facilities in countries with high regulatory standards and through the implementation of well-established environmental management systems in all locations. The risk management framework aims to assess the Group’s principal risks and ensure these are effectively managed across the entire business. Climate change is considered in our risk section as a principal risk. The financial impact of key climate change scenarios is reviewed below.
Risk
Physical risk such as adverse weather event disrupting manufacturing or our supply chain
Mitigation
Zotefoams sites are not located in areas under physical threat from climate change over and above an increased number of severe weather incidents. The likelihood of a severe weather impact is increasing, which in turn generates a higher expectation of supply disruption, including transportation. Most key suppliers are dual sourced, thereby mitigating this risk. As we invest in new, and update our existing, infrastructure, new designs accommodate more frequent extreme weather events arising from global warming.
Risk
A significant increase in the cost of energy would increase manufacturing, raw material and transportation costs and create inflationary pressures
Mitigation
Energy prices are a significant direct cost to our business and also to our suppliers. We have set objectives to reduce our direct energy consumption across our manufacturing sites and to reduce consumption of raw materials.
As well as reducing the consumption of energy and raw materials, we also have recourse to increasing prices to our customers. To ensure we understand the market response to such price increases, which are often implemented with a lag compared with cost inflation and after consultation with our customers, we monitor demand through our Controls Framework and Sales & Operational Planning processes. Over time, we seek to invest closer to markets which are expected to account for most of our sales volume and to improve our mix so that it includes more higher-value products, both of which mitigate the risk of higher transport costs.
Risk
A significant increase in taxation to drive behaviour, such as a carbon, plastic or waste tax
Mitigation
Environmental taxes are a relatively low proportion of tax revenues. They have been used to change consumer behaviour (plastic bag tax, Climate Change Levy, landfill tax) and offer opportunity as well as risk.
It is likely that taxes will be used to incentivise and force quicker change as emissions reduction targets are accelerated. Passing on increased tax costs through pricing would be more difficult to achieve than for increases in the cost of energy and materials. Our Controls Framework monitors taxation trends related to climate change and plans accordingly, whether through energy efficiency initiatives, investments or product developments to accommodate changing demand patterns.
Risk
A significant shift in market demand pattern, such as a move away from plastics or only sourcing circular plastic products. An increased demand for thermal insulation and lighter-weight products. Increasing energy costs increase transport cost
Mitigation
Our technology produces foams with better performance and a clean foaming agent that can be used in applications which directly and indirectly save energy. This is aligned with a low‑carbon economy. We have low exposure to single-use plastic markets. We have proven benefits in markets where weight saving is beneficial and where society values performance. Our product offering, managed through our Controls Framework, is evolving to meet the needs of a circular lower-carbon economy. The main challenge comes from faster transitions which reduce the time to react. In 2021, we added a Group Sustainability Steering Committee with a remit that includes monitoring and reacting to customer and market trends. A Group Sustainability Manager was also appointed in 2024.
Risk
Significant increase in water costs, directly or indirectly through taxation or levy
Mitigation
Compared with other manufacturers, Zotefoams is not a big user of water and the relative cost is small. Any change in the cost of water will have a small impact. An environmental management system is in place to monitor water usage and identify improvement opportunities.
Opportunities
Short-term: Our business model is centred around sustainability. The opportunities available to Zotefoams are detailed in here. Details of our strategic objectives, including those relating to sustainability and climate change, are provided in here. Progress has been made against the sustainability targets previously set in here.
Medium- and long-term: We believe the benefits of plastics will be recognised and scarce resources will be managed to ensure optimal use and a circular economy. The processing of polymers uses less energy compared with many other materials which, with our technology benefit of producing lighter, longer‑lasting products using less material and which have inherent thermal insulating performance, represents a significant opportunity as sustainability increases in importance.
Risk management
a. Describe the organisation’s processes for identifying and assessing climate-related risks
b. Describe the organisation’s processes for managing climate-related risks
c. Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management
Refer to our Risk management framework and Environmental sustainability and climate change risk.
Metrics and targets
a. Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process
b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks
c. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets
The SASB framework provides performance metrics for our functional steering committees to implement. See further details below.
Our Scope 1 and 2 emissions are disclosed in here. In 2025, we commenced work on our Scope 3 emission and formed a 2024 baseline. In 2025 we commenced work on our Scope 3 emissions and formed a baseline. The risks are managed through our risk management framework detailed in here.
Progress against our sustainability targets is detailed in here.
In the table below, we list the principal risks most likely to be materially impacted by climate change. We also set out examples of events that could cause financial losses or impact our strategy.
Methodology
A risk assessment, looking at impact and likelihood, was conducted reviewing three climate change scenarios and five risk events. The assessment was first undertaken by the Executive team and later revised following review with the entire Senior Management team. The following methodology has been used to assess the potential risk impact and the likelihood of the risk event.
Potential risk Impact1 | Negligible (1) | Minor (2) | Moderate (3) | High (4) | Major (5) |
|---|---|---|---|---|---|
Business disruption/asset damage and other consequential loss | <1% | 1-5% | 5-10% | 10-20% | >20% |
Politico-economic impact | Minimal financial impact | Material financial impact | Serious financial impact | Major financial | Extreme financial impact |
Technology impact | No need to change existing technologies | Insignificant | Significant | New technology | New technology |
Social impact | Public awareness | Local social | Regional social issue | National social issue | International |
Physical impact of climate change | Minimal impact | Material impact | Serious impact | Major impact | Extreme impact |
1 As calculated in FY2022.
Risk rating | Likelihood | |||||
|---|---|---|---|---|---|---|
Rare | Unlikely | Possible | Likely | Almost certain | ||
Impact | Major | ▲▲ | ▲▲▲ | ▲▲▲▲ | ▲▲▲▲▲ | ▲▲▲▲▲ |
High | ▲ | ▲▲ | ▲▲▲ | ▲▲▲▲ | ▲▲▲▲▲ | |
Moderate | ▲ | ▲▲ | ▲▲ | ▲▲▲ | ▲▲▲▲ | |
Minor | ▲ | ▲ | ▲▲ | ▲▲ | ▲▲▲ | |
Negligible | ▲ | ▲ | ▲ | ▲ | ▲▲ | |
▲ Very low ▲▲ Low ▲▲▲ Medium ▲▲▲▲ High ▲▲▲▲▲ Very high
Rare (1) | Unlikely (2) | Possible (3) | Likely (4) | Almost Certain (5) |
|---|---|---|---|---|
Never occurred or is highly | Occurred several times | Occurred at some point | Occurred infrequently: | Occurred frequently: |
The following risk events arising from climate change or the transition to a low‑carbon economy were considered:
- physical risk: adverse weather event disrupts manufacturing or supply chain
- significant increase in energy costs during transition: manufacturing costs, raw material costs, transport costs, inflationary pressures
- significant taxation increase during transition: carbon tax, plastics tax, waste tax
- significant shift in market demand pattern during transition: move from plastics or to circular plastic products only; increased demand for thermal insulation and lighter weight
- significant increase in water costs: directly or indirectly through taxation or levy.
The ongoing transition to a low-carbon economy was considered through the prism of achieving global net zero carbon emissions to limit global warming. Three scenarios were considered: no target, net zero by 2070 and net zero by 2050. The transition at the global and national levels brings about political, legal, economic, technological and other changes which produce transitional risks. Transitional risks primarily affect economic performance, which we have considered in terms of our planning cycles of one year, one to five years and more than five years.
Climate change impact | Business as usual | Paris Agreement scenario | Sustainable | Adaptions | |
|---|---|---|---|---|---|
Unlimited global | Limited global | Limited global | |||
Short term (> 1 year) | Physical risk | ▲ | ▲ | ▲ | Mitigate supply chain. |
Energy costs | ▲ | ▲ | ▲ | ||
Taxation | ▲ | ▲ | ▲ | ||
Demand Shift | ▲ | ▲ | ▲ | ||
Water costs | ▲ | ▲ | ▲ | ||
Medium term (1-5 years) | Physical risk | ▲▲ | ▲▲ | ▲▲ | Mitigate supply chain. Develop environmentally sustainable products that are part of the circular economy in markets which the products benefit or are less likely to be impacted. Better use of water as we update equipment and processes. |
Energy costs | ▲ | ▲▲ | ▲▲▲ | ||
Taxation | ▲ | ▲▲ | ▲▲▲ | ||
Demand Shift | ▲ | ▲▲ | ▲▲▲ | ||
Water costs | ▲ | ▲▲ | ▲▲▲ | ||
Long term (>5 years) | Physical risk | ▲▲▲ | ▲▲ | ▲▲ | Modify existing and new infrastructure to accommodate changing climate. Business interruption insurances. Product range and pricing evolves to address taxes. |
Energy costs | ▲▲ | ▲▲ | ▲▲ | ||
Taxation | ▲ | ▲ | ▲ | ||
Demand shift | ▲ | ▲▲ | ▲▲ | ||
Water costs | ▲ | ▲ | ▲ |
▲ Very low ▲▲ Low ▲▲▲ Medium ▲▲▲▲ High ▲▲▲▲▲ Very high
There are significant risks from climate change and the impact increases with faster transition to a low‑carbon economy. The impacts of climate change and the transition to a low-carbon economy are no greater than other risks faced by the business, such as energy pricing and currency fluctuations. Our core products present opportunities in a low-carbon economy and the mitigations already in place for the current, slower transition rate will help if the rate of transition increases.