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How Climate Change Impacts Business Strategies

Agnieszka Rum, Consultant

Sustainable Business Solutions

PricewaterhouseCoopers

April 27, 2009



Agenda

1. Latest trends – Climate Change on the Business Agenda

2. Relevance of Climate Change in a Business Context(Framework for Analysis)


April 27, 2009

4. Carbon Management Tips



Climate Change on the Business Agenda


April 27, 2009



12th Annual PwC Global CEO Survey – Climate Change


April 27, 2009



Framework for Analysis: Key Risks and Opportunities

Regulation Market Dynamics


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Business Direction

Physical Impacts



Physical Impacts from a Changing Climate

• Impacts caused by changes inclimate

- Vulnerability of physicalassets (eg. Infrastructure)

- Disruption to supply chain

- Business interruptions (eg.travel industry and


April 27, 2009

- Workforce disruption

- Changes in core marketconditions

Flooding

Health impacts onworkforce

Direct lossesForest fires

DroughtExtreme weatherRestoration/

Clean up Costs



Implications of Regulatory and Voluntary Mechanisms

- ETS and National Trading Schemes

- Denmark and France requiring CO2emission reporting

- Emission reporting (voluntary and

regulation driven)

- Global securities regulators such asSEC (US) & FSA (UK) are exploringways to amend disclosure


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regulations to include climate changeas a material risk

- Future possibility: Aviation andForest Products subjected to ETS

ETS

Carbon DisclosureProject (CDP)

Reporting GHG inventorydisclosure

CO2 tax

CO2 footprintCompliance costs



Market Dynamics

- Companies requesting CO2 emissionsfrom suppliers eg: Nestle, Tesco, Wal-mart

- Carbon emissions playing a role intransactions – Rio Tinto bid for Alcandue to low carbon risk

- Airlines - Virgin Blue, British Airways,Air Canada offering offsets

- The compliance market driven byinstruments such as the ETS was


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voluntary market at $337 million USD- Renewable energy 20-40% annual

growth

- Goldman Sachs spent $23 million toacquire a 10.1% stake in Climate

Exchange plcLong-termeconomic

consequences –Eg. Stern Study

Cost of Rawmaterials

Labellingschemes

Changing consumerdemand

Energy costs

CO2 tax

Carbon markets



The Business Response and Opportunities- Businesses developing strategies to

manage climate change related risks andopportunities

- Access to capital: CDP, FTSE4Good,DJSI

- Energy companies - diversification andsolutions such as CCS

- Allianz - climate change insuranceproducts & reductions by 20% by the year2020

- Yahoo, Dell and SwissRE declared-


April 27, 2009

- “Green Funds” - Citibank and MorganStanley developed funds for low carbonbusiness pursuits

- GE - clean technologies and equipmentgenerating revenues that are nearlytripling the initial sales targets

Preparationfor new

regulationsPreferred supplier

and employerPreferred product or

serviceoffsetting

Reducing long-term costs

Reputation Long-term Licenseto Operate



Value Chain Impacts

Raw materialsand other

supply chainsManufacturing Distribution Consumption End of life

Energy costs

Transport costs

Other materials costs


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• Low carbonsuppliersfavoured

• Demand for newmanufacturingtechnologies

and processes

• Implementationof renewable

energy

• New modes of transportation

• Local suppliers

favoured• Local products

favoured

• Customerinformation and

labelling

• Demand for lowcarbon products

and newproducts and

services

• Ability to re-useor recyclefavoured

• Demand for lesspackaging on

products

Redesign of supply chain Redesign of customer delivery



Tips for Carbon Management

Measure and monitor carbon emissions

Forecast emissions and set targets

Report emission reduction progress internally andexternall


April 27, 2009

Assign costs to abatement and price carbon intoinvestment opportunities

Identify and leverage new carbon opportunities

Review progress against targets in line with yourclimate change strategy



Documents

Agnieszka Rum Price Water House Coopers (1)