Climate changes your business³… · 4 © 2018 KPMG N.V., registered with the trade register in the Netherlands under number 34153857, is a member firm of the KPMG network of independent

Climate changesyour businessWim Bartels

28 February, 2018

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2© 2018 KPMG N.V., registered with the trade register in the Netherlands under number 34153857, is a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.

The KPMG name and logo are registered trademarks of KPMG International.

3© 2018 KPMG N.V., registered with the trade register in the Netherlands under number 34153857, is a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.


Climate-related financial risks and opportunities

Business impact on

climate change

Business

Climate change

Climate-related reporting today:

Focus on business models’

carbon footprint.

Impact of climate

change on the business

model

Reporting promoted by Task Force on

Climate-related Financial Disclosures (TCFD):

Focus on financial impact of climate change on business models.

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© 2018 KPMG N.V., registered with the trade register in the Netherlands under number 34153857, is a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG

International’), a Swiss entity. All rights reserved.


The impact of climate change (1)

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The tragedy of the horizons

https://youtu.be/V5c-eqNxeSQ?t=297

https://youtu.be/V5c-eqNxeSQ?t=297

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The KPMG name and logo are registered trademarks of KPMG International. 10

G20 Finance Ministers and Central Bank Governors asked the Financial Stability Board (FSB) to review how the financial sector can take account of climate-related issues.

The FSB established the Task Force on Climate-related Financial Disclosures (TCFD) to develop recommendations for more effective climate-related disclosures that:

‒ could “promote more informed investment, credit, and insurance underwriting decisions” and,

‒ in turn, “would enable stakeholders to understand better the concentrations ofcarbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.”

The Task Force’s 31 international members, led by Michael Bloomberg, include providers of capital,

insurers, large non-financial companies, accounting and consulting firms, and credit rating agencies.

Industry Led and Geographically Diverse Task Force

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The Task force on Climate-related Financial Disclosures

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The Task force on Climate-related Financial Disclosures

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Climate risks: in real estate

Fossil

fuel

energy

Extreme

weatherDrought

Water

availability

Migration

Energy

transition

Carbon

pricing

Damage to

property

Profit & Loss

Cash flowAsset value

Carbon

emissions

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The key recommendations

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Supplemental guidance for certain sectors

Banks Asset OwnersAsset

Managers

Insurance

Companies

For the financial sector and certain non-financial sectors and industries, the Task Force provides supplemental

guidance to highlight important sector-specific considerations.

Financial Sector

Non-financial sectors and Industry Groupings

EnergyMaterials and

Buildings

Agriculture, Food

and Forest ProductsTransportation

— Oil and Gas

— Coal and

Consumable Fuels

— Electric Utilities

— Renewable

Electricity

— Chemicals

— Construction

Materials

— Metals and

Mining

— Capital Goods

— Real Estate

Development and

Management

— Paper and Forest

Products

— Beverages

— Food Products,

including

Agriculture

Products and

Packaged Foods

and Meats

— Non-Food

Agriculture

— Air Freight and

Logistics

— Airlines

— Marine

— Road and Rail

— Automobiles

— Transportation

Infrastructure

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Challenges reporting climate-related issues

Only 29% of the material issues

included in sustainability reports

are also included as risks in a

company’s financial filings.1

Many of the reasons identified

for differences between risks

included in sustainability reports

and financial filings can be

addressed through better

coordination across functions

and knowledge sharing.

1. World Business Council for Sustainable Development. “Sustainability and enterprise risk management: The first step towards

integration.” January 18, 2017. www.wbcsd.org/contentwbc/download/2548/31131.

Some companies have limited knowledge of sustainability, which inhibits the capture of emerging sustainability risks.

Sustainability risks are often more challenging to quantify than traditional risks.

The sustainability risk outlook timeline is longer than that of traditional risks.

Existing risk management frameworks may not provide enough guidance to companies to manage sustainability risks.

There is often a lack of collaboration between sustainability and enterprise risk management functions.

Financial filings use different language than sustainability reports.

http://www.wbcsd.org/contentwbc/download/2548/31131

Thank youWim Bartels

KPMG Advisory

Partner, Sustainability

Tel: + 31 6 51 279 625

[email protected]

Documents

Climate changes your business³… · 4 © 2018 KPMG N.V., registered with the trade register in the Netherlands under number 34153857, is a member firm of the KPMG network of independent