Further information
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Building resilience through scenario analysis
We are currently studying how these risks and opportunities will change under different scenarios. In addition, we will study these 4 focal questions under the scenario analysis: • How does our global operating model impact our emissions profile , by geography, structure, and growth plans? • How fit for purpose are our governance structures to drive climate integration into our business strategy and achieve targets; and what are the key tensions between our business strategy and climate strategy? • When is our reputational risk exposure at its highest because of the information we choose to publish and the clients we choose to work with? • What are the key variables and events that need to be monitored and understood around client- related risk (operational and client-related) at Leadership level? Since the process of scenario analysis is still underway, we cannot yet address the financial impacts of our risks, opportunities, and controls in place. We aim to provide findings in the next reporting year.
To gain a more in-depth understanding, we are now taking our most material risks and opportunities through climate scenario analysis. To do so, we selected 3 scenarios from the Network for Greening the Financial System (NGFS). The scenarios are aligned to the recommendations of both the TCFD and the FCA and the transition elements considered are deemed most relevant to Clyde & Co. These scenarios are: • Net Zero 2050 – This ambitious scenario limits global warming to 1.5 °C through innovation and stringent climate policies, reaching Net Zero CO 2 emissions around 2050. The scenario involves Limiting warming to below 2°C requires strong new policies from 2030 onwards. Negative emissions are limited. This scenario involves higher transition risk, significant physical risk, an aggressive change towards decarbonising the economy from 2030 onwards. • Current Policies – Under this scenario, only currently implemented policies are maintained. This scenario involves limited transition risk, higher physical risk, and reduced support to limit the effects of climate change – only current policies are applied. higher transition risk, lower physical risk, and sharp changes towards decarbonising all aspects of the economy from today. • Delayed Transition – This scenario assumes global annual emissions do not fall until 2030.
Next Steps
• Following completion of scenario analysis, disclose the strategic impacts of climate risks against the time horizons under different tested scenarios • Continue to explore and disclose the interdependencies between the factors driving the climate risk and opportunities • Once fully aligned with the TCFD recommendations and having submitted our long-term Net Zero Science-Based Target, develop a climate transition plan that aligns with both a 1.5°C trajectory and guidance of the Transition Plan Taskforce (TPT)
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