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.
The KPMG name and logo are registered trademarks of KPMG International.
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 KPMG name and logo are registered trademarks of KPMG International.
The impact of climate change (1)
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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 KPMG name and logo are registered trademarks of KPMG International.
The impact of climate change (2)
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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 KPMG name and logo are registered trademarks of KPMG International.
The impact of climate change (3)
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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 KPMG name and logo are registered trademarks of KPMG International.
The impact of climate change (4)
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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 KPMG name and logo are registered trademarks of KPMG International.
The impact of climate change (5)
9
© 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.
The tragedy of the horizons
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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 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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© 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. 11
The Task force on Climate-related Financial Disclosures
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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 KPMG name and logo are registered trademarks of KPMG International. 12
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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© 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. 13
The key recommendations
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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 KPMG name and logo are registered trademarks of KPMG International.
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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© 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.
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.