Environmental and climate risks: in-depth analysis and disclosure
[GRI - 102-29],
[GRI - 201-2],
[GRI - 302-1],
[GRI - 305-1],
CLIMATE RISKS
Although the COVID-19 pandemic has represented the priority emergency in recent years, the current geopolitical situation is forcing us to confront an unprecedented energy crisis, while the intensification of climate change is having serious impacts locally and globally. These two factors have resulted in a slowdown of the world's leading economies.
As noted earlier, climate change is one of the most significant environmental and social challenges of our era. The Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change, held in Sharm el-Sheikh in November 2022 (see box for more details), confirmed the goal ratified in 2021 in Glasgow to maintain global temperatures below a 1.5°C increase on pre-industrial levels.
However, according to the latest IPCC Report published in 2022, the average global temperature increase since 1850 has been around 1°C144. Despite the current containment measures in place, keeping the global temperature rise below 1.5°C will require further commitments.
CLIMATE CHANGE AT COP27
The 27th Conference of the Parties (COP27) to the United Na- tionals Framework Convention on Climate Change was held in Sharm el-Sheikh from 6 to 18 November 2022, against a backdrop of global crisis. The negotiations focused on five key topics: decarbonisation, climate adaptation, nature, food, and water.
Meanwhile, on 16 November during the G20 Summit in Bali, these issues were incorporated into the updated “G20 Action Plan on the 2030 Agenda, adopted in 2016.
COP27 ended with the issuing of a final decision, the Sharm el-Sheikh Implementation Plan. The plan maintains the agreements ratified in the Glasgow Climate Pact (COP26), under which the signatory countries undertake to maintain the global temperature increase to below 1.5°C compared to pre-industrial levels.
The Agreement highlights the need to transition to an economy based on renewable sources and to reduce the use of fossil fuels. Efforts to gradually eliminate coal were encouraged, favouring low-emission sources and promoting the elimination of fossil fuel subsidies. As regards the Nationally Determined Contributions - NDC, countries that had not yet presented their decarbonisation commitments were encouraged to do so, while those that already have were asked to update them by the end of 2023.
The main change involves the introduction of the “loss and damage” principle, which calls for the payment of indemnities to the most vulnerable developing countries for climate damage suffered. This principle will be implemented by establishing a specific Fund to be defined at a later date. The next conference, COP28, will be held in Dubai from 30 November to 12 December 2023.
Acea has continued its climate-change mitigation and adaptation strategy i) with an increase in the energy efficiency of Companies and, regarding water, with the reuse of purified wastewater in agriculture ii) implementing actions aimed at increasing the resilience of infrastructure, and iii) adopting a plan to significantly increase generation from renewables145, and with the dual objective of achieving a high level of efficiency for final domestic usage and usage in energy processes, and reducing carbon intensity (gCO2/kWh produced). The results ob- tained to date are shown in Table no. 63 on energy intensity indices and in Table no. 69 on emission intensity indices.
Acea assesses climate risks, classifying them into physical and transition risks, in accordance with the CDP Questionnaire and with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). After an initial project conducted in previous years, in 2022 Acea worked in synergy with the main Group companies146 to analyse the main climate-related risks on its business areas (see box for more details).
THE 2022 ACEA PROJECT ON THE TCFD APPROACH
Acea, which has long been aware of the global challenge of climate action through to its experience with CDP, has aimed to expand its knowledge of the application of international climate scenarios through the development of two consecutive projects, most recently in 2022, on the application of the approach recommended by the Task Force on Climate-related financial Disclosures (TCFD).
The 11 Recommendations issued by the TCFD on Climate-Related Financial Disclosures represent the benchmark model at international and EU level. They are applicable to all organisations, are focused on risks and opportunities connected to climate change and increasing the capacity for a panorama based on precise analyses of scenarios. The scope of the 2022 project was extended to include the main Group companies operating in the water, energy production, energy distribution, and waste treatment and recovery sectors in the process to identify physical risks and the necessary transition.
The project also involved certain key departments of the Parent Company, particularly in the process to prioritise the identified risks.
Once the priority risks to be evaluated and compared with the more representative scenarios and parameters were identified, the in-depth analysis began. For most Companies involved, the risk of drought and water stress was identified as one of the critical physical risks. Other risks analysed included extreme precipitation and flooding (Acea Produzione, Areti and Gori), heat waves (Areti) and, during the first project, the risk of lightning strikes (Acea Ambiente and Acea Produzione). In terms of transition risks, carbon pricing was identified as the most representative risk by most of the Companies involved.
The outcome of the analyses, finalised at the end of the year, will be incorporated into Acea's climate-related disclosure, updating the first edition on FY 2021 published in 2022.
144 Available on the Intergovernmental Panel on Climate Change website.
145 In particular, in 2022 the output of the photovoltaic plants of the investee company reached 92.8 MW. Added to the 7.8 MW of Acea Production, total installed capacity stood at 100.6 MW.
146 In 2022, along with Acea Ato 2, Areti, Acea Produzione and Acea Ambiente, the companies Acea Ato 5, AdF, Gori and Gesesa took part in the TCFS project.