Environmental and climate risks: in-depth analysis and disclosure

COP28: AGREEMENTS AIMING TO MOVE AWAY FROM FOSSIL FUELS

The 28th Conference of the Parties (COP28) under the United Nations Framework Convention on Climate Change (UNFCCC) was held in Dubai from 30 November to 12 December 2023 and dealt with the main issues that had emerged from the previous COP27: the need to transition towards a system based on renewable sources and reduce the use of fossil fuels, the request for processing and possible updates to the contributions made at national level (Nationally Determined Contributions - NDC), the establishment of a Fund for losses and damages, which recognises compensation to developing countries that are more vulnerable to the eects of climate change.

As required by the Paris Accord, work was done during COP28 on the third phase of the global stock-take on climate (GST) relating to an assessment of all the national commitments undertaken (Nationally Determined Contribution – NDC)¹⁵³. It emerged that in summing up all the national commitments and assuming that the goals they contained were fully achieved, the goal of limiting the average temperature increase to less than 1.5°C compared to to pre-industrial levels, is still a long way o. The parties therefore entered into an agreement to accelerate the global transition,

promoting the formula “transition away” and drawing up a roadmap to drastically reduce the use of coal, oil and gas. For the first time in history, the agreement makes explicit reference to transitioning away from fossil fuels to achieve climate neutrality by 2050. New goals were set in this regard: triple renewables and double energy eciency, accelerate eorts to eliminate energy production from coal without osetting, eliminate inecient fossil fuel subsidies and promote the acceleration of zero and low emission technologies, including nuclear and carbon capture and storage technologies. With the aim of aligning national goals and measures to the Paris Accord, countries were asked to make new nationally determined contributions. Parties needed to submit their NDCs for 2035 by COP30, in line with the best scientific data available and results of the global stock-take.

Finally, an agreement was reached on how the Loss and Damage Fund would work. This had been created and adopted to support countries that were more vulnerable to climate crises, with Italy committing to an allocation of EUR one hundred million in this regard. The next COP29 conference will be hosted in 2024 in Baku, the capital of Azerbaijan.

THE CLIMATE-RELATED DISCLOSURE BASED 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, of which the most recent 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 2022 project involved the main Group companies, operating in the water, energy production, energy distribution, and waste treatment and recovery sectors, to identify the physical and pertinent transition risks, as well as quantify the economic-financial impact of the risks described.

Certain key Parent Company functions also participated, especially during the phase to prioritise the risks identified. Once the priority risks to be evaluated and compared with the more representative scenarios and parameters were identified, the in-depth analysis began. In the scope of physical risks, most Companies selected the risk of drought and water stress. The risk of extreme precipitation and flooding (Acea Produzione, Areti and Gori), heat waves (Areti) were also examined. The outcomes of the scenario analysis on the risk of lightning strikes (Acea Ambiente and Acea Produzione), developed during the previous two-year period (2020-2021) were also confirmed as valid. In terms of transition risks, carbon pricing was identified as the most representative risk by most of the Companies involved.

For further details, see the Acea Climate-related Disclosure, available on the link: https://www.gruppo.acea.it/il-nostro-impegno/ informativa-climatica-tcfd.