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Climate change

P.201-202

 

5.3.1. Task Force on Climate-related

Financial Disclosures (TCFD)

In 2020, the Jerónimo Martins Group began

implementing the TCFD recommendations38 to

enhance the identification and quantification of

financial risks and opportunities associated with

climate change. The Group recognises that climate

change is one of the major environmental, social

and financial risks that organisations currently

face and that adaptation and mitigation measures

may represent opportunities for differentiation and

to contribute to strengthening the resilience of its

Companies and businesses, while strengthening

the Group’s commitments to the Sustainable

Development Goals (SDG), in particular SDG

7 (Affordable and Clean Energy) and SDG 13

(Climate Action).

In this regard, we consider the following

dimensions:

Governance

Climate-related risks and opportunities are one

of the three priorities of the Group’s Environmental

Policy and are an integral part of its Responsibility

Strategy, both at its operations level and in its

supply chain. The Committee on Corporate

Governance and Corporate Responsibility39

works with the Board of Directors by assessing

and submitting corporate responsibility and

sustainability proposals, including mitigation of

the effects of climate change. These issues are

also followed up on in regular meetings of the

Sustainability Committees of each Company.

Strategy

In this approach, a sample of 30 food product

groups relevant to our business were selected in

all the geographies where we operate: Poland,

Portugal and Colombia. The sample covers the four

stages of the value chain – production, processing,

logistics and establishments – and includes an

analysis of several risk categories for a time

horizon until 2030, considering two scenarios:

• average temperature increase between 4.0ºC

e 6.1ºC (scenario RCP 8.540 ) – meaning that the

efforts to limit average warming fail;

• average temperature increase below 2.0ºC

(scenario RCP 2.6 estimates global warming of

between 1.3ºC and 1.9ºC), in line with the Paris

Agreement.

 

An analysis of the scenarios made it possible

to evaluate the Group’s exposure to physical

climate risks, such as (i) temperature changes,

(ii) increased precipitation, (iii) extreme weather

events, and (iv) rising sea level. In addition to

these risks, other risks and opportunities linked to

the transition to a low-carbon economy as well as

market and reputational were also assessed.

Findings

The analysis of the selected product groups

revealed that the major risks and opportunities

for our businesses are related to the source

of the ingredients we use in Private Brand

and Perishable products (e.g. extreme cold

and changes in precipitation), transformation

processes (e.g. transition risks, where an increase

in energy costs associated with the Paris

Agreement targets are considered) and logistics

processes (e.g. extreme cold and rising

sea level).

As regards establishments, the risks

and opportunities are mainly linked to energy

transition risks.

The findings of the first assessment will be

materialised in concrete actions to continue

activities already under way (e.g. acquisition

of renewable energy certificates, installing

equipment with natural refrigerant gases and

with a low global warming potential, fighting

deforestation and the sustainable agriculture

project) to mitigate the potential negative

impacts and maximise opportunities identified

for Jerónimo Martins’ businesses. In this context,

mapping potential future changes – whether

negative or positive – in the supply chain is,

therefore, essential.

Risk management

The following risk typologies have been identified

as a result of climate change, water usage and

commodities linked to deforestation41:

• transition risks, which may represent an

increase in costs incurred with complying with

environmental legislation in the framework of

the transition to a low-carbon economy;

• physical risks, which may result in the scarcity

of some natural resources, such as agricultural

products, or a climate-related disruption of the

supply chain;

• reputational risks, associated with

stakeholders’ expectations regarding the

reduction of carbon emissions and the Group’s

contribution to fighting deforestation.

The likelihood of any of these situations occurring

and the level and management of the respective

impact, including financial, is analysed by the

Group as a regular part of its risk assessment

processes.