The Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) has developed voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders. The task force structured its recommendations around four themes that represent key aspects of how organizations operate: governance, strategy, risk management, and metrics and targets. In the year under review, Sika started to address the recommendations, and to integrate them into the reporting structure.
The highest governance level of climate-related risks and opportunities is the Board of Directors. The Board’s responsibility is to review and endorse the development and implementation of sustainability policies and strategies. It is one of the main tasks of the Chair of the Board to steer and oversee climate-related topics.
Group Management is responsible for the development and implementation of initiatives and actions addressing climate change, in line with the defined sustainability strategy and targets.
Identification, assessment and management of climate-related risks is integrated into multi-disciplinary company-wide risk identification, assessment, and management processes.
The external Sustainability Advisory Board and the internal Sika Sustainability Committee ensure that climate-related aspects are adequately considered in the Group’s strategy and operations. The task of the internal Sika Sustainability Committee is to prepare the decision-making of the Group Management. Climate- related risks are identified via the Sustainability and Operations Technology Manager, and the Compliance and Risk Management divisions. Information on specific climate-related risks is collected on regional level and consolidated on corporate level aligned with the overall strategy. Here, the external Sustainability Advisory Board gives recommendations for the agenda setting on global level.
Locally, climate-related risks are assessed and evaluated by EHS and Operations Managers in collaboration with General Managers who are reporting to Area Managers. An Area Manager reports to the Regional Manager. The Regional Manager is part of the Sika Group Management.
The Sika Strategy 2023 is closely aligned with the Sustainability Strategy. The overall goal is to reduce the CO2 emissions by 12.0% by 2023. Climate Performance is one of the target areas of this strategy. In the year under review, the Sustainability and Operations Technology team started to assure that climate transition risks in future will be part of the Sika Risk Management. The focus in 2019 was the further development of the Sika Sustainability Strategy, the definition of “Climate Performance” as target area, and the development of a greenhouse gas emissions reduction plan; climate risks and opportunities will be defined in 2020. In this context, it’s the ambition of Sika to increase the coverage of scope 3 emissions. Furthermore, the company will start to identify the climate-relevant risks at operation level, and will then consider transition and physical risks along its value chain. Furthermore, in 2019 as part of the Sustainability Strategy 2023, Sika has started the development of a Sustainable Portfolio Management (SPM) methodology. This methodology will be used to assess sustainability-related risks and opportunities of product-technology combinations in defined market segments in which Sika is active, with a focus on the long term. This will lead to a deeper understanding of the sustainability performance of Sika products and solutions portfolio, focusing on new developments.
Climate-related risks, being long-term financial risks, in future will be embedded into the Group risk management. This implies that climate-related risks are considered in the analysis process when setting up a new factor.
The target areas of the new Sika Sustainability Strategy are Sustainable Solutions, Climate Performance, Community Engagement, Water/Waste, Energy and Occupational Health and Safety. The strategic objectives used to drive sustainable value creation are described in the Sika Sustainability Strategy “More Value – Less Impact”. With the Sustainability Strategy 2023 Sika has set the target to reduce CO2 emissions per ton sold by 12.0% by 2023 by improving its energy efficiency and energy mix and by investing in clean technologies. Greenhouse gas Scope 1 and Scope 2 emissions are fully reported. The scope of emissions reporting is consistent with financial reporting. Scope 3 emissions related to upstream activities are disclosed only partly, currently covering business travel and leased vehicles.
Other scope 3 emissions that occur in the value chain, related to purchased goods, transportation and distribution, waste disposal, employee commuting, processing and use of sold products are quantitatively assessed on product level and potential meaningful impacts have been identified but not fully quantified on company level, and are therefore not disclosed. Sika aims to increase the coverage of indirect upstream and downstream emissions that occur in the value chain (scope 3 emissions). Sika solutions are designed to enable customers to reduce emissions in the respective applications and during the lifetime of the building or vehicle.