Type Climate-related Risks Potential Impacts on IRPC business Estimated financial impacts Physical Risks Acute • Increased severity of extreme floods • Increased severity of extreme droughts • Increased severity of coastal/bank erosion • Increased capital costs (e.g., damage to facilities, Land lost due to coastal erosion) • Reduced revenue from decreased production capacity (e.g., transport difficulties, supply chain interruptions) • Reduced revenue and higher costs from negative impacts on workforce (e.g., health, safety, absenteeism) • Write-offs and early retirement of existing assets (e.g., damage to property and assets in “high-risk” locations) • Increased operating costs (e.g., inadequate water supply for operating plants) • Reduced revenues from lower sales/output • Increased insurance premiums and potential for reduced availability of insurance on assets in “high-risk” location 12,797 MB for a timeframe of 7 years Chronic • Risk of sea level rise • Rising mean temperatures Transition Risks Policy and Legal • Introduction of carbon pricing/emission rights trading in country i.e., tax, ETS • Introduction of carbon pricing and emission rights trading will decrease net profit 951 MB for a timeframe of 7 years • Enhanced emissions-reporting obligations • Increased operating costs to disclose information and has been certified by the designated agencies. Technology • Increase in switching cost • The company will have to consider selling assets or having a switching cost from fossil fuel to low-carbon intensive energy sources. Under consideration • Required huge investment cost to install removal Technology i.e., CCUS • High capital investments in technology deployment e.g. installation of GHG removal technology • Subsequent increased production costs due to the new and innovative technologies and skill set throughout the supply chain Market • Changing customer behavior • Decrease in oil consumption due to the shifting consumer preferences from internal combustion engine (ICE) vehicles to electric vehicles (EV) Under consideration Reputation • Increased stakeholder concern or negative stakeholder feedback • More pressure from stakeholders regarding environmental management, such as emissions of volatile substances from factories, effects on health of workers and surrounding communities, GHG reduction policy towards the global agenda to limit temperature rise no more than 2 ํC, etc. Under consideration 133 Business-Driven Sustainability 56-1 ONE REPORT 2023
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