This article originally appeared on Nielsen.com.
There is no denying the clear and measurable effects of climate change, and organizations around the globe are starting to assess the impact of the changing environment on their operations, align on recommendations for how companies can take strategic action on climate change and encourage increased climate-related disclosures. NielsenIQ is no exception; we acknowledged the continued risk of climate change and its potential impact on our business in our most recent 10-K.
Our first global climate risk assessment is a meaningful way for us to take our action on climate change forward. Launched in early 2018, we performed this assessment to measure climate-related risks, provide transparency about those risks to our stakeholders, and to better understand how climate change may affect our overall business strategy. In doing this, we sought to more effectively plan, prepare, and invest in a way that secures our business continuity and growth. To conduct the assessment, we worked with a third-party expert to focus our efforts on the physical and transitional risks we may be exposed to across our global footprint. Physical risks include how extreme weather events can affect business assets integral to our operations, and transitional risks encompass financial implications associated with regulatory pressures related to climate change and potential reputational risks.
What are our risks?
To understand transitional risks, we used a variety of key inputs: a database of all current carbon and fuel taxes; potential future carbon price trajectories; revenue; operating expenditure and greenhouse gas (GHG) emissions’ projections; and modeling of the pass-through pricing risks from our supply chain. To understand physical risks, we looked at multiple temperature and precipitation indices that measured changes in both average and extreme conditions today, and then projected them out to the year 2030.
While the approach we took in our assessment—and the risks it uncovered—are not unique to NielsenIQ, we do acknowledge the significance of environmental changes and the value of knowing these risks. We will continue to effectively integrate the findings into our business and operations, and to seek out new ways to deepen our understanding of these risks as they evolve over time. Here are some key opportunities that were highlighted through the assessment:
- Carbon pricing risk in certain locations: We used different emission reduction scenarios to determine which business locations are at the highest risk to increasing carbon prices. And as a result, we have identified an opportunity to prioritize clean energy investments across all our sites.
- Exposure to physical climate risk: Across our global facilities portfolio, we developed a hotspot ranking for our global sites that shows the overall exposure to physical climate risk (such as rising sea levels, water and heat stress, as well as exposure to cyclones and extreme rainfall).
- Technological changes: Ongoing operational efficiencies in our data centers have helped reduce our climate change related technological risks. We now recognize the opportunity to extend these efforts by tapping into renewable energy sources. Water availability will be an increasingly relevant risk for our data centers; we plan to continue investigating further efficiency opportunities, especially in water-scarce regions such as India.
- Reputational opportunities: We are actively seeking new and innovative ways to drive awareness about the impacts of climate change across the industries we support, including our fast-moving consumer goods (FMCG) and retail clients. We are committed to providing insights into consumers’ sustainability preferences to help our clients evolve their products to meet changing consumer needs, and ultimately use sustainability as a way to expand the pie for all product categories and consumer environments.
The findings from our climate risk assessment have implications for all aspects of our business, including global responsibility and sustainability, real estate, business resiliency, risk and insurance, global procurement, and technology. While we build on these results and integrate the findings into our ongoing operational strategy, certain improvements remain underway within key areas of our business:
- Integrating sustainability in enterprise risk management (ERM): Climate change is now a stand-alone risk category in our ERM process as a fundamental part of the annual business-level risk assessments by our global operational leads. This is a statement of our internal commitment to continue our environmental work in the climate change arena.
- Incorporating physical risk findings into real estate plans: We are using the hotspot ranking from our assessment to guide us on any risks associated with our current facilities, and potential risks with any new real estate plans or moves. This review is vital to ensuring both responsible business growth and our associates’ safety.
- Identifying synergies with business resiliency plans and impact on insurance: We have also integrated the hotspot site ranking into our ongoing business resiliency plans, which focus on risk mitigation across sites, prioritized based on criteria such as property value, size, employee safety, and client impact. This alignment further protects us against any potential increase in insurance costs associated with high-risk facilities.
- Using our platform for climate-related insights: We continue to leverage measurement expertise to provide relevant sustainability insights to the industries we support. Sustainability can have wide-ranging meaning to consumers today and these insights are valuable as our clients adapt to changing environments and consumer preferences.
- Ongoing efforts for a responsible footprint: In our continuous work to reduce our global emissions, we are extending our current Scope 1 (direct emissions) and Scope 2 (indirect emissions) measurement to include a comprehensive corporate value chain assessment through a Scope 3 analysis, to evaluate the relevance and impact for NielsenIQ of each of the 15 emissions categories within the scope.
“These findings from our first climate risk assessment help us advance on our ongoing journey as we continuously seek to deliver for our clients and communities through responsible stewardship of our global footprint,” said Yamini Dixit, Director, Global Responsibility & Sustainability. “We are focusing on a more holistic approach towards how we manage our resources, and understand the symbiotic relationship between nature and our business and the value of driving harmonious opportunities.”
We continue to stay mindful of emerging climate change-related risks, such as the findings from the most recent Intergovernmental Panel on Climate Change report, as we implement resiliency measures that will help secure our business and our associates’ safety.
For more information, please see our NielsenIQ Global Responsibility Report.