HOW THE GROUP MANAGES
CLIMATE RISKS
Identifying and managing risks relating to the environment and to climate change are a part of the Group’s global risk management system, which is supervised by the Risk Management department. The risk management method it applies is based on identifying and assessing risks of any kind, which are then mapped (as mentioned earlier), and on carrying out action plans to deal with these risks, and specifically their net impact and/or probability of occurrence, by means of elimination, prevention, protection or transfer.
Risk management policy is applied at Group level for major risks. It is also rolled out at operating entity level (countries, commercial and/or industrial subsidiaries), for vehicle programs and for global functions.
Level 1 – Group level.
The Risk Management department provides an overall view of major risks. Transition and physical climate risks are included in this risk map, not as distinct risks, but as the triggering or aggravating factors of several other risks. The identification and management of climate risks are therefore fully integrated into the Group’s global risk management system.
Under the supervision of the Board of Management (BoM) and the Board of Directors (mainly through two of its specialized committees – Risks and Internal Control, and Audit, Risks and Compliance), the major risk map is updated annually. These updates are closely coordinated with the development of the medium-term strategic plan and its rollout, so that it can include targeted action plans to address operational and strategic risks. The mapping of the Group’s major risks is presented in the Universal registration document 2020.
Level 2 – Operating department level.
Operating departments are in charge of managing major risks, which include climate risks. Each major risk is assigned to a “risk owner”, a member of the BoM who handles the management of the risk with their teams and reports on their work to the BoM. For example, the Group’s Prevention and Protection department is in charge of identifying and addressing the risks and opportunities relating to protecting assets from physical risks (such as severe weather events) and to follow up on risk prevention audits with insurers. Risks that relate more specifically to the transition to a low-carbon economy are supervised by the Strategic Environmental Planning department, with the support of the external affairs, manufacturing and logistics departments. These risks are reported on annually to the BoM, which approves the corresponding management strategy and the necessary means to implement it.
Level 3 – Entity level.
In all entities involved in business-critical processes, experts are appointed to identify and prioritize risk management solutions and related local opportunities and to oversee their implementation. They directly contribute to the Group’s major risk mapping and management process.