Climate change risks and opportunities

The Task Force on Climate-related Financial Disclosures (TCFD) was launched by Mark Carney, Chair of the Financial Stability Board (FSB) and Governor of the Bank of England, with the support of the G20. Its remit was to develop a set of voluntary, consistent and comparable recommendations for companies to use in disclosing information to investors, lenders and insurance underwriters about the impacts of climate change on their financial performance. The recommendations were published in June 2017 and the statement below reflects our first response for our UK business.

As a professional services firm, PwC is not in one of the priority sectors specified by the TCFD, but we do provide services to clients in each of them. As one of the members of the Task force, we played an active role in the development of the TCFD framework and recommendations and our Chief Operating Officer & Managing Partner - International, Warwick Hunt, is a signatory to the TCFD Statement of Support.

We want to play our part in contributing to the targets agreed in the Paris Agreement of 2015, and have reduced the Scope 1 and 2 emissions in our own business by 85% since 2007. In addition, as a professional services provider, we’re well placed to help bring to market new perspectives and approaches that can help to shape the way that organisations address the challenges associated with climate change. For example, we publish the Low Carbon Economy Index, tracking the progress of G20 countries in decarbonising their economies. Through our leadership of the Climate & Development Knowledge Network (CDKN) over the last eight years we supported developing countries to deliver climate-compatible development, and continue to support them in the international climate change negotiations. We’ve also extended our work with WEF to explore how the Fourth Industrial Revolution can be harnessed to address environmental challenges such as climate change.

Governance

Risks to our business relating to climate change, whether strategic or operational, are managed in the same way as other business risks, and in proportion to them, as part of our overall risk management systems.

Our Executive Board has oversight of our Purpose, which is to build trust in society and solve important problems. An element of this relates to our support for the transition to a low carbon economy.  All climate-related metrics that the firm publishes in the Annual Report are independently assured each year, and reviewed by both the Executive Board and the Audit & Risk Committee of the Supervisory Board. Our Head of Purpose, Emma Cox, reports to our Chairman & Senior Partner, Kevin Ellis and to our Chief Operating Officer & Managing Partner - International, Warwick Hunt, and updates the Executive Board twice a year.

The Executive Board is responsible for establishing systems of internal control and for reviewing and evaluating their effectiveness. These systems are overseen by our Risk Council, an Executive Board subcommittee which regularly reviews our business risks and approach to risk management.  Our risk and quality teams work across our business on our professional services risk management systems.

Strategy

As a professional services firm, PwC delivers tailored, industry-focused services and solutions for public and private sector clients, across our core lines of service - Assurance, Consulting, Deals and Tax. One of the strengths of our business is that we are diversified across a wide range of clients, sectors and geographies.

As a people-based organisation we rely on relatively small quantities of energy to run our offices, and we don’t produce significant volumes of greenhouse gases. Our offices are not concentrated in one location, and we invest heavily in business continuity to manage the risk of our core operations being disrupted by physical risks such as extreme weather events induced by climate change. Moreover, we’ve improved our resilience to such potential risks through increasing our use of technology and enabling remote working.

As such we have not identified any material physical risks to our business strategy relating to climate change in the short to medium term. On this basis, we have not modelled the potential impacts of different climate-related temperature scenarios.

Through our specialist Sustainability & Climate Change (S&CC) practice, we are members of climate-related technical working groups and expert panels for key international forums that seek to address various aspects of climate change. As our clients increasingly consider the implications of climate change for their organisations, we have the opportunity to support them in the transition to a low-carbon economy through relevant offerings across our lines of service.

Risk Management

The Risk Council oversees the risk management strategy for our business on behalf of the Executive Board. There are systems of control at every level of the firm. These include our lines of service, which report on risks relating to their business areas. Our risk and quality functions oversee our professional services risk management systems. Additionally, we have firm-wide processes for reviewing new business, and a corporate affairs team which leads the firm’s efforts to track all changes in applicable regulatory regimes. We publish our principal business risks in our Annual Report each year. These are assessed based on their potential impact (financial or reputational) and chance of occurrence. Climate change is not currently considered to be a principal business risk but we will continue to review and monitor this.

Potential physical risks relating to climate change are managed at an operational level through our business continuity management system that is certified to the ISO 22301:2012 standard, and overseen by the Business Continuity Strategy Group.

Metrics & targets

Given the relatively low risk to our business we don’t currently use financial measures to assess climate-related risks. However, internally we track the performance of our S&CC business practice, including the investments we make in our provision of technical support to external bodies, and in the development of new perspectives, methodologies and services related to climate change.

Additionally, we track the operational savings from the investments we’ve made to reduce our reliance on fossil fuels and to operate our offices more efficiently. Between 2007 and 2017, these helped us to save almost £20 million in direct energy use, and £1.3 million in costs from the UK government’s CRC scheme.

In the financial year to 30 June 2018, our greenhouse gas emissions totalled 72,943 tonnes CO2e.

This breaks down as:

Scope 1: 1,214 tonnes CO2e
Scope 2: 3,628 tonnes CO2e (market based)
Scope 3: 68,101 tonnes CO2e

Having reduced the total carbon emissions (Scope 1, 2 & 3) from our operations by 29% between 2007 and 2017, we set new five-year reduction targets in 2018. These are:

  • To reduce our total operational carbon emissions (tonnes CO2e) by 40% from our 2007 baseline
  • To reduce our business travel carbon emissions by 33% per FTE from our 2007 baseline
  • To maintain our energy reduction at 50% from our 2007 baseline
  • To eliminate our Scope 2 emissions by purchasing 100% of electricity from verified renewable sources
  • To offset 100% of our total Scope 1, 2 and 3 carbon emissions (tonnes CO2e) as reported each year, to remain carbon neutral

We publish extensive information about our programmes to manage our performance against these targets on our website.

Contact us

Emma Cox

UK Leader Sustainability & Climate Change, PwC United Kingdom

Tel: +44 (0)7973 317011

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