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Climate change risks and opportunities

The Task Force on Climate-related Financial Disclosures (TCFD) was launched in December 2015 by Mark Carney, at that time Chair of the Financial Stability Board (FSB) and Governor of the Bank of England, with the support of the G20. Its recommendations were published in 2017 and provide a framework for companies to disclose the impacts of climate change on their financial performance in a more consistent and comparable way. The intention is to assist investors, lenders and insurers to appropriately assess and price climate-related risks to their portfolios.

This is our fourth annual report for the UK firm following the publication of the TCFD recommendations and focuses on our 2021 financial year.

2021 Introduction

This is our fourth year of reporting on the basis of the recommendations of the Task Force on climate-related Financial Disclosures (TCFD). More than 2,600 companies with a combined market capitalisation of over $25 trillion and financial institutions responsible for assets of $194 trillion now support the TCFD recommendations. In parallel there has been an unprecedented level of investor concern and regulatory focus on the risks that climate change poses to business, and on TCFD adoption. Notably in the UK:

  • from 2021, premium listed companies on the London Stock Exchange are required to disclose in line with the TCFD recommendations on a ‘comply or explain’ basis;
  • the Financial Conduct Authority (FCA) has consulted on expanding the scope of this requirement to standard listed issuers, asset managers, life insurers, and FCA-regulated pension providers;
  • the Government has proposed mandatory reporting based on the TCFD recommendations for large companies and LLPs from 2022; and
  • the Financial Reporting Council (FRC) has reported that auditors need to improve their consideration of climate risk in relation to audits and quality monitoring, while urging public interest entities to report using the TCFD recommendations.

These and other developments will have implications both for our firm and for many of our clients.

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, and we are regulated by the FRC. As one of the members of the Task Force, we played an active role in the development of the TCFD framework and recommendations, our Managing Partner and Chief Operating Officer, Warwick Hunt, is a signatory to the TCFD Statement of Support and PwC is a signatory to the recommendations at a global level.


Climate related risk and opportunities within PricewaterhouseCoopers LLP (PwC UK) are overseen by two key bodies within the governance structure of the firm: the Management Board and the Supervisory Board.

The Management Board is responsible for the long term strategy of the firm and is focused on delivering for our clients, our people and our external stakeholders in line with our purpose. It is supported by a number of subcommittees.

Progress against our non-financial targets, including the metrics that underpin our climate change strategy, is reported twice a year to the Executive Board (a committee of the Management Board responsible for execution of the policies, strategy and management of the firm), which is chaired by our Chairman & Senior Partner. The Executive Board also approves all climate related disclosures. Additionally, the Executive Risk Committee (ERC), chaired by our Chief Risk Officer & General Counsel, periodically reviews emerging climate-related risks to the business, while the Clients & Markets Executive (a committee of the Management Board) considers climate issues in relation to client facing and market opportunities, and in particular our newly launched ESG Platform, within which our climate specialists are working with all our lines of service to evolve our core propositions to respond to market demand and our clients' needs.

In 2021 we established a monthly Net Zero & ESG committee, chaired by our Managing Partner & Chief Operating Officer, to provide focus and investment around our Net Zero commitments and related programmes. This committee has considered a variety of topics, from the firm's market presence relating to our ESG platform and our involvement in COP26; to upskilling arrangements for our people, our science-based Net Zero targets, and partnering with Count Us In, an initiative developed and supported by several external partners including the COP26 High Level Champion Team. Additionally, we established a cross-business programme to accelerate measures for controlling emissions from business travel as Covid-related restrictions ease.

An element of the Management Board’s remuneration is based on performance against the firm’s balanced scorecard of key business metrics. Progress against our carbon emissions reduction targets is one of these metrics.

The Supervisory Board is independent of the Management Board, and has regard to the interests and wellbeing of the Firm and the partners as a whole. Its Audit Committee is focused on the legal and fiduciary obligations relating to accounting, auditing, financial reporting and internal control functions of the firm. In this capacity it also reviews all of the climate-related disclosures, taking into account the views of both our internal and external auditors.

At a global level, our UK Chairman & Senior Partner also sits on both the PwC Network Leadership Team and the Strategy Council for PwC International Limited, which in 2020 approved the Network joining the Business Ambition for 1.5 C and the associated science-based commitment to achieving net zero by 2030.

Read more on the structure of the PwC Network


PwC delivers tailored, industry-focused services and solutions for public and private sector clients, across our core lines of service - Audit, Consulting, Deals, Risk and Tax. We do not manufacture or assemble physical products, or have complex supply chains, and one of the strengths of our business is that we are diversified across a wide range of clients, sectors and geographies. In revenue terms, we are not dependent on any individual sectors to the extent that, if they ceased to exist, it would call into question the future of our business.

However, we recognise that climate change has the potential to impact our business to varying degrees through our operations and the services that we provide to our clients across the sectors in which we operate.

Climate-related risks and opportunities

A key feature of climate change is the level of uncertainty surrounding it, so in 2020 we embarked upon a process of assessing potential implications of climate change under different scenarios of global warming from a preindustrial baseline1. Leveraging the expertise of our own climate change experts, we developed contrasting scenarios to help us explore how potential risks and opportunities may develop under different circumstances over the short, medium and long-term (0-5 years, 5-10 years and 10+ years).

The 4°C scenario implies greater ‘physical’ risks to asset values from events related to more extreme weather, while the 1.5°C scenario involves greater transition risks in the short to medium term, as markets and regulators adapt to the realities of a zero carbon economy. Both scenarios present potential risks and opportunities, whether for our business operations or for the services that we provide to our clients. We are keeping these under review and will continue to refine them in the context of the wider PwC Network’s climate change strategy.

Our risk framework

In 2021 we undertook a series of consultations with the risk leaders across our lines of service to identify risks and opportunities in each area. We’ve applied the following framework, consistent with the wider PwC Network, to distinguish between those affecting our own services and our operations, and those to which we may be exposed through our client base and broader economic impacts arising from climate change.


Climate-related outcomes that may directly affect PwC operations, services or people


Climate-related outcomes impacting PwC clients

Broader market:

Climate-related economic and social disruption triggered by extreme weather or transitional activities, including large scale supply chain disruption and adaptation

Risks & opportunities identified Order of risk Time horizon Business impact
Physical risks      
Physical risks to office infrastructure arising from acute and chronic climate events.
Direct Mid to long-term Disruption to delivery of services; increased costs through property damage.
Disruption to business travel arising from extreme weather events Direct Mid to long-term Travel disruption may impact client services, leading to delays in delivery of our engagements, and affecting revenue.
Extreme weather events causing major disruption to sectors with significant supply chain concentration in areas of heightened risk. Broader market Mid to long-term Regional economic disruption impacting provision of services to sectors affected, particularly where supply chains are concentrated or heavily reliant on those areas.
Transition risks      
Adapting our core services to embed consideration of climate risk in line with regulatory and legislative changes, and market expectations. Direct Short to mid term Reputational damage and possible financial loss from failure to adapt our core services to consider the impacts of climate change. If the level of quality in our services was deemed to be impaired, reputational damage could lead to loss of market share to competitors, impacting revenue.
Exposure to particular clients or sectors with highest levels of inherent climate risk Portfolio Mid term Potential loss of revenue as sectors or clients face disruption, leading to reduced budget for professional services.
Attracting and retaining talent Direct Short to mid term Reputational impact from our response to the global climate challenge could impact our ongoing ability to attract and retain talent, which is critical to our ability to serve our clients.
Brand/reputational risk arising from failure to contribute in a meaningful way to the climate agenda, including failure to meet our public Net Zero commitments Direct Mid term Potential reputational damage and/or financial loss.
Supporting clients in addressing climate-related risks and opportunities arising for them n/a Short, mid & long-term Potential for revenue growth / increasing market share from adapting core services and developing and scaling new services to help clients understand, respond to and report on the implications of climate change for their businesses.
Advocacy and contribution of expertise to wider policy and/or sector-based efforts to solve transitional challenges and/or accelerate transition to low carbon alternatives n/a Short, mid & long-term Purpose-led responses to support solving of important issues; reputational benefits; engaging our people

PwC Operations

As a large, people-based services organisation, we rely on relatively small quantities of energy, compared to many sectors, to run our offices. Most are run on renewable energy, and we do not produce significant volumes of greenhouse gases. Our highest carbon impact is from business travel relating to client work. Our offices are located across the UK which reduces the risk of widespread disruption from extreme weather events in particular areas, and we invest heavily in business continuity to mitigate the risk of disruption to our core operations and business travel. Our business continuity management system is certified to the ISO 22301:2019 standard. Additionally, we are engaging with our key suppliers to drive net zero action.

We also continue to improve our resilience to potential ‘physical’ risks through leveraging our ongoing investment in collaborative technology and enabling remote working. The Covid pandemic has been an effective test of our ability to rapidly shift to working from remote and distributed locations in response to an external shock, and to adapt our ways of working with minimal impact on our ability to support our clients. We will continue to consider our resilience to potential disruptions on our people’s remote working locations. Given these mitigating actions, the physical risks from climate change to our operations are not currently considered to be material to our strategy.


Client services

The focus of investors and regulators on the impact that climate change can have - and its implications for financial reporting - continues to accelerate. This has implications for our clients in terms of market expectations and emerging regulation that they will need to comply with, and therefore for how we conduct our work. One of the immediate consequences is for the audit sector where the Financial Reporting Council (FRC) has highlighted the importance of auditors being alert to the impact that climate risk could have on the judgements which underpin financial statements, as well as wider reporting requirements.

As companies are assessing the impact of climate risk to their businesses, and in some cases adapting their business models, we recognise that the audit profession has a critical role to play in the evolution of the corporate reporting ecosystem on climate change. We are taking several steps to support this. For example, we’ve provided awareness training to all of our qualified audit staff through our annual External Auditor Training programme, and have embarked on a programme of individual engagement with our engagement leaders who are responsible for signing audit opinions. We’ve also added two new mandatory steps in our audit methodology for all audit engagements to ensure that climate risk is given appropriate consideration at the right stage in the process, and introduced an online climate-risk knowledge hub which houses our relevant guidance and audit methodology updates. Additionally, we’re raising awareness of reporting and accounting issues related to climate change with the management of our clients, and including the subject in our broader non-executive programmes and Accounting & Reporting Updates. PwC globally is also a signatory to the Net Zero Financial Service Providers Alliance (NZFSPA) under the Glasgow Financial Alliance for Net Zero (GFANZ).

We need to remain conscious of our clients’ exposure to risks and opportunities from climate change when selling and delivering our other core services in order to maintain our service quality - particularly those services relating to strategy and governance, risk and reporting, deals related transactions, and business transformation work. Equally, if some clients are disproportionately affected by physical or transition risks, it may change the priority that they give to certain types of external advice and alter the mix of services they seek.

Conversely, climate change affords us an opportunity to play a valuable role in advising clients on the relevant implications for them, while mitigating our own risks from exposure to engagements in higher risk sectors. Meeting the demands of Net Zero calls for economy-wide change at an unprecedented scale, with implications for clients’ growth strategies and operating models. Often the pathway is unclear, so we can help clients to shape and drive the changes they need to make to retain a ‘licence to operate’ or to create long-term sustained outcomes, supported by a reporting approach that helps to build trust. We can also support the public sector to build the capacity to support climate action at scale. As a result, ESG - Environmental, Social, Governance - issues are at the heart of our new global strategy: The New Equation, with a significant investment plan that includes large scale upskilling and recruitment programmes. We launched our new ESG Platform, alongside the PwC Network’s global ESG Platform. We have also been instrumental in the development of the PwC Network’s ESG Academy programme, which aims to upskill all our people in climate and broader ESG matters, with an early focus on net zero transformation and the TCFD reporting framework.

Helping to shape the agenda

Our ability to mitigate against the broader market risks we have identified is less direct, as they relate to broader economic and societal impacts. A critical part of our strategy is therefore to work to be part of the solution, investing time in research and thought leadership to inform the wider debate and to progress the agenda. We closely monitor regulatory discussions and market developments, and engage in relevant business forums and working groups. As well as the TCFD itself, we work with key opinion formers such as the World Economic Forum, the World Business Council for Sustainable Development, the Value Balancing Alliance, and the Capitals Coalition, among others.

In 2021 we contributed again to the TCFD Status Report, and played a key role in the development of the Measuring Stakeholder Capitalism framework to advance the standardisation of ESG reporting alongside others in our sector, led by the World Economic Forum’s International Business Council. We continue to publish the Net Zero Economy Index, tracking the progress of G20 countries in decarbonising their economies, and used our annual Building Public Trust Awards to highlight the importance of credible reporting with the introduction of a specific climate-change reporting award. We’ve also published several sector-specific reports as part of a series on how to address ESG while identifying growth opportunities, alongside several other thought leadership papers. Additionally, we produced a paper (commissioned by Microsoft) on ’The Building Blocks for Net Zero Transformation’ as a contribution to the ‘Transform to Net Zero’ initiative.

Risk management

Risks to our business relating to climate change, whether strategic or operational, are managed in the same way as other business risks, as part of our overall risk management systems. The Management Board takes overall responsibility for establishing systems of internal control, and internal quality control, and for reviewing and evaluating their effectiveness. These systems are overseen by our Executive Risk Committee, which oversees the business risks and risk management strategy for the firm. We assess the principal risks facing the firm annually, including those that would threaten the firm’s business model, future performance, solvency or liquidity, and publish our approach to firmwide risk and principal business risks in our Transparency Report each year.

There are systems of risk control at every level of the firm. These include our lines of service, which report on risks relating to their business areas, supported by our risk management teams who work across our business on our professional services risk management systems. Additionally, we have firm-wide processes for reviewing new business, and a team which leads the firm’s efforts to track changes in applicable regulatory regimes.

We also have specialist teams throughout the business that keep track of emerging developments for clients, and can also help to identify potential climate change implications for our business, together with our established Corporate Sustainability team. This synergy typically identifies emerging regulatory or commercial requirements relating to climate change. Recent examples include the new carbon reporting requirements for UK Government suppliers, and the UK Government’s consultation on TCFD reporting for large private businesses and Limited Liability Partnerships, to which we provided a response.

Our Corporate Sustainability team also identifies and manages reputational risks associated with our environmental data and reporting capabilities using a robust third party software platform, and an annual external assurance process through the firm’s external auditors.

The processes for further integrating climate related risks into the firm’s overall risk management are rapidly evolving at both the UK firm and PwC Network level, reflecting the wider pace of change externally. This year the ERC reviewed the implications of climate-related risk to the firm and initiated a review to consider the medium term implications to our services, resulting in the risks and opportunities identified in the table above. This was undertaken by the UK Risk team with input from the Corporate Sustainability team.

At a PwC Network level climate change has been identified as a Key Network Risk (KNR). KNRs are identified as those which have the potential to undermine the achievement of the network strategy and business objectives, or fundamentally damage the network and compromise its future. So further work will be required to determine the materiality for the UK of the global risks identified to date, over different time horizons, as part of this wider network risk process.

Metrics & targets

In 2020 PwC joined the Business Ambition for 1.5°C, committing to achieving net zero greenhouse gas (GHG) emissions by 2030.

Being transparent about our progress is a key principle that underpins our Purpose. Internally we track the financial performance of our ESG Platform, including our Sustainability & Climate Change team. We also track the investments of time we make in our provision of technical support to sustainability-related external bodies, and in the development of new perspectives, methodologies and services related to climate change. Additionally, we measure the operational savings from the investments we’ve made to reduce our reliance on fossil fuels and to operate our offices more efficiently.

We have been measuring, reducing and offsetting our operational carbon emissions since 2007. In that time we have significantly reduced our total carbon footprint with Covid-related travel restrictions in the financial year to June 2021 helping to drive emissions to 4,398 tonnes of carbon dioxide equivalent (tCO2e), 96% below our original 2007 baseline as per the table below. This compares to our public target of reducing total emissions by 40% by 2022.

  2021 tCO2e

2020 tCO2e

2021 vs 2020

2021 vs 2007

Scope 1





Scope 22





Scope 3





Total 4,398 51,753 -92%


Over the same period we have grown our revenue by 72%, and our total emissions intensity (tCO2 / £m revenue) has also fallen from 58 in 2007 to 1 in 2021.

The vast majority of our emissions reduction in 2021 was from the near cessation of ‘scope 3’ business travel. We expect this to rise next year in line with the easing of restrictions as the economy reopens, so we’re proactively exploring ways to limit the bounce back, as part of our aim to halve our operational footprint by 2030 from a new baseline of 2019. This baseline aligns with PwC’s global commitment to be net zero by 2030, which has been validated by the Science-Based Targets initiative (SBTi).

We use the GHG protocol, UK Government environmental reporting guidelines, and UK Government emission factors to calculate our footprint, and use the ‘Market based’ approach to calculating our Scope 2 emissions from electricity, which reflects our renewable electricity contract. The metrics disclosed here are consistent with those in our Non-financial scorecard and Annual Report, and the data was assured by our external auditor Crowe UK under a limited assurance engagement in accordance with International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements ("ISAE 3410"), issued by the International Auditing and Assurance Standards Board.

Our commitment to net zero by 2030 involves halving our operational carbon footprint again by 2030 against a new 2019 baseline in line with a 1.5 degree warming scenario, which aligns to the highest ambition level of the Science-Based Targets Initiative (SBTi). The commitment comprises:

  • Reducing our total emissions by 50% by: transitioning to 100% renewable electricity and driving energy efficiency improvements in our offices, and halving the emissions associated with business travel
  • Ensuring that 50% of our suppliers (by emissions) have set their own science-based target by 2025
  • Maintaining our carbon neutrality, and investing in carbon removal from 2030 to compensate for all remaining emissions

It also involves strengthening the way we embed climate action into our supplier engagement, our client services and our market advocacy.

Having offset our carbon emissions since 2007, we also track the price and availability of carbon offsets. In 2021 we used three REDD+ projects in recognised biodiversity hotspots to offset our total emissions (scope 1, 2 & 3). These projects form part of the portfolio of projects supported by the global PwC Network, through which we have also joined the LEAF Coalition (Lowering Emissions by Accelerating Forest finance). This is a public-private initiative that aims to protect tropical forests at scale, through a long term commitment to purchasing high integrity carbon credits that are verified against the independent and rigorous ART/TREES standard.

1 1.5°C scenario: In this scenario we would expect a significant increase in climate policies and regulation required to support the transition to a low carbon economy, with a particular focus on decarbonising the energy system, and corresponding implications for certain sectors whose business models rely on fossil fuels. This would be bolstered by a surge in market demand for lower carbon products. This scenario is based on the Intergovernmental Panel on Climate Change’s (IPCC) SSP 1 scenario and the International Energy Agency’s World Economic Output (IEA WEO) sustainable development scenario.

4.0°C scenario: This scenario reflects the trajectory of warming by the end of the century with little new action to reduce the carbon intensity of business, beyond current policies and commitments. The resulting increase in average temperatures, would lead to significant shifts in the frequency and intensity of extreme weather-related events in the UK and globally, as well as long term shifts in weather patterns that could affect food production, infrastructure, supply chains and migration for many of our clients. This 4°C scenario is based on the IPCC SSP 5 scenario and the IEA WEO stated policies scenario.

2 Based on the GHG Protocol ‘market based’ approach. ‘Location-based’ approach for 2021: 4,902 tonnes CO2e.

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Emma Cox

Emma Cox

Global Climate Leader, PwC United Kingdom

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