CLIMATE CHANGE-RELATED RISKS AND OPPORTUNITIES

CLIMATE CHANGE-RELATED RISKS AND OPPORTUNITIES

The company has defined its climate-related risks and opportunities according to the recommendations of Task Force on Climate-Related Financial Disclosures (TCFD). In 2021, the risks and opportunities were reassessed using two different scenarios.

In April 2019, the Quality and Sustainability Department organized a dedicated crossfunctional workshop on climate change-related business risks and opportunities.

The aim of the workshop was to identify top three climate risks for Nokian Tyres in each of the sub categories: physical, regulatory, market, technology and reputational risks. This was conducted along the recommendations of Task Force on Climate-Related Financial Disclosures. The workshop was facilitated by environmental experts. Risks and examples defined are reassessed annually.

Nokian Tyres is also committed to setting Science Based Targets in order to further reduce greenhouse gas emissions. In May 2020, these SBT’s were officially approved.

CLIMATE-RELATED RISKS

Risk group Sub category Examples of concrete risks Adaptation / mitigation plan

Regulatory

Emerging regulation

Deforestation-related regulation, mostly concerning natural rubber.

Green regulation on aviation and maritime fuels can significantly increase costs of llogistics.

Follow-up of emerging regulation

Further green labelling

Additional taxes and duties e.g. EU’s CBAM for fossil raw materials can increase prices.

Participation in industry sector working groups.

Stricter expectations to oversight

 

Follow-up of emerging regulations.

Physical Extreme weather events

Disruptions in logistics.

Alternative transportation routes.
Extreme temperatures Contamination of raw materials. Multiple supply sources.
Technological

Climate-related demands for new tire technology

A+ rolling resistance tires required for EVs.

150 km/h max speed for EU – demand for UHP (Ultra High Performance) tires fall

Anticipation of future expectations in R&D development roadmaps.


Materials technology

Requirements for non-renewable material replacements.

Roadmap for renewable and recyclable raw materials.

Market and reputation

Market changes

Shift from car ownership to mobility-as-a-service i.e. changing customer base.

Update product and service offering.

  Green energy prices go up due to strong demand. Long term power purchasing agreements.
 

Availability of renewable and recycled raw materials can limit plans for sustainability.

Aiming for multiple sources.

 

Increased demand for year-round tires and less winter tires.

Update product offering.

Reputational risk Deforestation scandals (natural rubber). Co-operation with supply chain in line with GPSNR recommendations.

CLIMATE-RELATED OPPORTUNITIES

Opportunity group Sub category Examples of concrete opportunities

Innovation

Raw materials

Innovations with renewable materials.


Recycling

Recycling system of tires still missing in many
countries, Scandinavian system can be used
as an example.

Climate-friendly technology

Lower rolling resistance.

Energy-efficient production Modern machinery used in Nokian Tyres’
factories.

Product range

 

 

Competitive advantage


Nokian Tyres is an expert in demanding and challenging weather conditions. We have a strong share in winter tire markets and are prepared to increase the share further, should the extreme weather phenomena increase in the future.

EU further labeling for sustainable tires

Existing focus on sustainable natural rubber and developing wear resistance.

Industrial (heavy) tires

We have existing expertise to provide climate-friendly solutions.

Engagement

Consumers

 

Policy makers

Increased preparedness for new regulations or incentives.

Shareholders/stakeholders

 

Regulatory

Renewable Energy Directive

More renewable energy available in EU, prices
can decrease.

Global carbon tax or similar would improve
NT’s competitive position.