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30-34 Rue du Chemin Vert 75011 Paris +33 (0)1 85 56 97 00 www.carrenoir.com
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ESG-RELATED RISKS
ESG risks are social, environmental, and governance variables that could affect a company's financial position or operating performance. For Technip Energies, ESG risks include those related to climate change, environmental protection, working and safety condition, respect for human rights, anti-bribery and corruption practices, and compliance to relevant laws and regulations. Our process to identify, assess and manage our risks, threats and opportunities is described in our 2022 Annual Report, sections 4.1. Risk Management overview and 4.2. Enterprise Risk Management framework where we have listed the main risks associated to the ownership of Technip Energies' shares: strategic risks, operational risks, financial risks, legal and regulatory risks, taxation risk, and ownership of Technip Energies shares. The ESG- related risks are integrated in the three main risks below: Strategic risks; Operational risks; Legal and regulatory risks. For more details on our risk management system and the risks to which we are subject, refer to Technip Energies 2022 Annual Report, chapter 4. Risk and Risk Management.
CLIMATE CHANGE-RELATED RISKS
Risks related to climate change have a significant impact on the Company’s activities and that of our clients throughout the entire value chain. Climate change and the energy transition have and will have impact on the Company's services and solutions provided to clients. Therefore, the identification and management of risks related to climate change and actions to seize opportunities are key for Technip Energies. Some climate-related risks are already captured by our company's Enterprise Risk Management (“ERM”), which implements risk identification and assessment both at global level (i.e. Group and operating centers) and at operational level (i.e. projects for our clients). Current processes enable the identification of climatic events that could impact the achievement of business objectives, strategies, and measures to address them.
In addition, this year, a high-level analysis has been performed to establish an exhaustive climate- related risk universe for Technip Energies. We ensured alignment of identified risks with the Task Force on Climate-Related Financial Disclosures (“TCFD”) and Carbon Disclosure Project (“CDP”) risks categories and subcategories (defined as "Primary climate-related risk drivers"). These risks can be found in the table below. The analysis was based on interviews with key internal stakeholders, a desktop review of existing external and internal documentation related to climate change and its associated impacts as well as a benchmark of common and best practices in the energy and oil and gas sectors. Through the interviews of key internal stakeholders and the business strategy, risks at short-, medium- and long-term horizons were captured. However time horizons have not been fully integrated in our ESG risk assessment yet; this is work in progress and will be disclosed in the coming years. Technip Energies, as a solution developer for several major energy companies in the world, needs to consider climate-related issues throughout its entire value chain to be able to respond to the technological innovations linked to the energy transition and climate change. The part of the value chain (upstream, own operations, downstream) impacted by each risk is described in the table below.
Identifying physical climate risks Regarding physical climate risks, in 2022, Technip Energies carried out a study, based on the 6th Intergovernmental Panel on Climate Change (“IPCC”) report published in August 2021, to assess the risks of climate change for our employees, customers, and assets. The study ranks the countries where we operate according to their exposure to four specific risk factors: flooding, costal submersion, heat stress and tropical cyclone. The aim is to provide information to site teams to conduct more local investigations, bearing in mind that different regions within a country may be affected differently. The risk rating analysis will continue to be developed in 2023 to support our projects and sites to identify and implement adaptation solutions within their respective HSES and risk management plans as early as possible in projects life cycle.
ESG risk management
Technip Energies Sustainability Report 2022 . 77
