ESG Risks and Opportunities
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Table 1 - ESG-related risks Topic Risk Type Main Technip Energies Risks Risk Impact Driver
Risk Description (Refer to Technip Energies 2022 Annual Report, section 4.3. Risks to which we are subject)
Where in the value chain the risk driver occurs
Climate Transition risk: Emerging and current regulation
Legal and regulatory risks
Mandates on and regulations of existing products and services
Existing or future laws and regulations relating to GHG emissions and climate change, such as the EU Taxonomy regulation, may adversely affect our business. See the details in 4.3.4.2.
Direct operations, Downstream
Climate Transition risk: Technology Strategic risks Substitution of existing products and services with lower emissions options
Inability to develop a sufficiently adequate technological innovation position for the business associated with energy transition. See the details in 4.3.1.1. and 4.3.1.2.
Direct operations
Climate Transition risk: Legal Operational risks Exposure to litigation
Our operations require us to comply with numerous regulations, violations of which could have a material adverse effect on our financial condition, results of operations, or cash flows. See the details in 4.3.2.7.
Direct operations, Downstream
Climate Transition risk: Market Strategic risks Uncertainty in market signals
Trends in the energy markets and changes in demand for certain products and services are directly affecting our business, such as: • Oil and gas demand and prices • Renewable energy profitability • CO₂ storage and hydrogen demand • Ability to access capital/financing See the details in 4.3.1.2., 4.3.1.4., and 4.3.1.5.
Downstream
Climate Transition risk: Market Operational risks
Price volatility and reduced material availability
The low carbon transition could lead to increased prices as companies providing raw materials (clays, rock, sands…) and processed materials (cement, concrete, metals) are also committed to climate trajectories. Indeed, their investments to reduce their carbon footprint and their willingness to develop "green" offers can lead to cost increases for their clients, including Technip Energies. See the details in 4.3.2.1.
Upstream, Direct operations
Climate Transition risk: Reputation Strategic & Operational risks
Stigmatization of oil & gas sector and increased stakeholder concern or negative stakeholder feedback
Our activity continues to focus on a very large extent on oil and gas sector, an emissive sector that can be stigmatized. This could affect: • Talent attraction and retention (difficulties in recruiting
certain expert profiles in energy transition and low carbon solutions)
• Investors’ perception of oil, gas and renewables investments
• Negative public opinion, demonstrations See the details in 4.3.1.2. and 4.3.2.5.
Direct operations
Climate Physical Risk: Acute
Strategic, Operational, & legal and regulatory risks
Increased severity of extreme weather events such as: • Cyclone, hurricane,
typhoon • Flood (coastal, fluvial,
pluvial, groundwater) • Heat wave • Heavy precipitation
(rain, hail, snow/ice)
Increased severity of extreme weather events could impact Technip Energies in several ways: • Delays and costs on construction projects due to
disruption on the site and in the supply chain, • Health and safety of employees and potential liabilities
arising from these events, • Contract margins (unforeseen additional costs due to
disruption in supply chain, additional costs to implement climate-resilient design and construction).
See the details in 4.3.1.3., 4.3.2.2., 4.3.2.3., and 4.3.4.4.
Upstream, Direct operations, Downstream
Climate Physical risk: Chronic
Strategic, Operational, & legal and regulatory risks
• Changing precipitation patterns and types (rain, hail, snow/ice)
• Temperature variability • Precipitation and/or
hydrological variability • Water scarcity
Chronic changes (such as temperatures and precipitations) could impact Technip Energies in several ways: • Health and safety of employees with adverse working
conditions, • Contract margins (additional costs to ensure efficiency
and performance of the plant designed in evolving climate conditions).
See the details in 4.3.1.3., 4.3.2.2., 4.3.2.3., and 4.3.4.4.
Upstream, Direct operations, Downstream
Below the tables with a summary of Technip Energies ESG-related risks and opportunities. For more details on the Company’s risks and how they are managed, refer to Technip Energies 2022 Annual Report chapter 4. Risk and Risk Management.
Environmental Biodiversity Legal and regulatory risks
Biodiversity loss, nature deteriorating worldwide, water scarcity
Without proper assessment, mitigation and prevention measures, the natural habitats of flora and fauna could be negatively impacted by our projects. See the details in 4.3.4.2.
Direct operations
Social Employees Operational risks
• Highly dynamic labor market and instability
• Need of specialized skills and experience in the workforce
• Specific growing need of Green skills across the industries
• Inflation and increase of wage rates
We may be unable to employ and retain a sufficient number of skilled and qualified workers. See the details in 4.3.2.5.
Direct operations
Social Safety Operational & Legal and regulatory risks
Serious or fatal employee injury or illness • Loss of, or impact to,
employees • Loss of productivity • Property damage • Reputational impact • Clients' confidence
Our ability to ensure the safety, health and well-being of our people. See the details in 4.3.2.7. and 4.3.4.4.
Direct operations
Social Supply Chain and Human Rights Operational risks
Supply chain disruption due to increase of climate-related risks as well as the evolution of international trade and market barriers • Delays in production
and delivery, incurring important costs
• Impact on clients experience if delays are too long
Violations of human rights and fundamental freedoms • Reputation and brand
image • Legal impact • Health & well-being
impact for our employees, suppliers and sub-contractors
We face risks relating to our reliance on subcontractors, suppliers, joint venture and consortium partners and our operations require us to comply with numerous regulations, violations of which could have a material adverse effect on our financial condition, results of operations, or cash flows. We can operate in regions where the risk of human rights, such as forced and compulsory labor, work conditions, and discrimination are high, and we need to invest financial and managerial resources to ensure the human rights for all the workers in all projects and operations. See the details in 4.3.2.4. and 4.3.2.7.
Upstream
Governance Ethics and Compliance Operational risks
Our international operations are subject to anti-corruption laws and regulations
As a result of doing business in foreign countries, including through partners and agents, we are exposed to a risk of violating anti-corruption laws and sanctions regulations. We may be exposed to the risk of damage to our image and reputation due to non-ethical business behavior. See the details in 4.3.2.7.
Upstream, Direct operations
Governance Cybersecurity Operational risks
• Dependency on information technology ("IT") systems
• Risk of cyber-attacks
A failure of our IT infrastructure, including as a result of cyber-attacks, could adversely impact our business and results of operations. See the details in 4.3.2.6.
Direct operations
Technip Energies Sustainability Report 2022 . 7978 . ESG Risks and Opportunities
