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TCFD Report 2022
Part of our strategy for sustainable business development
Sustainable development is an integrated part of our business model and investment process, from sourcing and assessment of new business opportunities to ongoing development of our companies and re-allocation of capital into new opportunities. Our ambition is to develop our companies into long-term sustainable businesses in line with the Paris Agreement, and to futureproof them for a new, low-carbon economy. To do this, we have set a sustainability strategy based on the UN 2030 Agenda for Sustainable Development, and which balances three dimensions of sustainability - environment, society and governance.
In the spring of 2020, Kinnevik adopted two climate targets, one for our own operations and one for our portfolio. More information about our climate targets is available here. As part of this effort, we are supporters of the TCFD and have implemented its recommendations, which enable us to better understand the actual and potential impact of climate-related risks and opportunities on our business, strategy and financial planning. By identifying and assessing the most material of these risks and opportunities for Kinnevik and our portfolio, we can manage and mitigate the risks while seizing the opportunities. It allows us to test the robustness and resilience of our strategy, and it provides guidance for capital allocation decisions. The result of our analysis is presented in our TCFD report, which covers the full year of 2021 and the first half of 2022.
Summary implications of climate change on Kinnevik
In our assessment of the potential implications of climate change on Kinnevik’s business, strategy, and financial planning, we have identified near-, mid- and long-term risks and opportunities for the most relevant sectors and sub-sectors.
We believe transition risks related to policy & legal, market and reputation are the most material climate-related risks for the Kinnevik portfolio. All our companies are to some degree exposed to transition risks stemming from increased pricing of greenhouse gas emissions and increased emissions reporting obligations. These risks are even more relevant and topical today compared to when we did our initial analysis in 2020. Carbon pricing mechanisms and more rigorous regulations related to emissions reporting could have implications on our companies’ costs, their ability to operate and our return on investment.
Increasing awareness about climate change will continue to impact customer preferences, leading to increased demand for products and services with a low climate impact. The risk of not being able to meet these demands by making the transition to a low-carbon economy may have a significant impact on our companies’ competitiveness. This is relevant for all our companies, perhaps with the exception of our healthcare businesses in the short-term as their customers primarily prioritise other aspects when choosing a care provider.
Meanwhile, we see several opportunities related to climate change, particularly as our strategy is to invest in technology-enabled and disruptive businesses. The main opportunity relates to being consumers’ preferred choice by leveraging new technology to take the lead in developing products and services with a low or positive climate impact. Compared to more analogue business models, our companies are in a good position to accelerate the pace of transformation to meet the increasing demands of their increasingly climate-conscious customer base.
Read more about Kinnevik’s climate-related risks and opportunities in our TCFD report.