Mercuria CSR Report 2024 - Flipbook - Page 25
CLIMATE RELATED RISKS
TRANSITION RISKS
RISK
HORIZON*
POTENTIAL FINANCIAL IMPACTS
MITIGATION MEASURES
Policy & Legal
Unforeseeable changes in government
policies and regulations.
-ML
Changes in regulations can impact
market dynamics, leading to
increased competition or costs.
We mitigate policy and legal transition risks by
investing in a diversified portfolio of assets and
locations. This strategy enhances our
adaptability to regulatory changes and
diversifies our growth opportunities, thereby
stabilizing revenue streams.
Increase in price of carbon credits
needed to offset our Scopes 1 and 2
emissions.
SML
Increased operating costs by
escalating the expenses associated to
offsetting our Scope 1 and 2
emissions.
To mitigate the financial impact of rising
carbon credit prices, we are investing in
renewable energy sources and carbon capture
technologies. These investments reduce our
reliance on external carbon credits and lower
our net emissions, ensuring more stable and
predictable operating costs.
Exposure to litigation.
-ML
Additional financial costs such as
penalties, settlements and legal fees,
impacting overall profitability.
Our stringent policies and regulations,
combined with robust legal and compliance
infrastructure, are an integral component of
our business, designed to prevent and mitigate
litigation exposure.
-ML
Early retirement of existing assets
with lost expenditure on asset.
We mitigate technology risk by strategically
updating our investment portfolio with
superior technology, ensuring resilience and
competitiveness through portfolio
diversification even if some investments do not
perform as expected.
Change in customer preferences.
SML
Reduced demand for certain
products or markets leading to lower
sales volumes and revenues.
Both product offerings and asset investments
are diverse in nature, hedging a decrease in a
revenue stream for any single product or asset.
Changes in costs.
SML
Various factors, including rising raw
material and shipping costs, can
significantly influence our cost
structure.
Our highly skilled teams proactively analyze
and assess situations that could lead to
increased costs, whether in raw materials or
operations, and strategically optimize cost
efficiency to maintain our competitive edge.
Counterparty-related risks.
SML
Risks associated with the reputation
of our counterparties, including
entities in our supply chains, could
potentially impact our own reputation
and impact our financials.
To mitigate counterparty-related risks, we
enforce a rigorous Know Your Counterparty
(KYC) process and continuously monitor up-todate news and disclosures. Our checks cover
supply chains and downstream counterparties,
focusing on human rights, responsible
sourcing, and environmental risks. Should any
risk emerge, we promptly react by mitigating
the risk.
Negative stakeholder feedback.
SML
Negative feedback from employees
and other stakeholders can lead to
talent attrition, which may result in
increased recruitment and training
costs, potentially impacting the
company's financial stability.
We carry out annual surveys based on the GRI
standard to assess our position with respect to
our operations and our employees. We act in
accordance with the results to ensure our
stakeholders’ satisfaction.
Technology
Invested technology replaced by
better alternatives.
Market
Reputation
* Horizons are short 1 year (S), medium 2-5 years (M), and long above 5 years (L)
Mercuria Corporate Social Responsibility Report 2024 | 25
