In December 2022, 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 risk groups: physical, regulatory, market, technology and reputational risks. This was conducted along the recommendations of Task Force on Climate-Related Financial Disclosures and the workshop was facilitated by environmental experts. Risks and examples defined are reassessed annually.
The following definitions were used in this assessment:
Time horizon: Short = 0-2 years, Medium = 2-5 years, Long = 5-20 years
Financial impact: Low = < 3M€, Medium = 3-20 M€, High = >20 M€
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 |
Time horizon |
Financial impact |
Adaptation / mitigation plan |
| Regulatory | Emerging regulation | Deforestation-related regulation, mostly concerning natural rubber | Medium | Medium | Follow-up of emerging regulation |
| Green regulation on aviation and maritime fuels can significantly increase costs of logistics | Long | Medium | |||
| Further environmental fees | Additional taxes and duties e.g. EU’s CBAM for fossil raw materials can increase prices. Certification costs | Short | Medium | Participation in industry sector working groups | |
| Stricter expectations to oversight | Increased verification testing of products and emission measurements | Short | Low | Follow-up of emerging regulations | |
| Physical | Extreme weather events | Disruptions in logistics and force majeure situations | Short | Medium | Alternative transportation routes |
| Extreme weather events | Permanent changes in logistics and/or increased force majeure situations | Long | High | Alternative transportation routes | |
| Extreme weather events | Impact of extreme weather events on natural rubber producers | Medium | Low | Alternative sourcing locations | |
| Extreme temperatures | Contamination/lower quality of raw materials | Short | Low | Multiple supply sources | |
| Technological | Climate-related demands for new tire technology | A+ rolling resistance tires required for Evs | Medium | Low | Anticipation of future expectations in R&D development road maps |
| 150 km/h max speed for EU – demand for UHP (Ultra High Performance) tires falls | Long | Medium | |||
| Market and reputation | Market changes | Shift from car ownership to mobility-as-a-service i.e. changing customer base | Long | Medium | Update product and service offering |
| Tire raw materials | Increase use of expensive renewable materials | Medium | High | Road map for selective use of renewable and recyclable raw materials | |
| Energy | Green energy prices go up due to strong demand | Short | Medium | Long term power purchasing agreements | |
| Energy | Raw material price increases due to higher energy prices | Short | Medium | Long term contracts | |
| Tire raw materials | Availability of renewable and recycled raw materials can limit plans for sustainability | Medium | Low | Aiming for multiple sources | |
| Tire demand | Increased demand for all-season tires and less winter tires | Short | Low | Update product offering | |
| Reputational risk | Deforestation scandals (natural rubber) | Medium | Low | Co-operation with supply chain in line with GPSNR recommendations |
CLIMATE-RELATED OPPORTUNITIES
| Opportunity group | Sub category | Examples of concrete opportunities | Time horizon | Financial impact | Implementation plan |
| Innovation | Raw materials | Innovations with renewable / recycled / local materials | Medium | Medium | Material development road map to reach 50% share of renewable or recycled raw materials by 2030 |
| Recycling | Co-operation with innovative recycling companies. | Medium | Medium | Screening of opportunities and widening of cooperation | |
| Climate-friendly technology | Lower rolling resistance products. Climate-friendly production | Short | High | Product development road map. New zero CO2 factory to Romania being implemented | |
| Energy-efficient production | Modern machinery used in Nokian Tyres’ factories | Short | Medium | New zero CO2 factory to Romania being implemented | |
| 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. | Short | Medium | Developing product portfolio, increasing consumer awareness |
| Competitive advantage | Increase of all-season tire sales in Europe due to milder winters | Medium | Medium | Developing product portfolio | |
| EU further green regulation | Increased focus on sustainable natural rubber | Long | Low | Co-operation within GPSNR | |
| EU further green regulation | Tire regulation for wear resistance (abrasion) | Medium | Medium | Product development | |
| Industrial (heavy) tires | We have existing expertise to provide climate-friendly solutions, e.g. intelligent sensor technology | Short | Medium | Product development | |
| Engagement | Consumers | Increase awareness of how tires can affect safety and carbon footprint | Short | Medium | Consumer education through communications and marketing |
| Policy makers | Increased preparedness for new regulations or incentives | Long | High | Industry-wide cooperation and information sharing with decision makers | |
| Shareholders / stakeholders | Green / sustainable financing | Short | High | Transparent sustainability targets, public reporting, collaboration with financial institutions, information sharing with stakeholders | |
| Regulatory | Renewable Energy Directive and other green regulation | More renewable energy available in EU, prices can decrease | Long | Low | Own investments/partnering for green energy |
| Global carbon tax or similar would improve the company’s competitive position | Long | Low | Further improvement of corporate carbon footprint |