Assessment of climate-related risk induced by global warming on the operations of Ontex
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- In the wake of the IPCC’s sixth assessment, which is more alarming than ever, this thesis aims at measuring the impact that global warming may have on the operations of Ontex, a Belgian multinational active in the personal hygiene solutions industry. A scenario analysis articulated around two carbon emission scenarios has been developed in order to investigate the different risks triggered by either a low-emission or a high-emission scenario. At the sourcing level, Ontex could be heavily impacted by physical risks for the sourcing of fluff pulp, while transition risks would be a high threat for the sourcing of SAP. At the operations level, the transition risks are the following in the low-emission scenario. Firstly, the imposition of a carbon tax will have a quite insignificant impact on scope 1 and 2 emissions but triggers a substantial risk of increased sourcing costs. Secondly, the expected imposition of a European tax on single-use products will trigger an additional increase in the cost of goods sold. Finally, the market risk is currently rather limited because the alternative reusable products do not offer the same level of convenience as the firm’s current disposable products. The physical risks resulting from the high-emission scenario are diverse. Chronic risks include a sea-level rise that threatens the two Belgian plants of annual floods by 2050, as well as losses of productivity in plants in Brazil, Mexico, and the US. The analysis of acute risks highlights key climate hazards for Ontex plants, namely droughts, heatwaves, and extreme precipitations. Finally, Ontex could also benefit from climate change, by grasping opportunities related to energy costs, adaptive capacity, technological innovations, and new products and services.