0:01
Hello, everyone.
0:02
In this webinar today, Resilience, we'll be exploring how food and drink manufacturers can move from completely climate and nature strategies to resilience-driven business transformation.
0:15
We have with us today Tom Sadan, Vice President Sales Resilience, and Nick Brown, ASG Director from Premier Foods. We'll be having some presentations, some discussions, and of course, a Q &A.
0:30
I'm very much look forward to your questions in the Q &A as well.
0:34
So please do think of those as we go through some discussion.
0:40
We will be covering how climate and nature risks are reshaping food and drink business models, how to make sustainability data actionable across finance, risk and procurement, practical steps to build finance-grade climate models and integrate nature into strategy, and how leading brands are embedding resilience into enterprise decision-making.
1:03
At the start, a few slides from me on our ambition 2030 and particularly the nature pillar, and of course our recent nature handbook. Next slide.
1:15
So very briefly, because I'm sure you're all aware, about a year ago we launched our ambition 2030, five pillars, net zero, natural restoration, sustainable commodities, food waste and packaging, with an emission aspect total after 2030.
1:30
Now with nature, next slide please, it is about becoming nature positive by 2030.
1:39
Now effectively what this means is about stopping the harm, the footprint, the negative footprint that the industry is having, as in farm to fork on the environment and then, you know, looking to then restore nature and we will hear much more today about why we're moving on this journey. Next slide please.
2:03
With the ambition, a number of you will have seen the toolkits that we provide for members and this helps members look at frameworks and targets and the activities that they can take which will help progress along the journey towards nature positivity by 2030.
2:25
Next slide, please. In terms of tools and help to do this, last week, we have a QR code there.
2:35
Last week, we published our Nature Handbook for Food and Drink Manufacturers, which Tom also So thank you, Tom, for your help with that.
2:45
A variety of contributors from across the farm-to-fork spectrum.
2:49
So do have a look and look forward to working with you all on this.
2:55
Now, on that note, Tom, I shall pass over to you.
2:59
Brilliant. Thank you so much, Emma. Good afternoon, everyone.
3:03
I thought we'd start just by trying to get a gauge of where everyone who's joined us today is in terms of integrating climate risk into their wider enterprise risk management.
3:16
The quick question is, how advanced is your company in integrating climate risk into enterprise risk management, or ERM?
3:24
You'll hear me refer to ERM a lot today.
3:26
It's just a rough idea that are you just starting out or about to start, are you starting to develop your frameworks, are you partially or somewhat integrated, or is it fully embedded?
3:37
We'll just give you 10 or 20 seconds to click one of those, and then we will share the results of that.
3:45
If this is your first time hearing something like Enterprise Risk Management or ERM or anything like that, that will also be something we touch upon at the start today as well.
3:56
Again, we will see where everyone is, and this is probably the dream answer from our point of view, which is there's a real mix.
4:05
I think that's what we expect to see.
4:09
At this point, I think even three or four years ago, this would be very, very different and much more heavily weighted towards just starting or developing frameworks.
4:16
So very encouraging to see about half already partially integrated or fully embedded.
4:22
So thank you very much for taking part in that.
4:25
What we will do is go straight into our climate and nature risk report that we published at Resilience last month to set the scene.
4:33
After that, I'll hand over to Nick to talk from his own experience at Premier Foods and then we'll come back to what we see at Resilience as well in terms of building out that pathway before opening up to Q &A and a bit of a dialogue between the three of us as well.
4:52
At Resilience we released our climate and nature risk report at New York Climate Week this year, so just a month ago now.
5:01
The survey was carried out in August of this year and was responded to by about 500 sustainability professionals, companies with revenues ranging about $700 million to $50 billion.
5:14
So again, for those that we know have joined today, most of you would fall within that bracket.
5:19
And all of those companies or the respondents were across Europe and North America.
5:25
The respondents weren't just in the food and beverage sector, but four or five different industries, all of which are extractive, so fashion and apparel, healthcare and pharmaceutical, alongside food and bev, but all of those surveys play a part in climate strategy decision-making at their organisations.
5:42
We also have a QR code there, and we'll send that round afterwards as well.
5:46
Just to highlight some of the key themes, we had really three that we identified across the food and beverage sector.
5:54
Firstly, climate and nature are now viewed as core business risks, not just sustainability issues.
6:01
The vast majority of food and drink companies we surveyed are integrating climate risk into their ERM systems, and actually, that's a huge shift.
6:09
It means that these risks are being discussed at board level alongside things like currency exposure or raw material volatility.
6:17
Obviously, raw material volatility is also a core sustainability issue, but it does mean that when it's being discussed at board level, the expectations are higher.
6:25
So investors, regulators, customers, all of these stakeholders want to see evidence that companies understand these risks and are acting on them.
6:34
Secondly, we're seeing persistent alignment challenges between finance and sustainability teams.
6:40
Many organizations have strong sustainability strategies but are struggling to translate them into finance-grade data, so the kind that can be used to inform capital allocation or investment decisions.
6:51
Without that bridge, really what we see is sustainability can remain quite siloed in an organisation rather than being embedded into core business planning.
7:00
Thirdly, Scope 3 complexity and supplier governance remain major bottlenecks as they have done sadly for years.
7:08
Most emissions and natural impacts will sit outside a company's direct control and they're really buried deep in the supply chains.
7:16
Often 98% plus of a company's will be in their scope three.
7:20
And companies are trying to balance a multitude of different areas, data quality, supplier engagement, procurement incentives.
7:29
All of this is while maintaining cost competitiveness and business resilience.
7:34
So really looking at those three together we think that these trends show that the sector understands the why of why companies must act, but the challenge is now the how.
7:43
So how to turn climate and nature risk into actionable insights that drive business resilience, and so that's exactly what we're going to explore throughout this webinar.
7:53
One of the most striking findings that we saw from our research is that 90% of organisations are reporting a greater need to invest in climate strategies, which is, I think, what we'd hope to be seeing in 2025.
8:07
However, only 9% of those have successfully embedded risk quantification into their strategic planning, and that gap is really telling quite an important story to us, which most food and drink businesses do understand it.
8:21
They get it.
8:22
They know climate change isn't a distant issue.
8:24
It's affecting us now, and it has been for years.
8:27
It's something that's been affecting ingredient availability, energy costs, logistics, consumer expectations.
8:33
It's all happening right now.
8:34
And the intention is there, and the budgets are increasing to deal with this.
8:39
But turning that awareness into actionable finance-grade insight is where many companies are still struggling.
8:45
Quantifying risk means being able to answer questions like, what is the financial exposure of our supply chain to extreme weather events?
8:53
On a transition risk side, it could be, how would carbon pricing impact its margins in different markets?
8:57
And those are really tough questions that need integrated data and clear governance at an enterprise level.
9:03
The 9% who are doing this well have started to treat climate and nature risk in the same way they treat something like operational risk or credit.
9:11
They're really embedding it into their enterprise risk systems and financial planning cycles.
9:16
So the real opportunity now isn't just about more investment, it's about better integration at a company level.
9:22
Building capabilities translate climate and nature data into decisions that drive resilience.
9:29
Another key insight from the research, if we come back to that same stat of the 90% reporting a greater need to invest in climate strategies, we found that only 36% of companies survey have a plan in place to address nature risk.
9:42
Now that gap, I think reflects two things.
9:44
One is actually how far we've come.
9:46
That 36% is probably about 35% higher than five or 10 years ago.
9:52
However, it shows that there's obviously still a long way that we need to go.
9:56
So over the past decade, climate has very rightly become a mainstream business priority, but nature, so ecosystems, water, soil, biodiversity, Basically, everything that sustains our food systems still hasn't received the same level of attention.
10:12
For food and drink companies, this isn't just about protecting supply chains.
10:15
It's about recognising that this whole industry literally depends on healthy natural systems.
10:21
Without having thriving ecosystems, there's no long-term business, no product innovation, no healthy ecosystem, and no resilience.
10:30
That shift we're seeing among leading organisations is a move from viewing nature as an asset to be managed to actually viewing nature as a partner to be protected.
10:40
Their mapping dependencies, their engaging suppliers on regenerative practices and integrating nature metrics alongside climate metrics in governance and disclosure.
10:50
While climate strategies are now well established, nature is becoming the next critical focus, not only for risk management but for stewardship because yes, businesses realize now that we do need to care for nature and the business case is there, it still remains fundamentally the right thing to do.
11:10
Our research also found that on average, more than a third of all CAPEX is actually now aligned with sustainability goals and that's a really major signal of intent by these companies that sustainability isn't a side project and nice to have, is really central to how businesses are choosing to invest innovate and grow.
11:29
But despite this growing board level focus and the increase in spend, there is still quite a storytelling gap.
11:37
So many organisations are struggling to communicate the value of long-term resilience and sustainability in financial terms.
11:43
The reality is that the benefits of climate and nature investment often sit on very different timelines than traditional financial metrics.
11:51
You know, avoided risk, supply chain security, Reputation Trust, they're all incredibly valuable, but they don't always sit neatly in a quarterly P &L.
12:00
If you're measuring the carbon in your soil on-farm, you're only going to notice change after probably minimum five years.
12:08
So it's a very different timeline we're working with, and that's where the challenge lies, and that's helping boards, chief financial officers, investors, all connect the dots between sustainability-related decisions now and the financial performance that they safeguard tomorrow.
12:23
Leading companies are really starting to bridge that gap.
12:26
By building these finance grade models, again, we'll come onto that a bit more later on in this webinar.
12:31
These are the kind of models that will quantify exposure, measure ROI on mitigation adaptation measures, and set a clear value story to decision makers and investors.
12:41
Because ultimately, I think we know in a sustainability space that resilience has a return on investment.
12:46
The question is just whether we can articulate it in a way that resonates, not just with our own sustainability teams, but with the people who make capital and strategic decisions.
12:57
When we looked at how companies are progressing on decarbonisation, there's a really interesting split that we noticed in the results.
13:06
So around half the organisation surveyed say that they have aligned their net zero goals with a detailed roadmap, and that's obviously a really positive sign that long-term ambition is finally being matched with structured planning.
13:18
The other half is really catching up.
13:20
And a large proportion haven't yet built those roadmaps, though many say they plan to.
13:25
And that suggests that momentum is building, we're just not yet at full pace.
13:29
What's really revealing from these results though, is what happens when we take out regulatory pressure.
13:35
So when asked whether their organisation would perform a quantified climate risk assessment, if it wasn't mandated, the overwhelming majority said no.
13:43
That tells us something really important about where we are in this transition, which is that for many organisations, climate action is still compliance-led rather than purpose-led.
13:53
It's about meeting disclosure requirements rather than building genuine resilience at the business.
13:59
That's a really critical distinction, we think, because decarbonisation planning and climate risk assessments really shouldn't be just reporting exercises.
14:08
They're really useful strategic tools that can help businesses make the right investment decisions, protecting long-term value and building confidence in transitioning to a low-carbon future.
14:19
So that challenge isn't just to have a plan, it's to make sure the plan is driven by conviction and purpose, not just obligation requirements.
14:28
So the final thing I'll say for now before handing over to Nick to give his perspective from Premier Foods is that at Resilience we have our own environmental risk framework where we try to capture the full suite of physical and transition climate and nature related risks and opportunities of a company.
14:47
We create a digital twin, which is just a data-driven representation of a company and its value chain, which you can see on the left.
14:53
We then basically shock that system with a whole suite of physical risks and transition risks, and then the output is a standardised, quantified metric showing the impacts on opportunities, and that metric class is earnings value at risk, which is exactly what it says on the tin.
15:10
And we're trying to identify the trends in the main drivers and business exposures up until 2050. So that's our approach and we framed that study overall.
15:20
So hopefully that was a view and setting scene for the overall objectives of the webinar.
15:27
And at this point I will hand over to Nick at Premier Foods.
15:32
Thanks very much, Tom. And good afternoon, everybody. It's great to be here.
15:38
Tom and Emma asked me if I'd give some perspectives from our company, which I'm more than happy to do.
15:45
We worked with resilience from the very early stages in trying to understand and quantify climate-related risks, so more than happy to give some of our perspectives.
15:54
And I think it's one of the things that I think has been the biggest change over the four or five years that when companies work out how to talk about risk and resilience and designs and include sustainability issues into their risk management and corporate governance it really is an enabler for driving action.
16:16
And for those of us that have been in sustainability a long time I think it's what we've been asking for it's what we've been saying for a long time that there are risks that we're gonna face as an industry over the coming years, and we need to face into and address those.
16:33
What's happening now is businesses are now understanding that, hearing that, and now they're wanting to know, well, what are those risks?
16:40
How are they gonna impact us?
16:41
What should our responses be that make things better and not worse?
16:45
So I think it's a massive change that we've seen over the last couple of years.
16:50
Tom, if you wouldn't mind moving on to the next slide.
16:52
I'll just introduce Premier Foods, just enough to give context to the discussion.
16:58
So you'll recognise many of those brands, I'm sure.
17:02
We are a company with about 4 ,000 colleagues.
17:06
We operate about 13 sites in the UK.
17:10
We've got a turnover of about 1.2 billion.
17:14
Perhaps of more importance for the discussion today, we have a scope one and two carbon impact of about 50 ,000 tonnes.
17:20
We've got a scope three carbon impact of nearly 700 ,000 tons.
17:26
We have a direct water footprint of 650 ,000 metric cubic meters, and that's only the direct side, so that's not the indirect side.
17:41
We purchase about 250 ,000 tons of ingredients each year, about 40 million liters of milk, about 45 ,000 tonnes of wheat, more than 300 ingredient supplies.
17:53
So when we're talking about resilience and climate risks, we're taking a very broad perspective and a supply chain perspective.
18:03
So what I plan to cover over the next six or seven minutes, I'll just talk about the risks and opportunities that we identified, focusing primarily on climate related risks.
18:14
I'll then talk a little bit about how we're using corporate governance to put more attention and focus onto those issues.
18:22
Finally, I'll cover off some of the tools and some of the places we've been able to look to try and improve our understanding of risks, which includes the resilience platform.
18:33
I know there's a Q &A and a discussion plan for afterwards, so please put any information in the chat.
18:41
Most of the information I'll is already in the public domain, so TCFD and the disclosure requirements around that are, I think, if we're honest, a major driver for lots of companies starting on this journey, so you'll find more detail of what I'm talking about in our TCFD statements.
19:00
So a good place to start is where most companies start, which is with a brainstorm on climate-related risks and opportunities.
19:11
We carried out this driven a lot by the TCFD requirements back in 2021. If you remember, 22 was a really hot summer.
19:27
It was probably one of the first really hot summers we had.
19:31
Towards the end of August, we started hearing a lot of stories about how we could have flash flooding.
19:39
And we were hit by an incident of flash flooding.
19:42
That's our workshop site in the top left-hand corner there, which caused quite a lot of disruption and gave a lot of importance internally.
19:56
People started to really understand that climate risks are not something that are a long way away and in different parts of the world, but are things that are impacting us now.
20:05
So the first of the main six climate risks and opportunities we identified was disruption to our own operations around extreme weather events.
20:14
The second one, and I've alluded to it already, was actually looking back through our value chain and understanding the risks and opportunities of changing availability, changing quality, changing price of key ingredients.
20:32
And we found every year, procurement teams would tell us that they had several ingredients that there were some sourcing issues that over, that's growing each year.
20:44
And so the way we manage that with our suppliers is really, really key.
20:48
So that was the second area.
20:50
The third risk was about policy interventions that governments and policymakers might make to encourage the transition.
21:00
The most obvious being energy pricing and CO2 pricing, but there are a much broader range of potential policy levers as well, things like bans or subsidies or phase-outs of key technology.
21:13
And so looking at how some of those would impact our business was a key risk and opportunity we needed to look at.
21:21
And then the final couple of risks and opportunities were very much about how we expect consumers and customers to respond.
21:30
When it's very warm, people tend to eat a bit less custard and gravy and cup of soup.
21:38
And so understanding how shoppers respond to changing climate is really important.
21:44
And many of our customers – we've got the example of Tesco and Asda on there – bringing out initiatives to encourage their supply chain to address the issues of it change.
21:55
There's increasingly going to be opportunities and risks for suppliers who can prove that they are managing these responsibly.
22:04
Having identified those six, and we keep them under review, Tom, if you just jump back a little bit. Thanks.
22:15
Once you've identified those and we review it each year to make sure that we don't think there are any new risks and opportunities that are coming into that top list.
22:25
I mean, clearly there are hundreds of potential risks and opportunities, but these are the six key ones that we identify.
22:32
We've spent the last couple of years trying to really understand and quantify how these risks are likely to impact us as a business.
22:40
And that's really important because to fit properly into an enterprise risk management programme, you need to be able to lay out the cost and the impact that these things might have so that you can prioritise these risks and you can work out what investments are worth making to mitigate them.
23:02
That's where we've used some of the tools that we'll come on to talk about in a minute. If you could just jump on one now.
23:09
I think one of the key learnings is that organisations should already have robust risk management frameworks, and many of them do, often called enterprise risk management or risk management processes.
23:25
One of our learnings is that you can really use those frameworks, those programmes to raise the profile of climate and nature-related risk, but you have to do it in the right way.
23:40
Typically, these programs are overseen by the board of directors, they're run by teams like Internal Audit, and there is a very specific framework, there's a specific set of language on how you describe and quantify risks and opportunities.
23:59
I think one of our key learnings is that sustainability managers need to be getting better and better at using that kind of language, using the right frameworks and using these tools and becoming best friends with the internal audit teams in your organizations.
24:18
What I'd say is that once you get more ESG and sustainability-related risks into a corporate risk register, they tend to stay there.
24:28
They get the focus there and they get tracked and it every year.
24:34
Once these things are learned by a corporate organisation, they can't be unlearned.
24:39
It does mean that they fit into the programme and they then flow with it and then they're working with the system as opposed to fighting for place on it.
24:51
What I thought I'd do just to close is run through some of the places we found really useful in helping to understand risks and opportunities within our value chain.
25:06
Some of these were a conscious effort, some of them we stumbled across.
25:10
You might have many of your own, but our example has been that you need to take a broad perspective on these risks and opportunities, and insight can come from all kinds of different spaces.
25:24
For us as an organisation, insurers in financial institutions, our insurance partners had an awful lot of information about climate and nature-related risks that they were able to share with us. They've got access to good frameworks and tools.
25:39
One of the reasons I think Emma asked me to talk this afternoon is because groups like the FDF and the IGD are doing more and more work on risk and resilience at an industry level, and I'm involved in couple of those.
25:54
So a shout out for some of the reports that the Institute of Grocery Distribution have done.
25:58
There's a system under pressure report and there's a report that they launched last month which looks at climate related risks of 10 key commodities that are used by the UK food industry.
26:13
The little icons on the right there, the inevitable policy response, the group called the of responsible investment have some really good frameworks on what could happen with policy to help understand how policy changes might impact businesses.
26:33
The government, the UK climate risk body, has got sector briefing papers on all kinds of industries, and there's one on agriculture and food, which has got lots of really great information and resilience we used to help us with some of the detailed yield impact assessments on what might happen to the yield on key commodities from regions we currently source from, and importantly, regions where we could also source from.
27:03
We've been using an organisation called Water Plan and the WWF Water Risk Filter to look at water-related risks, nature risk screening.
27:13
There's some good platforms on there as well.
27:17
We also include human rights in ESG-related risk assessments as well.
27:26
Now, what we've found is that we want a bit more skill and capability and experience in this area internally.
27:34
We've now got a dedicated risk manager in my ESG team, and their role is to work with different parts of the business to understand how to do risk frameworks and screening for particular issues and that's really helping us build some capability.
27:48
The other thing that we're doing, which I haven't heard too many other companies doing yet, is we are asking all of our key suppliers, along with making commitments around things like science-based decarbonisation targets, we're also asking them to share nature, climate and human rights risk assessment because as great as some of these screening tools are, we want to make sure suppliers are understanding and managing the risks that they face.
28:16
Just to close on some of our experiences and happy to carry on with the discussion afterwards, we did do a good broad risk identification brainstorming session that included a lot of the business and raised the profile.
28:33
The more we've seen climate-related issues, both in our own supply chain and elsewhere, the more we've helped, the more we've shared that internally to help people understand what risks might be coming our way in the future.
28:50
We've worked really hard with the internal risk teams to make sure that we are properly representing these risks in the way that the business frameworks require and to get them onto the corporate agenda.
29:03
We'll keep working on these tools and many, many others to try and improve our understanding the risks so that we can make more targeted responses and investments to help mitigate them.
29:17
So, Tom, back to you. That's brilliant. Thanks so much, Nick.
29:22
And as Nick said at the start of his section, please do send any more questions you have in, particularly for what Nick just ran through.
29:31
He and the Premier Team are an organisation that has really gone further than most that we've seen in this sector.
29:37
So, if you're looking for tips and tricks and advice and guidance, this is a very, very good time to ask it.
29:44
So what we'll do just for the next few minutes before opening up into more of a conversation with myself, Nick and Emma, and answer any questions that continue to pop up, is just talk about some practical pathways of turning all these different risks and opportunities that we're talking about into long-term business resilience.
30:02
So as we move into that, just pose the second poll for today, which is which of the four areas we've identified here poses the biggest challenge for your organisation.
30:15
The four that we've looked at today are data quality, finance integration, supplier alignment and or engagement and leadership buy-in.
30:24
Data quality, obviously, can you trust what you're working with and where you're getting it from.
30:28
Finance integration is moving from qualitative assessments to quantitative assessments.
30:35
Supplier alignment and engagement, this has always been a challenge, I think, in this space.
30:40
And then, of course, leadership buy-in. So are you working bottom-up?
30:44
Are you working top-down? Have you got the mix of the two?
30:47
Let's give it a few more seconds for a few of the last results to come in. Brilliant.
30:57
Thank you very much, everyone who took part that.
31:00
So the bigger challenges are looking like finance integration and supplier engagement and alignment.
31:08
That is hopefully something that you're about to see that is addressed in this webinar, and we can speak to that a bit more when we open it up into the conversation.
31:18
Quite interesting to see that leadership buy-in isn't maybe the biggest challenge.
31:23
Again, I think that's probably quite different from track back five years to COVID era.
31:28
That was often a very high or a very big challenge for most organisations in this sector.
31:34
It's good to see the data quality, although never perfect.
31:37
I think hopefully we're moving into an era of the data quality is definitely or hopefully good enough at this point to at least start working towards better strategy or key decision making and insights.
31:51
So, we want to analyse, I guess, four different ways where we can practically look at turning risk into resilience.
32:00
So, the first of these would be actually embedding risk into enterprise governance and finance systems. That's exactly what Nick was just alluding to.
32:09
And when we're talking about embedding risk into enterprise governance, it's really where integration becomes the reality of the business.
32:17
So, where climate and nature move from sustainability reports into the core of business decision-making.
32:24
Right now, many organisations are still treating climate and nature as externalities, so things to measure, report, manage separately.
32:33
If you look at this framework on the left-hand side, which is from the Cambridge Institute for Sustainability Leadership, it's really clear why that approach actually does fall short. Nature-related risks aren't just environmental.
32:47
A lot of this language you're probably hearing links with double materiality assessments, if you've carried those out.
32:53
But they are financially material as well.
32:56
They affect supply chains, asset value, insurance exposure, and at the end of the day, the stability of the financial system at the companies themselves.
33:06
And when companies focus only on climate mitigation, so reducing carbon, investing in renewables, obviously that's brilliant and needed, but they can unintentionally create new risks for nature. For example, intensive biofuel production that could harm soil health or biodiversity.
33:22
That's why an integrated approach is so essential, particularly in this sector.
33:27
Combining climate and nature risk assessments, that allows us to uncover compounding effects, so how floods, droughts, severe weather events, land degradation, how all of these can hopefully help you identify opportunities for synergy and efficiency at the company.
33:43
Practically, what that means is bringing these considerations into existing ERM frameworks and linking them with financial planning, making sure boards and executives have accurate, true oversight.
33:55
Climate and nature metrics essentially shouldn't sit alongside financial KPIs or should sit alongside financial KPIs, sorry, not underneath them or as a side thought. It is also about ownership internally.
34:09
Finance, risk, operations, teams, exactly what Nick was talking about.
34:13
It shouldn't just be sustainability team task, all of those other teams need to understand and act on these risks as well.
34:19
When accountability spreads across the organisation, you're moving again from compliance and regulation to conviction and purpose.
34:27
That is the direction the leading companies are taking.
34:29
They're treating climate and nature as interconnected levers for business resilience or innovation and long-term value rather than just obligations to be disclosed.
34:41
If we want to talk about building finance grade models, the whole idea behind that is quantifying exposure and ROI.
34:50
That is really what allows you to translate sustainability into business speak and business language.
34:55
One of the biggest challenges that companies are facing is understanding the financial impact of climate and nature related risks.
35:02
By quantifying both physical and transition risks in financial terms, we can put essentially a price tag, not to be too crude about it, on the potential impacts on the business, whether that's supply chain disruption, regulatory change, or shifts in consumer demand.
35:18
These models can allow you to test multiple different scenarios, from extreme weather events to evolving market and policy conditions.
35:27
You can see, for example, how a heat wave affecting key crops could reduce yields by X percent.
35:35
How does that translate into concrete revenue impact to the company.
35:39
At the same time, you can evaluate the return on investment of mitigation and adaptation actions, helping you make decisions that aren't just financially sound but, of course, environmentally responsible as well.
35:51
The outputs aren't, or at least they shouldn't be just treated as data, but they're actually CFO-ready insights.
35:58
They are providing the foundation to inform capital allocation, insurance strategies, investment decisions, and then leadership can use these insights to prioritise spending, identify the most cost-effective interventions and demonstrate the business case for action to stakeholders across the entire organisation.
36:16
Ultimately, this approach turns sustainability from a compliance exercise into a strategic, financially grounded part of business planning.
36:25
And by connecting climate and nature risks to real financial impact, companies can make decisions with confidence, ideally optimising their investments and protecting both the planet but also their future finances as well.
36:39
The third area I wanted to look at, and at this point I wanted to bring in a couple of other food and beverage companies as case studies essentially, is aligning procurement and incentives to tackle the big scope three dilemma.
36:52
So scope three or the supply chain emissions often make up the overwhelming majority of a food and beverage company's footprint.
36:58
I can't remember the last time I saw one where it wasn't 95% plus, but it can still feel out of reach in terms of decarbonisation and tackling that Scope 3 footprint. So that's where aligning procurement and incentives comes in.
37:13
By integrating climate and nature KPIs into supplier selection contracts, performance reviews, companies can make sustainability partner everyday business relationships.
37:23
And a really good example that we've seen on the market is Britvik, a large soft drinks manufacturer.
37:28
They didn't just ask their suppliers to be more sustainable, they really built it into the way that they work with their suppliers.
37:35
They have supplier agreements that include environmental KPIs and progress is tracked quarterly, at very least annually, but they still go further than that and suppliers are incentivised through shared targets, transparent data sharing and collaboration platforms, creating a system where everyone has a stake in hitting the same sustainability goals.
37:55
For this to succeed, procurement teams need the right tools and authority or empowerment.
38:01
And that means platforms to monitor supply performance, mechanisms to reward high-performing partners, and the confidence to prioritize sustainable options, even if they're not the financially cheapest route.
38:13
What is the impact of all of this?
38:16
It's that procurement becomes a strategic lever for reducing Scope 3 emissions, and companies like Britvik are showing that when suppliers are engaged, incentivised and accountable, your entire supply chain can actually drive measurable and tangible environmental outcomes, at the same time creating business value through stronger partnerships and resilience.
38:37
And the second and I guess final area or case study we wanted to tap into is integrating nature alongside climate and strategy and disclosure, so really embracing the climate and nature nexus.
38:49
So while many companies are focusing on climate alone, as we saw from our report and research and what we've spoken about today, nature dependencies and impacts are equally critical, particularly in food and beverage, and they're often hidden risks in your supply chain.
39:05
So mapping these dependencies helps reveal exposures you might otherwise miss, from water stress affecting crops to biodiversity loss impacting raw materials.
39:15
And this is where Nestle is actually quite a good example of how they've been tackling this.
39:20
They've been mapping their natural dependencies across supply chains, and they've been identifying where sourcing could pose risks to both the business and the environment.
39:29
So again, that double material is coming into play.
39:32
They don't stop there.
39:33
They also combine climate and nature targets in their risk modelling and disclosures, and then align that with frameworks like key NFDs and taskforces, but nature-related financial Disclosure and the CSRD as well.
39:47
This gives their leadership a really clear integrated view of long-term climate and nature risks, and it's not just for reporting purposes, it is for decision-making and strategy as well.
39:58
So the key here is really treating climate and nature as interconnected, hand-in-hand levers to lean on.
40:05
When approached together, they can unlock long-term resilience, they can strengthen reputational trust, and by integrating these insights into strategy, companies can proactively manage risks, seize opportunities and communicate impact with credibility.
40:20
With the NSA example, this is all publicly available information.
40:24
It shows that when nature is assessed and managed alongside climate, it's no longer just about compliance.
40:29
It becomes strategic, almost advantage, helping companies build resilience, innovate responsibly, and maintain trust with stakeholders along value chain.
40:40
So just before we open up into a conversation where I'll hand back over to Emma, we want to do one more poll for today just so all of us actually can see where our peers are in this journey, and that is which function in your organisation is leading climate and nature risk integration or management.
40:59
So the four we've identified in the four that we've spoken about today so far, so sustainability, finance, risk or compliance, procurement or, of course, cross-functional. We do see a real mix.
41:12
It'll be interesting to see what those of you on today's webinar are finding as well.
41:16
Give you a few more seconds just to get those in. And then what we're seeing here, this is very, very interesting.
41:30
So overall majority, it's still sitting in sustainability, which, of course, for us makes sense.
41:35
I guess what we're trying to get at in this webinar is that ideally we're moving more into the cross-functional area.
41:41
I'd be interested to discuss this with Emma and Nick a moment.
41:45
I'm really interested to see that no one has clicked on financial procurement, maybe that's because it falls into cross-functional.
41:54
But yeah, I think considering the way that climate and nature risk integration can be utilised by a company, very interesting to see that those two are the blanks.
42:03
So I will pause there for now and I will hand over to Emma for a bit of a Q &A, bit more of a discussion. Thank you Tom and thank you very much Nick.
42:17
So I'm thinking with time, just to say everyone get your questions in because I think we can perhaps do a little bit of a mix discussion now and see what questions come in.
42:28
I think, I mean one question that really comes to my mind Nick is like with the work that you've done with Tom, were there any surprises that perhaps came out of the initial analysis of what was done.
42:44
Were there any risks that you haven't quite appreciated in terms of scale or perhaps new risks that come up that you haven't thought of?
42:54
Yes, so the work we did with Resilience to start with was, as I said, looking at key commodities that we were sourcing from the regions we were sourcing and also other regions.
43:09
And I think one thing to say is in lots of places it gave us reassurance that actually the climate impact there, if properly managed, has an opportunity to improve yields or improve outputs.
43:26
So I think we were probably a bit surprised at the opportunities that were out there and I think quite often in this area we talk about the risks, we don't necessarily talk about the opportunities that are out there as well.
43:40
Notwithstanding that, it also gave some particular commodities where actually the procurement teams had a bit of a feeling that there might be some pressures coming, but it came out much more clearly, so the signals came out a lot more.
43:56
Because we were looking at – what we didn't want to do was jump from one climate stressed region for supply to another.
44:06
We also looked at different sourcing regions that we weren't currently sourcing from, and it gave us some confidence as to how sustainable those agricultural practices were in those areas as well.
44:22
Also, because of where we were in our maturity, the discipline that a model like this brought in terms of how to structure it, what is a good scenario analysis?
44:37
What scenarios should you use?
44:39
That was all really useful stuff as well that we've carried on into a lot of the work that we do now.
44:49
Thank you.
44:50
And Tom, we just heard from Nick there and I'm just thinking about your comments around storytelling.
44:59
How do you see people using?
45:02
What are the top things that you're finding people are using from this work that feed into this storytelling and to whom perhaps?
45:11
I'm just thinking like, there's lots of recipients for this storytelling as well. Yeah, it's a really good question.
45:22
Is there support there that you also provide? Yeah, it's a really good question.
45:30
I think it actually comes back to the poll we adjusted, so essentially who leads climate and nature risk management, because depending on the team that is trying to understand this will then dictate almost how you have to tell the story.
45:45
So if you're dealing with your finance team, for example, and you say to them, oh, well, in 10 years' time, if we keep business as usual, here's how much we stand to lose or gain in this market or this region.
46:00
It doesn't really land because, A, what if they're not at the business in 10 years?
46:07
If people don't intrinsically care, they're not going to care about that.
46:10
Similarly, that really is coming across as just trying to predict the future. Even when you're creating models, it's not perfect.
46:18
Obviously, it relies on the data that underpins it.
46:21
But if you just come and say, in 10 years' time, here's what the issue's going to be, it will get brushed away.
46:27
So you have to be able to say, look, here's our business case, our business as usual right now.
46:33
Let's say we keep going as it is today.
46:35
In one to five years time, if we make these changes, or if the world continues on this trajectory, so you look at it from a macro and a micro point of view, then it starts to unlock slightly more interesting questions of, well, okay, that sounds like a good adaptation to look at, are we better off investing in that today Are we better off investing it yesterday?
46:57
Or do we actually wait a year or two to see the trajectory in different climate pathways?
47:01
So I think from a storytelling angle, part of it is about granularity.
47:05
There are some teams that need to know in great detail what crop yields could look like in a year or in two years.
47:14
And then there are some who go, I don't need to know about crop yields.
47:17
I need to look at our key facilities and their exposure.
47:20
Or I need to look at what's going to happen to our farmers if new tariffs are introduced or new incentives from a policy level.
47:28
So it's just trying to pull the right levers for the right teams internally and not trying to, I guess, send a message to a team that it doesn't align with their day-to-day importance or urgency, if that makes sense. Thank you.
47:45
This very much relates to a question that Charlie's popped in, which is, I'll read this out.
47:52
So, for alignment between finance and sustainability, financial figures are numbers which businesses have relied on for years to drive certainty in investments and climate and nature risk models are new, less aggregate and regularly changed.
48:07
How do you effectively manage this uncertainty with stakeholders to ensure investment in climate and nature mitigation measures?
48:15
and it'd be interesting to have both Nick, your thoughts on that and Tom's.
48:22
What would you say, Nick, would be your initial thoughts on Chai's question?
48:29
So what we found is it genuinely does need to be a cross-functional team that brings that insight together because sustainability professionals might understand the concepts that are driving some of these risks, but you need the procurement team in the room, you need the engineering and facilities team in the room, and you need the finance team in the room to try and work out how to, what those impacts are likely to be and how they could be quantified.
48:57
I think Tom said something earlier.
48:59
We try not to say it's going to have this impact because no one can really know and you make yourself a bit of a hostage to fortune.
49:06
You need to talk about the range of possible impacts.
49:12
That in itself is often enough to help the business work out what a sensible response could be because boards and leadership teams are managing different levels of uncertainty and risk all the time in how they allocate capital.
49:29
I think one of the things it's probably helped us to do is not necessarily to have to look at each investment on an individual climate-related or nature-related risk, but more to look at if we're spending money on upgrading infrastructure at sites, are we making sure that that investment includes things that make it – that address future resilience risks?
49:56
So it's not necessarily about saying we need to make a change in the way we invest capital now, but it is about looking at your long-term capital investment programme and saying, have we got the right balance in there of obsolescence and infrastructure?
50:17
Tom, actually, I've got a question for you, which neatly fits on from Molly.
50:23
This is from Molly, and she says, can you speak more as to how to translate these long-term benefits to the more short-term financial term?
50:32
I think it very much these done from the points that Nick was saying.
50:38
Would you say, what would you add from these breaks at the company that you've been working with?
50:45
Yeah, it's a really good question.
50:47
I think something that we've seen, I think I mentioned it earlier, is about trying to make the breakthrough at the company that the investments that you might be making today that you need for five years' time or 10 years' time, you're not to see a return on that by the next financial year.
51:04
So if you're expecting a quick turnaround and a quick reporting cycle, that isn't how it works.
51:09
So what you have to be able to say is, on an annualized basis, it's a bit like if we track back to 10 or 15 years ago when solar panels were still incredibly expensive, almost prohibitively so, the question that all of us in the carbon accounting world got was, what's the payback time? If I install them now, what's my payback time?
51:27
It is a similar question here as well.
51:30
It's saying, well, you're saying maybe in five or 10 years, if I don't do this, I'll feel the effects financially of X amount of our future earnings value.
51:40
We say, okay, if we use that digital twin, which is what we use at Resilience, and you basically copy it and say, let's say you invest in that adaptational mitigation this year, here's your payback time, or here's what you could stand to save yourselves in five or 10 years, but now let's also create a swing where you actually only invest in that in five years' time.
52:02
And you have the dual lens end of saying, well, if you're looking at something like solar panels, what's the forecasted price in five years' time versus today, but similarly, what will your payback time then be based on where your facility is in the world?
52:17
Because as Nick said, I think when you're looking at things like facility exposure, that is not just a job for a sustainability team, it's not just a job for the facility team, everyone has to be in that room discussing these different risks and opportunities.
52:32
So yeah, if you're trying to look at long-term planning, you still have to start with, okay, what happens if we act on it today? And sort of build annually from that.
52:42
Thank you.
52:44
And for both of you, I've got a question in from Martin Beckford and he says, Are you aware of any companies that have been assessing risks of climatic tipping point being breached and the associated impact being greater than the impact perhaps current models are predicting?
53:08
Okay, first, Tom.
53:09
Who would like to go first?
53:11
Go for it, Nick.
53:13
Yeah.
53:13
Well, my perspective is we're at the nascent stage of understanding a lot of these risks and the models are going to continue to get better and better and the outputs are going to continue to be more and more useful.
53:27
That's one of the points I was trying to make with that final slide that I put up that said you have to dig around in quite a lot of different places to get things that you see you think are credible for your particular circumstances.
53:43
At the moment, I think quite a lot of those models are still reasonably simplistic and at their early stages and they will get more and more sophisticated, so in terms of tipping points per se, I'm not aware of any that are really claiming to be able to do that, at least not any that we're looking at at the moment, but Tom you probably know the market better than I do.
54:11
Yeah, I think just to build on that, I completely reviewed UNIC in that, particularly in food and bed. I've not seen it. I've not seen that being used in this sector.
54:21
The only sector that sprung to mind when that question came through is insurance providers.
54:27
Now, again, I can't claim that I've dug into their models.
54:31
I don't know how granular or accurate they might be, but the only sector where I've seen them use tipping points for their own risk and resilience projects are the likes of Aviva, AXA.
54:48
I've seen this in their reports before, but again, echoing next point, I can't claim that they're excellent or terrible.
54:56
I don't know, but that's the only sector I can think of who's doing that so far.
55:03
I have a question.
55:07
I'm just wondering if you could comment on perhaps some of the barriers that perhaps companies are facing in having these conversations and just any sort of immediate thoughts around what would be your top tips for tackling them, I suppose.
55:28
For any companies on our webinar today, who are very new, what are the top things to look out for, to start with?
55:42
What would be some advice you would give, do you think? I know that's a huge question, but sorry.
55:50
So there's two quotes I quite like.
55:51
One is, never let a good crisis go to waste, and the other one is, it's good to learn from your mistakes, but it's better to learn from peoples.
56:00
So I keep both of those in mind when looking at this kind of stuff in trying to just raise awareness of issues.
56:10
As sustainability professionals we tend to be really well attuned to seeing a story about a particular issue and immediately making the connection to, well could that be in our supply chain, what might the impacts be?
56:27
Not everyone's like that, so wherever we see stories about climate-related or nature-related or human rights-related risks that are happening, not even in food and drink, but more generally than that, we try and make sure that we raise awareness of it, make sure we ask those questions, are they happening here?
56:47
I think one of the challenges we've got now, and I think it's an issue with the maturity we're going through, is really how do you quantify a human rights risk against a climate-related risk, against a nature risk, against a cyber risk or the geopolitical risks around trade.
57:10
And that's where we have to get sharper and sharper at being able to explain and quantify the risks in the ESG space, because we might have to say from a corporate point of view, some of these actually don't get onto the corporate material risk register.
57:24
They are an order of magnitude lower, but that is a learning in itself and that doesn't mean you don't do anything about it. It just means where the more disciplined focus and structure has to go.
57:39
Thank you.
57:40
I think I shall leave you with last words because we've got one minute left, So I should leave you to last words and close.
57:49
I'd say the last thing I'd say is if it comes, when you're talking about quantifying risk and opportunity, start small and start tangible.
57:58
If you haven't done this before, it will land a lot better and make a lot more sense to you and your other teams internally.
58:06
If you start with something like we source this ingredient from this country and that makes up this amount of our purchasing volume.
58:13
If we do nothing on this pathway, here's what we could stand to be looking at in a year, five years, 10 years.
58:21
If you try and start with something like reputation or consumer demand, which is slightly less tangible, it can be a tougher task.
58:29
So if you haven't done it before, just start with something that is the most material to you right now.
58:36
Thank you, that's a great way to finish on.
58:38
And thank you both very much for joining us today And thank you to everyone who's joined the webinar and will shall be sending out a recording shortly.
58:47
Thank you very much, everyone.
58:49
Goodbye.
