We use a systematic approach to manage climate risks.
Climate-related risks and opportunities in 2022
The effects of climate change are already being felt around the world, and will continue to impact generations to come. Physical changes, such as rising sea levels and changing weather patterns, create significant risks that need to be identified, assessed and mitigated. At the same time, the transition to a low-carbon economy will present both risks and opportunities for PPG.
To advance our approach to managing climate-related risks and opportunities in 2022, we:
- Improved the climate risk modeling used in our risk assessment process
- Completed in-depth analysis of climate risks at key sites
- Continued to expand sales of sustainably advantaged products to capture climate-related opportunities
- Worked with business units to incorporate climate risk into decision making processes
- Developed targets for scope 1, 2 and 3 emissions and submitted the targets to the Science Based Targets initiative (SBTi) for approval
Our approach to climate-related risks and opportunities
Understanding climate risks and opportunities
To expand our understanding of likely impacts and refine our response to climate change, PPG proactively undertakes climate scenario analysis, risk assessment and planning activities. These activities reflect guidance from the Task Force on Climate-related Disclosures (TCFD).
We conduct climate scenario analysis regularly to consider the resilience of our strategy against a range of possible future scenarios. Climate scenario analysis is a well-established method for developing and testing strategic plans. Our last scenario analysis was undertaken in 2021, and included input from more than 700 participants representing a wide range of business units and functions across PPG. We developed a range of possible climate scenarios based on well-established, publicly available resources including:
- International Energy Agency Sustainable Development Scenario
- Principles for Responsible Investment Inevitable Policy Response (Forecast Policy Scenario)
- Intergovernmental Panel on Climate Change RCP 8.5
- Intergovernmental Panel on Climate Change RCP 6.0
Our climate scenario analysis process
In addition to our scenario analysis work, we conduct risk assessments to understand our exposure to physical impacts of climate change. Our physical climate risk assessment starts with a high-level, qualitative perspective on climate change stressors with potential to affect PPG’s global portfolio of facilities. We evaluate sites across our portfolio to understand their exposure to these stressors and assign relative risk scores based on site-specific data. Working with a third party, we use global climate models to assess the relative risk of each facility against six climate change stressors: drought, flooding potential, extreme heat, extreme seasonal precipitation, sea level rise and high wind speeds. PPG personnel can explore the outcomes of this analysis through an interactive dashboard, which can be filtered by type of risk, business unit, region, country and type of facility.
Sites with high relative risk scores and those that are most important to our continued operations are included in a more thorough risk assessment. This assessment includes more refined climate modeling and detailed site information, including site plans and information on critical infrastructure. Results of the climate risk assessment are reviewed with regional and global operations management teams. We are continuing to build on these efforts by defining action plans for at-risk locations, prioritizing sites with the nearest-term risks.
Environmental, social and governance risks are also considered through our mainstream enterprise risk management processes. Learn more about PPG’s approach to risk management in our TCFD Index.
We have formal processes in place throughout PPG to ensure we identify and capture climate-related opportunities. For example, we hold structured regular meetings with our customers to understand how PPG can help them meet their environmental objectives – through our existing products and through research and development to address unmet customer needs. Each of PPG's businesses has a dedicated sustainability subject matter expert to ensure that sustainability considerations are integrated into customer engagement across our product lines. This process helps us identify new markets for our existing products, and ensures that we are developing the right technologies to meet our clients' needs.
Learn more about how we develop products to help our customers meet their environmental goals in the Sustainably Advantaged Products section.
Managing risks and opportunities in our operations
We regularly update our emergency and crisis management processes to account for climate-related risks. Through these processes, we coordinate the efforts of our local emergency management teams at each location with our regional and global crisis management leadership. Global, regional and local plans consider the risk of natural disaster, infectious disease, supply chain interruptions, employee safety, asset protection, customer impacts and other business continuity requirements.
Each year, the local emergency management team at our facilities around the world must review and update its emergency response plan to reflect current conditions and changes in risk. Emergency preparedness and response is a key element of PPG’s EHS Management System. This includes assuring employees are properly trained and equipment needed to respond to emergencies is available. Each site also performs an emergency response exercise, and our global leadership monitors conformance with these requirements through an internal corporate auditing process. Our regional and global crisis management teams conduct similar crisis response exercises annually.
Transition risks arise from action taken to transition the economy away from fossil fuels through policy, technology change and shifts in market or consumer preferences. These risks also present opportunities for companies focused on supporting the low-carbon transition through enhanced resource efficiency. We focus on resource efficiency through activities to reduce our environmental impact and establishing emissions reduction targets expected to be certified by the Science Based Targets initiative.
Accompanying these emissions targets are other environmental targets designed to support the long-term success of the business and reduce our impacts. Learn more about how we’re acting on opportunities to improve our resource efficiency in the Energy, Water, and Waste sections.
Managing risks and opportunities in our value chain
We're also focused on opportunities to support decarbonization along our value chain. We pursue supplier management strategies that help us make more sustainable choices in what we buy and from whom. We work with EcoVadis to evaluate and improve our suppliers' environmental performance, recognizing that efficiency improvements throughout our value chain represent opportunities for saving costs and reducing our environmental impacts. PPG has also analyzed tier one suppliers’ carbon emission contribution and reduction potential of top raw materials which contribute to scope 3 emissions. This analysis provides insights on potential scope 3 reductions and also sets the basis for further analysis on upstream value chain transitional risks related to shifting to a low carbon economy. Learn more about our work in the Supplier Sustainability section.
Our products, processes and innovations can help consumers live more sustainably and help industries reduce their impact on the planet. We identify products in our research and development pipeline that are sustainably advantaged, and are constantly working to increase the percentage of our sales that come from sustainable products. Learn more in the Sustainably Advantaged Products section.
Creating sustainably advantaged products and supporting more responsible processes along our supply chain are just a couple of the tools that we use to combat climate change. Industry-wide change and legislative support are important magnifiers of these efforts. Through our Government Affairs department and membership with trade associations and coalitions, we engage directly and indirectly on an ongoing basis with policymakers at the local, state and national levels on issues related to climate change. Two key focus areas are energy efficiency and clean energy generation. We support an “all-of-the-above” approach to energy generation, which includes clean energy generation methods such as wind and solar. We believe that clean energy generation must occur in a measured way, without significant price fluctuations and without harming our production, suppliers and business customers.
We are constantly exploring ways to better support the growing industries that will aid the transition away from fossil fuels. As a producer of advanced coatings that go into clean energy generation, we closely follow the advanced energy manufacturing industry. We frequently support the advocacy efforts of wind, solar and other clean energy stakeholders. We also work with alternative energy providers to source more renewable electricity for our operations. Learn more about our use of low emission energy sources in the Energy section.