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. The workshop was facilitated by environmental experts. Risks and examples defined are reassessed annually.
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 |