The effects of the climate crisis are being felt faster and are more serious than anticipated. Temperatures have reached record levels in recent years, while environmental pollution and biodiversity loss are on the verge of becoming irreversible. Every year, natural disasters are becoming more frequent and destructive.
Climate Risk Strategy
Being one of the supporters of the TCFD, we have an integrated approach which enables us to monitor, measure and manage the environmental, social, governance (ESG) risks and the impact on the financials.
The Board of Directors (BoD) is the highest governing body for the management of ESG related risks and opportunities. Koç Holding Consumer Durables President has been appointed by the BoD as the responsible board member to inform the BoD on ESG related risks and opportunities. Sustainability, as a business model, has fully integrated into the Group’s corporate strategy. The climate related and other ESG risks and opportunities are governed by the Sustainability Council that is chaired by the CFO and includes members from senior management. A number of working groups reports to the Council which meets quarterly.
In 2021, three reports were prepared to the attention of the BoD. The investments made or to be made concerning the decarbonization strategy, the risks concerning the potential application of the Carbon Border Adjustment Mechanism, the rise in carbon prices in both the voluntary and the regulated markets, the risks associated with the decarbonization strategy on the way to Net Zero are reported besides the investment need for other environmental/social issues and the restructuring in terms of human rights and diversity, inclusion issues.
Arçelik has a solid ESG risk management structure thanks to the mutual efforts of the Sustainability and Enterprise Risk Management teams. Additionally, Arçelik has received a third-party service to apply a physical and transition risk scenario analysis to identify the long-term potential impacts of the climate crisis. The outcome of the analysis is embedded in the Enterprise Risk Management system’s financial risks reporting structure.
Our ambition is to further develop our business towards achieving a low-carbon future and ensuring our business is resilient and adaptable for climate and other ESG-related risks and opportunities. By supporting TCFD, we strive to strengthen the link between climate change and its financial impacts on our business and operations.
Arçelik’s climate risk strategy consists of two pillars:
Approved Science Based Targets:
Our targets to reduce GHG emissions were approved by the Science Based Targets initiative, in line with the Paris Agreement’s goal of limiting global temperature increase to "well-below 2°C". As of 2030, we will reduce the Scope 1 and 2 emissions by 30% and the Scope 3 emissions from the use of sold products by 15% compared to 2018 baseline.
In addition to the approved SBTs, Arçelik has submitted the company’s updated SBTs which are in line with 1.5°C and aiming to reduce the Scope 1-2 and the Scope 3 emissions from the use of sold products by 50.4%. Arçelik has published the revised target regarding the SBTs which are under the approval phase by SBTi.
Net-Zero Target in the Value Chain:
We are committed to reach net zero emissions in the value chain by 2050.
We committed to making it compatible with the SBTi Net-Zero 2050 Standard. We are expected to receive approval for this within two years.
Arçelik's Climate Change Strategy
TCFD Reporting And Other
Esg-Related Risks & Opportunities
By supporting the Taskforce on Climate-related Financial Disclosures (TCFD), we aim to strengthen the link between climate change and the resulting financial impacts on our business.
For detailed explanation please refer to Arçelik 2021 Sustainability Report Annex 11 and 12.
Reducing adverse and irreversible impacts of global warming is in the main agenda of the most international and regional organizations. There are also increasing trends to set rules and standards for companies operating in different sectors. We are closely following laws and regulations regarding climate change, circular economy, digitalization, and sustainable product criteria policies and strategies. and We also play an active role in contributing to the formation of opinions on these laws and regulations with the organizations of which we are members* of such as, DigitalEurope, APPLiA, AMDEA etc.
*Please refer to Arçelik Sustainability Report, Annex 5: Main Institutions Guiding Our Work on page 162 for breakdown of all the payments made to trade associations for managing our business, the % of payments and why the association is important for us. Those payments are not related to any political campaigns, political lobby campaigns, etc.
As a company with approved Science Based near term targets, and a Science Based Net Zero 2050 commitment in place to set science based net zero targets, Arçelik is highly committed to act in line with the goals of the Paris Agreement. Therefore, in its relations with stakeholders including but not limited to trade/industry associations, coalitions, NGO’s, suppliers, B2B customers, Arçelik commits to act and cooperate in line with the necessities of the Paris Agreement. Our sector related engagements and representations in the leading and major trade/industry associations are monthly reported to the top management. To the best of our knowledge, the leading and major industry associations that Arçelik has membership have no contradicting opinions against the Paris Agreement criteria. In case such contradicting opinions arise, Arçelik commits to not be part of any organization or cooperation that would divert its mission away from transition to a low carbon economy, aiming for a net zero world no later than 2050.
In addition to these, we are eager to transform all together with our supply chain and minimize the impact of the operations in the value chain in total. Therefore, it is important that we help and guide our suppliers to set environmental targets, measure their progress, and reduce their impact. We have publicly available targets in place to let our suppliers set their own environmental targets publicly, and monitor their improvement for GHG emission reduction, energy efficiency, waste and water reduction.
According to our Supplier Sustainability Data Monitoring and Development Program, we are sending suppliers a survey with a list of both qualitative and quantitative questions about the environmental, social, and governance issues. We assess suppliers based on the data provided to understand their level of maturity in terms of ESG integration into their business based on our internal assessment.
Then, third-party audits are conducted to monitor suppliers' social and governance performance. The results of these audits and our own assessments are combined to scale the performance of the suppliers as high, medium, or low risk.
If any findings constitute a potential risk, as a mitigation measure, we provide corrective action plans to all suppliers. The details of the third-party audit findings and our own assessments are explained under Supplier Audits.
We track and improve the operational energy efficiency by identifying areas that require upgrades through effective audit mechanisms.
Renewable Energy Technologies
Producing and purchasing renewable energy has an important role in reducing Scope 1 and 2 GHG emissions.
As Arçelik, we have been using the Implicit Carbon Price Model since 2010 to measure the low-carbon transition impact of applied energy efficiency projects and investments.
Greenhouse Gas Emissions in The Value Chain
In line with our strategy to combat climate crisis, we have set greenhouse gas emission reduction targets and we aim to increase awareness across all stakeholders.