WENDEL 
TCFD REPORT 2023
Table of contents
1.1Board's oversight of climate-related risks and opportunities
1.2 Supervisory Board training on ESG and climate change
1.4Management's role in assessing and managing climate-related risks
2.1.Risks and opportunities identified over the short, medium, and long term
2.2.Impact of climate-related risks and opportunities on the strategy
3. Risk management: processes for identifying, managing, and integrating intothe organization climate-related risks
4.1Metrics used to assess climate-related risks and opportunitiesGHG emissions of Wendel and its portfolio companies
4.2 GHG emissions of Wendel and its portfolio companies
4.3 Emissions generated by Wendel and its portfolio companies in 2023: consolidation using GHG Protocol's financial control approach
4.4 Focus on the scope 3 financed absolute emissions of Wendel Group
4.5 Carbon targets at Wendel SE and portfolio companies' level
4.5.1 Wendel's SBTi commitment
4.5.2 Consolidation of emissions using the financial control approach - SBTi method
4.5.3 Portfolio emissions and 2030 reduction targets in absolute terms compared to baseline years
1. Governance
1.1 Board's oversight of climate-related risks and opportunities
Wendel's Supervisory Board comprises 10 members appointed by the Annual Shareholders' Meeting, including 4 independent members, and 2 members representing employees appointed by Wendel's Social and Economic Committee, for a total of 12 members.
The operating rules of the Supervisory Board and its committees (derived from the law, the by-laws and the Afep-Medef Code) are set out in the Supervisory Board's internal regulations (described in section 2.1.1 of Wendel's 2023 Universal Registration Document). These internal regulations are periodically reviewed in order to adapt them to changes in legislation and governance practices.
For the Board to fulfill its responsibilities under optimal conditions, its internal regulations stipulate that discussions on certain topics should be prepared in advance by standing committees. There are two such committees: the Audit, Risks and Compliance Committee, and the Governance and Sustainability Committee. With regard to ESG, after analyzing the specific characteristics of Wendel SE in this area, it was decided to entrust the work related to this topic to the Board's two current Committees, rather than create a dedicated committee (described in section 2.1.2, of Wendel's 2023
URD).
Governance is involved in the E, S, G themes in the broader meaning. This includes strategy and climate- related issues for Wendel. Indeed, climate is one of the 4 Wendel's ESG priorities. Missions of the Supervisory Board are described in section 2.1.1.4 of Wendel's 2023 URD. The climate-related tasks of the Supervisory Board and its Committees are declined as follows:
Supervisory Board Audit, Risks and Compliance Committee Governance and Sustainability Committee | |
ESG strategy and consideration of ESG issues
| Monitoring objectives and ESG skills at Governance level, including climate issues:
|
1.2 Supervisory Board training on ESG and climate change
In 2023, the members of the Board benefited from a training session dedicated to ESG, provided by external experts, following their expressed wish during the Supervisory Board's 2022 assessment. This training enabled the Supervisory Board members to deepen their knowledge of Green Taxonomy regulation, and to better understand their role in this area.
In 2023, Wendel supervisory board welcomed a new board member with a strong ESG experience: Fabienne Lecorvaisier was Deputy CEO of Air Liquide until March 2023, also in charge of Public and International Affairs, Sustainable Development and the Group's social programs.
1.3 ESG and climate issues on the agenda in 2023
• Supervisory Board: European Green Taxonomy training - 1 session;
• Governance and Sustainability Committee: monitoring of Wendel's non-financial ratings; definition (for 2023) and assessment (for 2022) of ESG and climate objectives underlying the Executive Board's annual variable compensation; assessment of the achievement of performance conditions (including ESG conditions) for stock option and performance share plans; review of the results of the assessment of the functioning and work of the Supervisory Board and committees and presentation of recommendations to the Board, notably concerning the enhancement of ESG skills - 3 sessions;
• Audit, Risks and compliance committee: Audit, Risks and Compliance Committee: monitoring of the implementation by controlled portfolio companies of corrective action plans to address their climate risks; review of resilience plans of controlled portfolio companies; monitoring of non-financial performance indicators (notably ESG); review of GHG emissions mitigation commitments at Wendel level (SBTi commitment); follow-up of the processes deployed at the level of Wendel and its portfolio companies concerning the European Taxonomy; review of approaches to achieve CSRD compliance; follow-up of the work of the independent third-party organization on the NFPS; preparation of the selection process for the sustainability auditor - 4 sessions
1.4 Management's role in assessing and managing climate-related risks
The Executive Board establishes the Group's strategic direction and ESG roadmap. It is responsible for validating the climate strategy and the targets set.
The Executive Board is supported by an ESG Steering Committee. The committee is chaired by David Darmon, member of the Executive Board, and is made up of two of the Company's Operating Partners and representatives from Wendel's different business and support divisions: Internal Audit department, General Secretariat, Sustainable Development and Communications department, Financial Communications department, Human Resources and Operational Resources department. It meets every six weeks to monitor the Group's and its portfolio companies' ESG performance and progress made on rolling out the 2023 ESG roadmap including climate objectives.
The Sustainable Development department established by Wendel in 2011 reports directly to the Executive Board and coordinates initiatives in this area. The ESG department is in charge of implementing and monitoring the ESG roadmap, climate objectives and compliance with regulatory obligations in terms of non-financial reporting. It provides technical expertise on climate issues.
The members of the Executive Board and all members of the Coordination Committee (i.e., 20% of Wendel's workforce) receive a portion of their variable compensation contingent on the achievement of ESG objectives. In 2023, criteria relating to the implementation of climate objectives have also been implemented separately for the Executive Board.
Climate issues on the agenda in 2023:
• Executive Board: presentation of non-financial results for 2022, approval of objectives for the GHG emissions mitigation plan (Wendel and portfolio) as part of Wendel's SBTi commitment in 2023;
• ESG Steering Committee: approval of Wendel's SBTi targets, ESG integration of Scalian, preparation of CSRD implementation for 2024, presentation of non-financial ratings, presentation of the NFPS 2023, etc.
2. Strategy
To ensure that our strategy is in line with existing and future climate challenges, Wendel must first be able to identify the climate risks and opportunities for all Wendel's activities. The identification process therefore requires positioning both at the level of Wendel SE and at portfolio level. The risks and opportunities associated with these investments are specific to their activities and sectors.
In addition to the definition of the scope of analysis, Wendel also considers the time frame in which the assessment is to be carried out. In view of Wendel SE' activities and according to CSRD - ESRS 1 recommendations, we consider short-term to be within a timeframe of 1 year, the medium-term being considered between 2 and 5 years, and the long-term being beyond 5 years.
The various climate risks and opportunities identified by the Wendel Group are described below, along with their level of exposure and time horizon.
2.1 Risks and opportunities identified over the short, medium and long-term
Transition risks and opportunities | |
Transition risk/opportunityRisk/opportunityDescription Exposure levelTime horizon | Measures in place or recommended |
Estimates from the International Energy Agency anticipate a 250% increase in the price per metric ton of carbon by
Transition risk - Emerging regulation
Carbon price increase
Transition risk and Opportunity - Market
Change in commodities costs
- Bureau Veritas' Green Line segment on energy efficiency and low-carbon transition;
- Segment of Scalian's sustainability offering, including decarbonization strategy services;
- Stahl's development of water-based products eligible for the European Taxonomy (with a better carbon footprint than solvent-based products).
Wendel and its controlled portfolio companies are working to increase the share of these products and services.
2050, assuming a low-carbon transition.
No portfolio companies currently have facilities subject to the emissions trading scheme. This increase will mainly have indirect effects in the value chain of the portfolio companies (transportation, energy, commodities, etc.).
Recent examples related to the EU taxonomy and European "Fit for 55" package demonstrate the strongly evolving nature of the regulations related to low-carbon alignment and emissions reduction.
These new regulations generate direct costs (internal and external resources mobilized to verify compliance) as well as indirect costs over the long term (operational transformations necessary for compliance).
The energy transition requires a rapid increase in renewable energy production capacity.
Nevertheless, this transition to renewable energy will automatically reduce the current costs of renewable energy. Wendel and its portfolio companies are all committed to significantly increasing the share of renewable energies in their total consumption.
Renewables currently account for 19% of the Group's total consumption.
The transition to a low-carbon society is transforming the needs and consumption habits of society as a whole. While some products may be abandoned, new needs may emerge. The main examples within the Wendel portfolio are:
Transition opportunity - Markets
Changes in consumer expectations
- the development of needs related to corporate social responsibility, eco-efficiency, emissions reduction and climate change adaptation, as expressed by Bureau Veritas and Scalian group customers via the Net Promoter Scores calculated;
- the management and support of trauma related to natural disasters or severe weather events.
Measuring and anticipating the potential cost generated by a carbon emissions tax.
Long-term
For the portfolio companies and for future investment opportunities studied, a carbon cost is estimated when material. GHG emissions mitigation targets for Wendel and the portfolio companies according to SBTi standards.
*
Vigilance with regard to the applicability of emissions trading systems (size of facilities, choice of geographical location, etc.).
As a listed company, Wendel monitors changes in European and international regulations on climate impact reduction. It also encourages the controlled companies to respect the best standards in terms of reducing their emissions (e.g., emissions reduction pathway approved for Stahl, Bureau Veritas and Tarkett).
The companies in the portfolio also carry out more specific monitoring of certain subjects to which they may be exposed (e.g., the carbon credit market, environmental labeling, circular economy, etc.).
Securing multiple and diversified supply chains.
Wendel monitors and controls the deliberations of the portfolio companies in order to optimize the quantities of products used.
**Short-term
Participation in the improvement of recycling capacities in order to promote the reuse of certain commodities.
In 2024, Wendel will roll out an application that analyzes climate risks in the value chain, particularly for the most exposed companies in its portfolio.
Wendel encourages its portfolio companies to monitor emerging trends and the risks of substitution in their respective products. The share of sales linked to products or services with environmental added value illustrates Wendel's determination to seize transition opportunities and bring portfolio companies on Board.
Accordingly, the majority of the controlled portfolio companies have defined low-carbon products and services:
Bureau Veritas' Green Line offering addresses all emerging needs related to the low-carbon transition (renewable energies, new forms of mobility, low-carbon buildings, etc.).
**Mid-term
Scalian's sustainability offering specifically addresses issues related to ESG performance, decarbonization of organizations, ESG reporting and life cycle analysis. CPI is involved in managing people who have survived severe climatic events, and its training includes emergency care workers and hospitals.
Lastly, Stahl is actively involved in the Zero Discharge of Hazardous Chemicals (ZDHC) program, which is designed to promote the sustainable management of chemicals in the fashion industry. It is also a founding member of the Renewable Carbon Initiative.
Physical hazards and opportunities - moderate or severe risks
At the Wendel portfolio level, excluding Bureau Veritas, four sites have been identified to date as vulnerable to potentially moderate or severe physical hazards by 2050.
Bureau Veritas estimates the number of sites exposed to high risks at 431 in 2050, according to the RCP 8.5 scenario. (1).
The identification of sites at risk of hazards is based exclusively on the RCP 8.5 scenario projections for 2050. This process does not therefore include the existence of protection measures put in place by the Company or by third parties (such as the local authority where the Company is located). This assessment of actual and effective risks at the most vulnerable sites was prepared in 2022 as part of the climate resilience plans of the relevant portfolio companies.
(1) For more information, see "Climate change adaptation" in the Bureau Veritas 2023 Universal Registration Document
2.2 Impact of climate-related risks and opportunities on the strategy
Wendel's approach as a long-term investor, strongly oriented towards value creation through ESG leverage, demonstrates that sustainability issues are at the heart of its strategy. Climate change management is positioned as one of the four ESG priorities established by the Company. Wendel's ESG team and the operating partners ensure that climate issues are integrated into the strategy of the portfolio companies. As such, the portfolio companies (except ACAMS, which joined Wendel's consolidated scope in 2022) have all defined low-carbon products and services:
• Bureau Veritas' Green Line segment on energy efficiency and low carbon transition;
• Stahl's development of water-based products (with a better carbon footprint than solvent-based products);
• Scalian's sustainability segment offering including decarbonization strategy services;
• Digitalization of CPI's training courses.
In the pre-investment phase, Wendel's ESG teams also carry out an assessment of the most material ESG risks and opportunities, including, where relevant, an evaluation of climate risks and opportunities. This analysis is part of the in-depth due diligence process, which has been applied to all investment opportunities.
During the holding phase, Wendel requires each investment to have an ESG roadmap. These roadmaps, which are reviewed annually by Wendel's Executive Board and by the executive and non-executive governance of each portfolio company, include action plans on climate issues in connection with one of Wendel's 4 ESG pillars. This is the case, for example, of Bureau Veritas, which, through its Climate Plan, has carried out an assessment of the financial impact of physical climate risks. At Wendel Group level, excluding Bureau Veritas, four sites have been identified as vulnerable to potentially moderate or severe physical risks by 2050. Bureau Veritas estimates the number of sites exposed to high risk at 431 according to the RCP 8.5 scenario. Bureau Veritas' detailed climate risk analysis is published and publicly available in the Bureau Veritas 2023 Extra-Financial Performance Statement.
The identification of sites at risk is based on the RCP 8.5 scenario projections for 2050. This process therefore does not include the existence of protection measures put in place by the company or by third parties (such as the local authority where the company is located). This assessment of actual and effective risks at the most vulnerable sites was prepared in 2021/2022 (updated in 2023 for Bureau Veritas) as part of the climate resilience plans of the relevant portfolio companies.
3. Risk management: processes for identifying, managing, and integrating into the organization climate-related risks
Wendel's ability to seize investment opportunities, best manage its investments, and optimize financing and refinancing depends on how well it is able to assess the quality and resilience of the business models of its portfolio companies, from when those companies are acquired through to when they are divested.
The ESG and climate risks factors of Wendel and its companies in portfolio are integrated into the company's overall risk management.
The climate risks of the controlled companies in portfolio are also assessed at each company's level. In 2021, all the companies in the portfolio have carried out an analysis of the transition and physical risks and opportunities as presented in the TCFD guidelines.
All these risks and opportunities are presented in the ESG performance report on Wendel's portfolio participations, available on Wendel's website (https://www.wendelgroup.com/esg-performance-2023.pdf). When significant risks have been identified, climate resilience plans have been approved at the board level of each participation in 2022 (Bureau Veritas and Stahl). The climate resilience plans approved by the board of portfolio companies include an action plan to address short, medium- and long-term risk for transition risks and physical risks.
For each new company in its portfolio, Wendel requires management to carry out an analysis of transitional and physical risks within 18 months of their integration.
In 2023, climate resilience action plans for all controlled companies were presented in Wendel's Audits, Risks and Compliance Committee.
4. Metrics and targets
4.1Metrics used to assess climate-related risks and opportunitiesGHG emissions of Wendel and its portfolio companies
As a long-term investor committed to value creation, Wendel requires all its companies in portfolio to report on their greenhouse gas emissions through an accurate carbon footprint. To date, 100% of its controlled companies in portfolio assess their carbon footprint yearly in accordance with GHG Protocol standards on scopes 1, 2 and 3. All of the Wendel Group's scope 1 and 2 emissions (Wendel SE and controlled companies in portfolio) are audited by an independent third-party organization (please see pages 211-213 of Wendel's URD 2023), and Wendel has chosen to have its information verified with a higher level of verification ("reasonable assurance" meaning beyond mandatory law requirements). With regard to scope 3 emissions, only those from Wendel SE (except 3.15 category) have been audited to date by our independent third-party organization in fiscal year 2022 and in fiscal year 2023.
At Wendel Group level, GHG emissions are reported using the financial control approach, in accordance with the Global GHG Accounting and Reporting Standard for the Financial Industry developed by the Partnership for Carbon Accounting Financials (PCAF Standard).
In addition to greenhouse gas emission indicators, Wendel uses the indicators below to monitor the transition of its portfolio companies:
Transition risks: the share of products and services with environmental added value offered by portfolio companies This indicator reflects the proportion of sales of products and services that contribute to environmental objectives (circularity, environment-related services and inspection climate change mitigation, etc.). Wendel also calculates its alignment with the taxonomy on its consolidated scope for climate change mitigation and adaptation objectives.
Physical risk: For each of its portfolio companies, Wendel tracks the number of sites exposed to physical risks related to climate change. For all participations, the identification of sites at risk is based on at least the RCP 8.5 scenario projections for 2050.
4.2 GHG emissions of Wendel and its portfolio companies
Indicators | Wendel SE | Bureau Veritas | Stahl | CPI | ACAMS | Scalian | Wendel consolidated (financial control) |
Scope 1 | 18 | 74,412 | 10,453 | 0 | 0 | 945 | 85,828 |
3.2 Capital goods 3,324 0 9,945 | 0 0 0 13,269 |
3.4 Upstream transportation and distribution 0 0 55,920 | 0 574 0 56,494 |
3.6 Business travel 310 82,750 2,691 | 888 1,059 1,883 98,663 |
3.8 Upstream leased assets 0 60,911 0 | 0 0 0 60,844 |
3.10 Processing of sold products 0 0 0 | 0 0 0 0 |
3.12 End-of-life treatment of sold products 0 0 4,394 | 2 14 0 4,410 |
3.14 Franchises 0 0 0 | 0 0 0 0 |
Other (upstream) 0 0 0 | 0 0 0 0 |
Scope 2 | 98 | 74,994 | 2,127 | 1,014 | 0 | 71 | 78,305 |
Scope 3 | 6,281 | 592,278 | 630,557 | 2,190 | 1,112 | 6,794 | 1,828,264(1) |
2,605 | 351,282 | 545,196 | 182 | 6 | 2,661 | 901,933 | |
233 | |||||||
19 | 50,057 | 6,311 | 91 | 0 | 47,628 | ||
4 | 5,828 | 759 | 3 | 0 | 253 | 6,847 | |
19 | 41,449 | 1,427 | 418 | 46 | 1,762 | 44,428 | |
0 | |||||||
0 | 0 | 3,914 | 19 | 0 | 3,933 | ||
0 | 0 | 0 | 0 | 0 | 0 | 0 | |
0 | 0 | 0 | 0 | 0 | 0 | 0 | |
0 | 0 | 0 | 0 | 0 | 0 | 589,052(2) | |
0 | 0 | 0 | 0 | 0 | 0 | 0 |
3.1 Purchased goods and services
3.3 Fuel- and energy-related activities (not included in scope 1 or scope 2)
3.5 Waste generated
3.7 Employee commuting
3.9 Downstream transportation and distribution
3.11 Use of sold products
3.13 Downstream leased assets
3.15 InvestmentsOther (downstream)
Total 6,397 741,684 643,138 | 3,204 1,112 7,810 1,992,397 |
(1) Wendel consolidated total scope 3 is not equal to the sum of the row. This is explained by the inclusion of the "3.15 Investment" category in the Wendel consolidated scope 3 total.
(2) GHG emissions relating to category 3.15 Investments correspond to the GHG emissions of Tarkett and IHS, over which the Wendel Group has no financial control as specified in the GHG Protocol. Consequently, and in accordance with the guidelines of the GHG Protocol, these emissions have been recorded under item 3.15.
Scope 3 emissions exclude GHG protocol categories that are not relevant for the respective entities. For that reason, several null data are displayed in the table above.
4.3 Emissions generated by Wendel and its portfolio companies in 2023: consolidation using GHG Protocol's financial control approach
Under the financial control approach to consolidation, the Company accounts for 100% of the emissions of controlled assets (Bureau Veritas, Stahl, CPI, ACAMS, Wendel SE and Scalian) and includes the emissions (Scopes 1, 2 and 3) of non-controlled assets in Scope 3 (Tarkett and IHS), in proportion to its share in the holding. Emissions related to Wendel Growth investments are not included as they are not deemed material.
GHG emissions (tCO2eq) Total emissions - financial control approach 2022(2) Total emissions - financial control approach 2023(1) 2022/2023 change (%) | ||
Scope 1 | 203,705 | 85,828 -58% |
Scope 2 (3) | 167,206 | 78,305 | -53% |
Scope 3 (4) | 3,417,154 | 1,828,264 | -46% |
TOTAL | 3,788,065 | 1,992,397 | -47% |
(1) IHS Scopes 1 and 2 for 2023 are not available at the date of publication of this report. The 2022 emissions have been taken into account for 2023. IHS Towers' Scope 3 emissions are not available. Scopes 1, 2 and 3 emissions for Scalian are not available for 2023. The 2022 data have been used.
(2) GHG emissions for 2022 have changed slightly compared with emissions published in the previous report. IHS scopes 1 and 2, and Constantia Flexibles scope 3, have been updated with 2022 data made available after the report was published in 2023. Wendel SE's 2022 emissions were recalculated during the 2023 financial year following the updating of certain emissions factors.
(3) Scope 2 emissions are calculated and consolidated on a market-based basis as soon as the emission factor data is available.
(4) The emission items included in the controlled portfolio companies' Scope 3 emissions are listed in 4.2 ESG performance of controlled portfolio companies in the 2023
Wendel URD. These emissions items can also be found in the previous table. Downstream and/or upstream emissions are included depending on their materiality by business sector.
Overall portfolio emissions were down 47% in absolute terms compared to 2022. This decrease is mainly due to the exit from the portfolio of Constantia Flexibles, which in 2022 represented 45% of emissions consolidated according to the financial control method. On a like-for-like basis, emissions decreased by 4% in absolute terms. The intensity ratio of tons of CO2 per million euros of consolidated sales was down 46% with the exit of Constantia Flexibles and down 6% on a like-for-like basis.
4.4 Focus on the scope 3 financed absolute emissions of Wendel Group
The scope 3 financed absolute emissions, also known as scope 3 category 15, is a category of emissions associated with the reporting company's investments in the reporting year. Within the scope of Wendel, and in accordance with the PCAF guidelines, these emissions correspond to those of Tarkett and IHS. On 31 December 2023, these two companies are not under control of the Wendel Group. The following emissions correspond to scopes 1, 2 and 3 of those companies, in proportion to its share in the holding.
GHG emissions | Total Scope 3 - financed | Total Scope 3 - financed | 2022/2023 | Carbon footprint (tCO2e/ M€ portfolio |
(tCO2eq) | ||||
emissions 2022 | emissions 2023 | change (%) | market value at December 2023) | |
Tarkett | 435,956 | 399,533 | -8.4% | 9,988 |
IHS (1) | 192,425 | 189,519 | -1.5% | 755 |
Total | 628,381 | 589,052 | -6.3% | 2,024 |
(1) IHS Scopes 1 and 2 for 2023 are not available at the date of publication of this report. The 2022 emissions have been considered for 2023. IHS Towers' Scope 3 emissions are not available. The difference between the 2023 and 2022 GHG emissions is explained by the change in Wendel's ownership ratio at the end of each financial year.
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Wendel SE published this content on 28 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2024 18:28:26 UTC.
