PERNOD RICARD - Universal Registration Document 2019-2020

3. SUSTAINABILITY & RESPONSIBILITY The four pillars of the good times from a good place roadmap

STRATEGY Climate-related risks and opportunities

Climate-related risks and horizon

Potential financial impact and magnitude of impact

Impact on the Group's strategy and financial planning

Type

Area of business impacted

Transition risks Policy and legal Long-term risk:

Operations & Supply Chain Medium impact:

Pernod Ricard takes — measures to reduce

Energy and GHG emissions — regulations may affect the Group: directly through its own — operations; or indirectly through — its suppliers (especially with respect to glass, alcohol and transportation).

Regulations may have — an impact on direct costs, for instance if the Group had to buy carbon quotas. In Europe, the Group’s four largest distilleries are subject to the EU Emissions Trading System (EU-ETS). There may be indirect impact through increases in the price of raw materials (especially for glass manufacturing, which is an energy-intensive industry). Medium impact: The Group feels that a shift — in consumer preferences might lead to a fall in market share.

greenhouse gas emissions: directly at production sites — through energy efficiency and renewable energy; and indirectly with its suppliers — and by optimising the logistics chain (see subsections 3.3.3.2, 3.3.3.4 and 3.3.3.5).

Reputation Long-term risk: Consumers may prefer — products that are perceived

Products

The risk of shifting consumer — preferences is factored into Group marketing strategy. For example, Pernod Ricard eco-design policy aims to make the products more sustainable (see subsection 3.3.3.4). To face extreme variability in — weather patterns, the Group uses hedging to limit the extent of seasonal volatility due to climate factors and includes environmental factors in its Responsible Procurement Policy and its Procurement Code of Ethics

as more responsible, and this could affect Pernod Ricard sales and market share if not anticipated.

Physical risks Extreme

Long-term risks: Extreme variability in weather — patterns, such as frost, hail and drought, can affect the supply and quality of agricultural raw materials and, more broadly, their price. For example, price volatility might impact grains and grapes. Wine alcohol content might increase, and different parameters might impact wine quality. Changes in precipitation — patterns can affect the groundwater reserves on which some production sites

Supply chain & Operations High impact:

The financial implications — of agricultural supply chain disruption could be

significant. It could lead to higher prices for raw materials.

(for more details, see subsections 3.3.3.1 and 3.3.3.2).

Water management is — a significant component of the Group’s environmental strategy (see subsection 3.3.3.3).

rely. This may ultimately impact the availability and quality of water.

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