The TCFD recommendations
Cloudberry Clean Energy ASA
2 Cloudberry Clean Energy ASA The TCFD Recommendations
Content
The TCFD Recommendations | 3 |
TCFD Context Index | 4 |
Governance | 5 |
Strategy | 6 |
Risk management | 14 |
Metrics and targets | 15 |
Appendix | 18 |
Cloudberry Clean Energy ASA | 3 |
The TCFD Recommendations
The TCFD Recommendations
There is a growing demand for standardized, climate-related risk disclosure in the financial sector, and creditors and investors are increasingly asking for reporting that is consistent, comparable, and clear. The Task Force on Climate-Related Financial Disclosure (TCFD) developed recommendations to enhance market transparency and stability and encourages standardized reporting of financially material climate-related risks and opportunities to provide investors, lenders, and insurers with comparability when assessing and pricing companies.
The TCFD recommendations are grouped into four areas of disclosure that represent core elements of how organizations operate: governance, strat- egy, risk management, and metrics and targets. Moreover, the framework separates recommended disclosures into three main categories: risks related to the transition to a lower-carbon economy, risks related to the physical impacts of climate change, and climate-related opportunities. The TCFD has also incorporated potential financial impact as an integral part of its disclosure recommendations.
Cloudberry is in the process of adopting the requirements of the European Corporate Sustainability Reporting Directive (CSRD). In 2023, Cloudberry conducted a double materiality assessment. In the annual sustainability report, we will disclose the material sustainability topics in Cloudberry considering our impact on the environment, people, and society, along with sustainability-related financial risks and opportunities that are relevant to the company. Cloudberry is working to gather the necessary information to be able to meet the full CSRD requirements in the future.
Core Elements of Recommended Climate- Related Financial Disclosures
Governance
The organization's governance around climate- related risks and opportunities
Strategy
The actual and potential impacts of climate-related risks and opportunities on the organization's busi- ness, strategy, and financial planning
Risk Management
The processes used by the organization to identify, assess, and manage climate-related
Governance
Strategy
Risk
Management
Metrics and
targets
Metrics and Targets
The metrics and targets used to assess and manage relevant climate-related risks and opportunities
4 Cloudberry Clean Energy ASA TCFD Context Index
TCFD Context Index
Governance | Strategy |
Disclose the | Disclose the actual and |
organization's | potential impacts of |
governance around | climate-related risks |
climate-related risks and | and opportunities on the |
opportunities. | organization's business, |
strategy, and financial | |
planning where such | |
information is material. | |
Recommended disclosures |
Risk Management
Disclose how the organization identifies, assesses, and manages climate-related risks.
Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
- Describe the board's oversight of climate- related risks and opportunities
- Describe the management's role in assessing and managing climate-related risks and opportunities
- Describe the climate- related risks and opportunities the organization has identified over the short, medium, and long term.
- Describe the impact of climate-related risks and opportunities on the organization's business, strategy, and financial planning.
- Describe the organization's process for identifying and assessing climate-related risks.
- Describe the organization's processes for managing climate- related risks.
a) Disclose the metrics used |
by the organization to |
assess climate-related |
risks and opportunities |
in line with its strategy |
and risk management |
process. |
b) Disclose Scope 1, Scope |
2, and, if appropriate, |
Scope 3 greenhouse gas |
(GHG) emissions, and the |
related risks. |
- Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario
- Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management.
c) Describe the targets used |
by the organization to |
manage climate-related |
risks and opportunities |
and performance against |
targets. |
In the changing world we are living in, with rising temperatures, climate-related policy changes, and emerging technologies, both risks and opportunities are becoming more prominent. Failure to limit global warming to 1.5 °C may cause severe changes in the world`s climate, with subsequent dramatic consequences for the planet. The effect of climate change also has consequences for our operating assets that we need to consider in our business planning.
Cloudberry Clean Energy ASA | 5 |
The TCFD Recommendations
Governance
Disclose the company's governance around climate-related risks and opportunities.
Figure 1: Board-level oversight
General Meeting
Nomination
Committee
Board of Directors
ESG | Audit | Compensation | ||
Committee | Committee | Committee | ||
Climate-related issues are of high importance to Cloudberry and are integrated into Cloudberry`s overall business strategy and processes. Before a project investment decision, relevant risks are assessed by the Management and later presented to the Board of Directors. The climate-related risks are an integral part of the discussions and evalua- tions. The overall responsibility thus sits within the Board of Directors. In addition, Cloudberry`s overall
risk management process and all risks perceived by the company and its business segments are subject to a quarterly review by the Audit Committee, and an annual thorough review by the Board. The climate-related risks will in addition be assessed by the ESG committee and discussed along with all other relevant risks. The Board of Directors and its work is also described in the company`s Corporate Governance Report.
Figure 2: Executive Management oversight
Chief Executive
Officer
Finance
ESG / Organization /
Compliance
Development | Production | Operations (Captiva) | ||
The Executive Management team assesses and manages climate-related risks and opportunities, with the highest level of responsibility lying with the Chief Executive Officer and the Chief Compliance and Organization Officer. The manager of the
individual business segment is responsible for assessing relevant risks and for implementing risk-mitigating actions. The Executive Management team follows up quarterly on key mitigation plans and reports annually to the Board of Directors.
6 Cloudberry Clean Energy ASA The TCFD Recommendations
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the company`s business, strategy, and financial planning where such information is material.
Cloudberry integrates principles of governance throughout the organization as a key topic that strengthens our sustainability strategy. Such a commitment requires a continuous evaluation of the current climate-related risks and opportunities that could potentially affect Cloudberry's opera- tions. Cloudberry annually updates and assesses climate-related risks and opportunities related to our business development and expansion. Expanding on our climate ambitions, a climate transition plan will be developed, forming an integral part of the overall company strategy. Cloudberry will establish a roadmap to measure and reduce greenhouse gas emissions for both near-term and long-term objectives and actions. Two workshops have been facilitated by a third party, the first was held in 2020, and an update to the risks- and opportunities assessment was carried out in 2022. Key personnel in Cloudberry participated in the mentioned workshops and additional meetings to uncover potential changes from the previous climate risks and opportunities assessment. This process involved personnel from the sustainability, operations, compliance, development, and finance divisions. Additionally, an assessment was conducted during the second half of 2023 to incorporate the newly acquired wind farm portfolio Odin in Denmark. Several changes were identified given the changing physical and transition-related dynamics in the current market.
In total, ten changes to the risks and opportunities were identified. Following the workshop, a summary report was developed outlining the key elements of each risk and opportunity. To accurately monitor and evaluate risks and opportunities, Cloudberry has defined and updated its thresholds for time horizon,
the likelihood of occurrence, and financial impact according to the guidelines of the TCFD framework.
Cloudberry recognizes the impact climate-related risks and opportunities may have on its financial planning. Cloudberry has conducted assessments of and performance on eligible, aligned, and non-eligible economic activities on the KPIs outlined in the EU Taxonomy. The company assessed the business activities against the eligibility and alignment criteria for the two EU environmental objectives: climate change mitigation and climate change adaptation. The analysis serves as a foundation for calculating our KPIs as they relate to eligible and aligned Turnover, Capex, and Opex. The company`s EU Taxonomy Report 2023 outlines how our activities contribute substantially to the EU Taxonomy objectives without doing any significant harm and complying with the minimum safeguards. The detailed report is accessible on the company's website.
See Appendix A for an overview of risk identified changes in the 2022 assessment, and Appendix C for a summary of the full-year 2023 Taxonomy alignment.
Climate-related risks and opportunities identified over the short, medium, and long term
We have used the TCFD framework to identify and assess climate-related risks relevant to the com- pany`s positive or negative financial or strategic impacts on a company level. They are addressed in the table below. Cloudberry will continuously analyse and assess its climate-related risk strategy to detect other risks and opportunities.
Cloudberry Clean Energy ASA | 7 |
The TCFD Recommendations
TCFD | Like- | Financial | Time | |||
Risk | lihood 1 | Impact 2 | Horizon 3 Description | Risk mitigation | Opportunity | |
Extreme | High | Low | Short | Exacerbated wear-and- |
Winds | tear of wind turbines | |||
(i.e., increased service | ||||
and maintenance/ | ||||
repair costs). Higher | ||||
risks/costs during | ||||
construction (e.g., | ||||
wind days and | ||||
delayed construction). | ||||
Temporary stop in | ||||
production causes loss | ||||
in production time, due | ||||
to extreme winds. |
Cloudberry has emergency plans on- site on all our producing assets. A contingency plan is established. The company uses certified and well-proven technology aims for long service contracts with solid counterparts and ensures that agreements with contractors have substantial buffers
on weather-exposed operations.
Finding solutions for how future wind turbines (or upgrades of older wind turbines) can maximize production based on increased wind strength. It
also opens for the opportunity to build wind parks in areas that are less sensitive.
Extreme | High | Low | Short | Damage and lost | The technical standard |
rainfall | production to | and capacity of our | |||
hydropower stations | dams and pipelines | ||||
(including higher | are designed to | ||||
insurance premiums), | withstand most | ||||
as well as lost revenue | floodings. Cloudberry | ||||
from overflowing dams. | has emergency plans | ||||
Increased precipitation | on-site all its producing | ||||
levels can also trigger | assets. Heavy rain | ||||
temporary floods, | poses difficulties | ||||
presenting a threat | concerning soil | ||||
of harm to electrical | erosion and the risk of | ||||
equipment within | landslides. Prolonged or | ||||
the wind farm and | heavy rain wears away | ||||
complicating access for | the soil surrounding | ||||
repair tasks. | wind turbines, resulting | ||||
in potential degradation | |||||
of infrastructure. |
It is likely that new permits include demands of creating regulation dams
to our assets for flood prevention. An opportunity to increase the company's production capacity and be able to take full advantage and
be more efficient in producing more power. Overall, increased precipitation will most likely increase revenue for the company.
Changing High | Medium Long | Changes in average | Positioning and | Wind farms will in most |
weather | temperatures will | preparing the company | cases get more hours | |
patterns | impact the climate | to cope with scenarios | of production due to | |
of Norway, Sweden, | from changes in | increased wind, and | ||
and Denmark where | weather patterns by | the production at hydro | ||
Cloudberry's current | investing in technical | plants will increase with | ||
operations are located. | capabilities and | more rainfall, and fewer | ||
Overall warmer | solutions. With the | water-frozen days in the | ||
climate with increased | Captiva portal, the | rivers and lakes due to | ||
temperatures can | company has access | warmer temperatures. | ||
lead to increased | to a live overview of all | Furthermore, with a | ||
rainfall, wind, storms, | our producing assets | warmer climate, comes | ||
and longer periods | with an operational | snow melting to a larger | ||
of drought. These | status, and the weather | degree than normal, | ||
climate changes may | situation at the | and hydropower plants | ||
affect and disrupt | locations. Cloudberry`s | that previously have | ||
Cloudberry's energy | mitigation strategy | been water frozen | ||
production. Possible | for changing weather | during winters might | ||
scenarios are flooding | patterns is also | be able to produce | ||
at hydro plants resulting | reflected in Cloudberry's | power during the winter | ||
in less production. More | portfolio developments, | season. | ||
storms and lightning | being diversified within | |||
increase the risk of | hydro-, wind and | |||
damaging wind farm | potentially sun power | |||
blades and electrical | development and | |||
equipment, potentially | production. | |||
causing months-long | ||||
production downtime. | ||||
Droughts leading to | ||||
low water levels forcing | ||||
the company to reduce | ||||
or even fully stop the | ||||
electricity production. | ||||
8 Cloudberry Clean Energy ASA The TCFD Recommendations
TCFD | Like- | Financial | Time | |||
Risk | lihood 1 | Impact 2 | Horizon 3 Description | Risk mitigation | Opportunity | |
Transitional Risks and Opportunities | Policy and legal |
Significant High | High | Short | Significant changes | Being at the forefront | Stricter energy |
changes in | in the regulatory | is of high importance | Regulations and | ||
regulatory | framework could | when preparing for | CO2 taxes lead to | ||
framework | have an impact on | significant changes | possibilities for the | ||
the renewable energy | in regulatory | renewable energy | |||
sector. The European | framework, Cloudberry | sector and provides | |||
Union has through its | has a dedicated | business opportunities. | |||
announced ambitions | group working | With regulatory | |||
and strategies set out | with government | frameworks such as | |||
an ambitious pathway | relations and market | the EU Taxonomy | |||
for reducing emissions. | communication. | and Corporate Social | |||
Upcoming reporting | Priorities and guidelines | Responsibility Directive | |||
legislations such as the | are prepared to | (CSRD) comes revised | |||
Corporate Sustainability | safeguard that the | directives. Cloudberry | |||
Reporting Directive | company takes | values standardization | |||
(CSRD) standardizes the | position where | of laws and standards | |||
reporting requirements | possible. Cloudberry | which speeds up the | |||
for companies and sets | is working proactively | transition of capital | |||
out disclosures that | through cooperation | towards the renewable | |||
covers the three main | with organizations, | energy sector, and | |||
pillars of sustainability, | municipalities, the | the company is well | |||
E, S & G. Similarly, | industry, through the | positioned to capitalize | |||
the EU Taxonomy | media and meetings | on the increased | |||
requires companies | with politicians in the | demand for renewable | |||
to classify their | Government and the | energy projects and | |||
products and services | Parliament. | assets. | |||
according to a set of | |||||
sustainability criteria. | |||||
These regulations will | |||||
directly impact the | |||||
demand for renewable | |||||
energy sources. The | |||||
new taxation for the | |||||
renewable energy | |||||
sector in Norway | |||||
consisting of an | |||||
increased tax on | |||||
onshore wind and a | |||||
windfall tax on hydro | |||||
and wind power, could | |||||
slow down or interrupt | |||||
plans of upgrading and | |||||
developing renewable | |||||
energy plants. This is | |||||
a risk to a necessary | |||||
green shift in Norway. |
Revised | Medium Medium Short | Historically the | Cloudberry is following | The REPowerEU |
permit | process of receiving | political proposals and | Plan (2022) and the | |
regulations | concession for | industry association's | intention to speed | |
constructing a power | recommendations | up the oncoming | ||
plant has been long | on new or revised | green transition may | ||
due to a more stringent | regulations. Cloudberry | contribute to that | ||
regulatory process. | seeks to involve with | permit regulations may | ||
This is especially | local communities, | be revised and shorter | ||
relevant for wind. With | municipalities, | time schedule for future | ||
the introduction of | and other relevant | developing projects. | ||
REPowerEU Plan (2022) | stakeholders from | In Sweden there is | ||
the concession process | greenfield projects but | an ongoing political | ||
will be reduced with | also on M&A processes | process on wind | ||
the goal to produce | to secure potential | development projects, | ||
more renewable energy | mitigations plans | to move the local "veto" | ||
in the near future. For | in regard to revised | from municipalities to | ||
hydropower, revision | regulations. | national level, which | ||
of existing hydropower | may speed up the | |||
regulation plans is | process of concession | |||
considered low risk as | and revised permit | |||
the concessions are | regulations. | |||
perpetual. | ||||
Cloudberry Clean Energy ASA | 9 |
The TCFD Recommendations
TCFD | Like- | Financial | Time | |||
Risk | lihood 1 | Impact 2 | Horizon 3 Description | Risk mitigation | Opportunity | |
Risks and Opportunities | Technology |
Transitional |
Improved | Medium Medium Medium Technology related | Cloudberry will maintain | By closely monitoring |
technol- | to hydro and wind | a portfolio of assets | technological |
ogies | generators experience | employing relevant and | developments, |
rapid improvements. | efficient technology | Cloudberry can adapt | |
Captiva, a company | and will ensure that | and seize opportunities | |
owned by Cloudberry, | its operating portfolio | that arise from | |
is a data-driven | remains competitive in | technology shifts. Being | |
operator, manager, and | an evolving landscape. | a smaller company | |
developer of renewable | The company invests | allows Cloudberry to be | |
energy, which delivers | in power plants | agile and implement | |
management services | of expected high | strategic initiatives | |
within operations | technical standards | rapidly as required | |
and maintenance, | and prioritizes technical | by technological | |
e.g., technical and | solutions that are | developments. | |
commercial digital | well-proven and | Technical | |
services, and | delivered by reputable | improvements, solutions | |
operational intelligence, | suppliers. As a part of | and services will | |
visualization and | Cloudberry`s overall | increase the production | |
reporting solutions | strategy, and with the | of renewable energy | |
to renewable energy | data-driven Captiva, | and improve profitability. | |
projects in the Nordics. | Cloudberry delivers | This influences and | |
management services | results in attractive | ||
within operations and | insurance terms and | ||
maintenance. The | funding. In addition, | ||
company relies on | the improvement of | ||
being updated on new | technical solutions | ||
technologies related | enables an increase in | ||
to power production, | the output of renewable | ||
operations, and market | energy technologies | ||
activities. Cloudberry | without adding any | ||
is well-informed of | negative environmental | ||
ongoing initiatives and | impact. | ||
promising technologies. |
10 Cloudberry Clean Energy ASA The TCFD Recommendations
TCFD
Like- | Financial | Time | |||
Risk | lihood 1 | Impact 2 | Horizon 3 Description | Risk mitigation | Opportunity |
andOpportunities |
Volatile | High | High | Short | It is difficult to predict |
power | power prices. Power | |||
prices | prices may rise from | |||
volatility in commodity | ||||
prices increased | ||||
CO2 prices, or higher | ||||
electricity demand, or | ||||
they might fall from | ||||
an expanded supply | ||||
for instance due to | ||||
government-issued | ||||
incentives. |
Cloudberry cautiously follows the market fundamentals and power price forecasts in the short- and long-term. To mitigate the downside risk
of volatile power prices, Cloudberry is positioning its production portfolio so that the company is not dependent on one price area as a hedge toward lock-in effects in the case of depressed prices in certain price areas. Cloudberry has a well-developed overall risk management strategy including price hedging of electricity, and a small portion of the portfolio with PPA to secure fixed income in the short- and medium- term. This strategy further includes close monitoring of market developments, with a special focus on the Nordics.
Cloudberry believes there are strong, fundamental drivers behind a stable, relatively high prices Nordic power market going forward, such as increase in consumption from both electrification and new power intensive industries.
The company's ability to execute on both transactions and new investments without affixing a PPA to projects, may enable Cloudberry to both act on investment opportunities and investment decisions others cannot. With a strong financial capability, Cloudberry may also find opportunities in assets in distress due to, for example, short-term lower power prices, such as seen in for example NO3 and NO4 during the summer of 2022.
Risks | Market |
Transitional |
Supply | High | Medium Short | More extreme weather |
chain | conditions may | ||
cause disruptions in | |||
Cloudberry's supply | |||
chain. Certain products | |||
and components are | |||
dependent on very few | |||
suppliers often in Asia. | |||
A flooding in China | |||
may lead to delayed | |||
deliveries of crucial | |||
components during | |||
the construction stage, | |||
or when a turbine on | |||
a wind power plant | |||
needs replacement | |||
of a component. | |||
Consequently, extreme | |||
weather could disrupt | |||
the production and | |||
transportation of the | |||
specific component, | |||
which could delay or | |||
shut down a renewable | |||
energy plant. In | |||
addition, there is not | |||
much willingness to | |||
enter into long-term | |||
contracts with suppliers | |||
anymore due to the | |||
unpredictable situation, | |||
possible disruptions | |||
and volatile prices. | |||
This increases the risk | |||
of higher costs in our | |||
projects. |
Long-term relationships with crucial suppliers are helpful in times of supply chain issues. In addition, it is a priority to have suppliers
that are located as close as possible to the construction site to take down the risk of disruptions in the supply chain and the environmental impact. Cloudberry also seeks to reduce the number of suppliers and steps of sub-suppliers in the supply chain to increase control and transparency. For maintenance of our power plants, the company will consider the need for a backup storage of crucial components that need regular replacement.
By prioritizing more nearby suppliers, Cloudberry will gain a greater degree of control over its value chain and reduce the environmental impact. It will also be easier to follow up with the suppliers during the construction stage, during maintenance and repair which reduces the downtime of a power plant.
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Cloudberry Clean Energy ASA published this content on 19 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2024 14:31:07 UTC.