Climate Change Risks and Opportunities

GC is committed to building climate resilience and aligning its business strategy with the Paris Agreement by targeting Net Zero by 2050 through its Decarbonization Pathway. Climate-related risks and opportunities are continually assessed across all departments and integrated into strategic planning to ensure effective mitigation and adaptation.

In 2024, GC complied with IFRS S2: Climate-related Disclosures by conducting physical and transition risk analyses across all consolidated entities included in its financial statements as of 31 December 2024. To extend oversight of physical risks throughout the value chain, GC also carried out climate-related risk assessments of upstream (suppliers) and downstream (customers) to identify potential impacts and establish mitigation plans.

GC identified four material physical risks—extreme heat, riverine flooding, drought, and water stress—alongside carbon pricing as a transition risk and sustainable products (low carbon products, including polymers, chemicals, CCU, and circular solutions such as design, recycling, and bio products—for example, biorefinery, bio based polymers, and biodegradable products) as a transition opportunity, all of which could significantly affect its prospects, operations, and value chain. Using Enterprise Risk Management (ERM) criteria, GC ranked these factors and prioritized drought, water stress, carbon pricing, and sustainable products as top focus areas.

To demonstrate climate resilience, GC applied scenario analyses over short- (to 2030), medium- (2031–2040), and long-term (2041–2050) horizons. It used the IPCC’s Shared Socioeconomic Pathways (SSPs) for physical risks—SSP1-2.6 (low emissions), SSP2-4.5 (business as usual), and SSP5-8.5 (high emissions)—and the IEA’s World Energy Outlook scenarios for transition risks and opportunities, including the Stated Energy Policies Scenario (STEPS) and the Net Zero Emissions by 2050 Scenario (NZE2050). These analyses informed mitigation and adaptation strategies that cover 100% of operations. Guided by these insights, GC has adopted a three-pronged decarbonization strategy—Efficiency-driven, Portfolio-driven, and Compensation-driven—to address identified risks and opportunities and keep the company on track to achieve its 2050 Net Zero target.

To strengthen oversight, GC adopted the COSO ERM 2017 framework, embedding climate-related risks and opportunities into its ERM processes. Identified risks and opportunities are cascaded to executives and operational teams with clear KPIs and reviewed annually for effectiveness. Progress is reported monthly to the Enterprise Risk Management and Management Committees and quarterly to the Risk Management Committee, ensuring continuous monitoring and alignment with GC’s Net Zero ambition.

GC has summarized its key climate-related risks and opportunities for 2024, along with the mitigation measures implemented in response to these issues, as follows:

Climate-related Risks/Opportunities	Potential business impacts	Mitigation and Adaptation Strategies
Physical Risks
Extreme Heat	Short: worker heat stress → absenteeism, higher health costs; higher cooling energy/costs; minor process deviations. Medium: equipment damage/accelerated wear; higher volatility & fire/explosion risk. Long: fundamental design/location challenges; supply-chain/insurance risks; potential strategic site shifts.	Short: shift work schedules; rest/cooling areas; emergency drills; awareness & health checks. Medium: upgrade cooling systems; building retrofits; advanced controls/automation; wearable monitoring tech. Long: heat resilient process R&D (cryogenics/alt. methods); material selection; site planning; workforce planning.
Riverine Flood	Short: operational disruptions (power, access, shipping); minor equipment damage; immediate costs. Medium: major infrastructure damage; environmental contamination; supply chain impacts. Long: untenable locations; relocation/re engineering; loss of human capital; societal disruption.	Short: emergency response (BCP), spill prevention & containment. Medium: permanent flood barriers; chemical inventory mgmt.; flood training/awareness. Long: land raising; relocation from high risk sites; risk informed land use planning.
Drought	Short: water use restrictions; increased water/cooling costs; reduced cooling efficiency; higher energy use. Medium: production cuts/shutdowns; higher operational costs; degraded water quality. Long: site viability issues; strategic product shifts; significant capex (advanced treatment/desalination).	Short: water audits; leak detection/repair; groundwater monitoring; non process water optimisation; employee awareness. Medium: water risk assessments; closed loop systems; water recycling/reuse; rainwater harvesting; greywater reuse; community collaboration. Long: zero liquid discharge; desalination (critical/high value processes).
Water Stress	Short: production cuts from reduced water availability/quality; social licence risks; increased water costs. Medium: expansion/investment constraints; higher capex (treatment/recycling/alt. sources); legal/compliance risks. Long: possible closure/relocation; reduced competitiveness vs. water resilient peers.	Short: water audits; process optimisation; enhanced treatment; review compliance. Medium: closed loop & recycling; water efficient technologies; alternative sources (rain/municipal); local engagement. Long: ZLD; desalination; community level water quality initiatives.
Transition Risk
Carbon Price	Short: higher operational costs; margin compression; export competitiveness risk (e.g., CBAM). Medium: cost base restructuring; asset impairment risk (high carbon assets); large scale decarb capex; value chain transparency (Scope 3). Long: threat to business model if targets missed; access to capital/licence to operate at risk.	Short: aggressive energy efficiency; internal carbon pricing; renewable electricity/PPAs. Medium: CCUS/CCU deployment; scale up sustainable product portfolio; design for circularity/reduced embodied carbon. Long: green hydrogen as feedstock/fuel; strategic partnerships across value chain; achieve net zero operations (Scopes 1–3).
Transition Opportunity
Sustainable Products Low Carbon Products, including Polymer, Chemicals, CCU. Circular, such as Design, Recycle. Bio Products, for example, Bio refinery, Bio-based, Polymers, and Biodegradable.	Short: higher R&D/capex; emerging market/reputation upsides; regulatory/carbon pricing pressure. Medium: market growth; disruption of traditional models; supply chain transformation/infrastructure needs. Long: dominance of sustainable chemistry & net zero operations; new market segments/value chains (e.g., CO₂ utilization); circular business models.	Short: strategic R&D/pilots; collaborative value chain development; LCA/eco labels; product portfolio of certified sustainable products. Medium: scale industrial grade sustainable chemicals; integrate carbon capture/utilisation and circular business models. Long: design for infinite circularity; continuous innovation & governance to enable fully circular, low carbon economy.

IFRS S2 2024 Report