2022 TCFD Index
Fresenius Medical Care supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Using the TCFD disclosure recommendations, the table below provides information on climate-related risks and opportunities. The table is divided into four key areas in line with the four core categories governance, strategy, risk management, as well as metrics and targets.
|Disclose the organization’s governance around climate-related risks and opportunities.|
|a) Describe the Board’s oversight of climate-related risks and opportunities.|| |
The highest governing body for our sustainability activities, including climate-related issues, is our Sustainability Decision Board. Headed by our CEO, it is responsible for integrating sustainability into our strategy and business. Together with the Sustainability Decision Board, the Management Board decides on strategic sustainability initiatives. The Global Sustainability department drives our strategic sustainability activities. The Global Head of Sustainability regularly informs the Management Board about sustainability progress and the status of target achievement. Our Lead Independent Director is a member of the Supervisory Board. Her responsibilities include addressing matters relating to ESG aspects of the Company, including climate-related matters.
|b) Describe management’s role in assessing and managing climate-related risks and opportunities.|| |
Sustainability risks, including climate-related risks, are monitored and assessed as part of our enterprise risk management. Twice a year, identified risks are discussed in dedicated risk committees. Reviewed risks are compiled and communicated to the Management Board. The focus during this process is on significant risks, which are above a defined threshold.
The Global Sustainability department is responsible for analyzing and measuring our overall environmental impact, including our climate-related impact, to see how we can further improve our efforts. Throughout the duration of the three-year Global Sustainability Program, that also included the development of global climate targets, the program’s progress was linked with Management Board compensation via a sustainability target (20% of the short-term variable component).
|Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.|
|a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. |
b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.
c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
For information on our environmental scenario analyses, see our Non-Financial Group Report – Water (page 104). For an overview of risks which could have an impact on our business operations, see our Risks and Opportunities Report – Main features of the risk management and internal control system (pages 59 ff.).
Physical risk: acute – Unpredictable events (medium risk in the short term; low risk in the medium term1)
Transition risk: market – Procurement (medium risk in the short term; low risk in the medium term)
Transition risk: politics and law – Rise in prices for carbon emissions rights (low risk in the medium term)
For an overview about our opportunities management, see our Risks and Opportunities Report – Opportunities management (pages 75 ff.).
Developing new, resource-friendly products and services through R&D and innovation
Eco-performance of our products and services
|Disclose how the organization identifies, assesses, and manages climate-related risks.|
|a) Describe the organization’s processes for identifying and assessing climate-related risks.|| |
Sustainability risks, including climate-related risks, are monitored and assessed as part of our enterprise risk management. Our assessment is based on a list of potential non-financial risks, which is reviewed regularly. Risks are classified based on their potential impact and likelihood.
As part of the risk management, regional risk coordinators assume the task of coordinating risk management activities within our operating segments. This is done with the help of risk management software. These activities relate to existing and potential emerging short-term as well as mid-term risks. Semi-annually, identified risk information is processed by the risk coordinators, reviewed by the respective corporate functions, and discussed in regional / functional risk committees. Subsequently, the central risk management function gathers the risks and risk responses from regions and functions, analyzes and discusses them in the corporate risk committee and communicates the compiled results to the Management Board. The focus during this process is on significant risks, which are above a defined threshold.
One element of our sustainability risk management approach involves assessing the impact of our business activities on the environment. In 2022, we developed a new methodology for this purpose. We used external and internal data to evaluate our impact on climate change, water stress, wastewater, and waste management. We are continuously monitoring and increasing the granularity of our risk assessment to better understand how our business operations impact the environment.
We additionally performed further assessments to determine how environmental factors such as water stress, climate change vulnerability, and waste management can represent risks to our business. In 2022, we also continued to integrate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) into our enterprise risk management approach. We review climate-related risks and opportunities on a yearly basis.
|b) Describe the organization’s processes for managing climate-related risks.|| |
We see risk management, including the management of climate-related risks, as the ongoing task of determining, analyzing, and evaluating the spectrum of actual and potential risks arising from our business operations in our environment. This includes, where possible, taking pre-emptive and corrective measures. Our risk management system provides us with a basis for these activities. It enables management to identify risks that could jeopardize our growth or going concern and to take steps to minimize any negative impact. Accordingly, it is an important component of our management and governance.
We have increased our focus on climate-related risk and opportunity management. The Global Sustainability department drives our strategic sustainability activities. The Global Head of Sustainability regularly informs the Management Board about sustainability progress and the status of target achievement.
For further information on our processes for managing climate-related risks, see our Risks and Opportunities Report – Main features of the risk management and internal control system (pages 59 ff.).
|c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.|| |
Sustainability risks, including climate-related risks, are integrated into our enterprise risk management. The risk assessment is based on a list of potential non-financial risks, which is reviewed regularly. Twice a year, the Management Board is informed about identified risks. The focus is on significant risks, which are above a defined threshold.
Metrics and targets
|Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities|
|a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.|| |
We measure and assess several key performance indicators as part of our environmental management. This includes water withdrawal and energy consumption, facilities in water-stressed areas, Scope 1 and 2 greenhouse gas emissions, production sites with ISO 14001 as well as ISO 50001 certification, and resource-friendly dialysis machines sold.
We use both location-based and market-based methods based on the residual mix that quantify emissions based on emission factors per country. We calculate our Scope 1 and Scope 2 emissions following the methodology of the Greenhouse Gas Protocol. For the calculation of Scope 1 emissions, we use the UK Department for Environment, Food and Rural Affairs’ (DEFRA’s) latest version of this guidance. We use International Energy Agency (IEA) emission factors, Reliable disclosure systems for Europe (RE-DISS) Residual European Mix as well as US Residual Mix (Green-e Energy Emissions Rates) for electricity consumption to calculate indirect emissions from electricity.
|b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.|| |
We currently disclose Scope 1 and Scope 2 greenhouse gas emissions. As part of our Climate Neutrality Action Plan, we plan to also quantify and disclose Scope 3 emissions. We are currently assessing Scope 3 emissions that arise from activities or assets that we do not own or control along our value chain.
Sustainability risks, including climate-related risks, are integrated into our company-wide risk management. We are carefully monitoring regulatory developments and market trends. In 2022, we did not identify any significant risks related to our own operations, business relationships, products, or services that are very likely to have an adverse effect on material sustainability-related topics.
|c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.|| |
In 2022, we defined global climate targets. We plan to be climate neutral in our operations by 2040. By 2030, we aim to reduce Scope 1 and Scope 2 emissions by 50% compared with those reported in the base year 2020. Our Scope 1 and 2 emissions climate targets are aligned with the Paris Agreement ambition of limiting global warming to 1.5°C. We are also currently assessing Scope 3 emissions that arise from activities or assets that we do not own or control along our value chain. With this information, we intend to evaluate the possible inclusion of Scope 3 emissions in our climate target roadmap. Setting climate targets helps us also to align with TCFD requirements and improve our environmental performance.
1 Time horizon for the short-term effect: one year, time horizon for the mid-term effect: five years.