With a broad and innovative portfolio of packaging, product films, and services, KP plays an integral role in the customer value chain by safeguarding product integrity, protecting brand reputation, and improving sustainability.

KP’s “Investing in Better” sustainability strategy solidifies its commitment to achieving ten clear targets for long-term improvement by increasing recycling and recyclability of products, cutting carbon emissions and continuously improving employee engagement, safety, diversity, equity and inclusion.

Founded in 1965, KP has 31 plants in 18 countries and employs over 5,700 people committed to serving customers worldwide in over 60 locations.

Navigating the sustainability space as a plastics manufacturer is complex. To maintain relevance and adhere to regulatory requirements, KP needs to be aware of climate impacts and operate with a strategy that has sustainability at its core.

The challenge

While operating in the highly scrutinized space of plastics, KP understands that to demonstrate leadership on sustainability, it is critical to engage across a range of material issues. Increasingly, the interconnectivity of sustainability topics is becoming clearer, and climate-related issues often act as a connection that ties many of these issues together. The ability to talk about climate issues in an informed way, with a quantitative viewpoint, is essential to ensure the appropriate decisions are made for the business.

For example, it is not yet widely understood that plastics often have a much lower carbon footprint than other common packaging materials seen on the market, and as climate impact is an important determinant of whether a material is future-proof, it is a critical input for the business, its customers and final consumers.

Climate disclosures not only demonstrate leadership but are critical in the current regulatory environment. Despite not yet being mandatory in the EU where kp are headquartered, regulations will come into force in 2024. Therefore, as well as demonstrating a commitment to transparency which is essential in the space within which kp operates, they are also prepared for a future that involves mandatory TCFD-aligned reporting, by using the TCFD framework to inform the development of their global climate strategy and understand potential risks.

As a privately owned company, kp is seeing an increase in reporting requirements on climate risk from capital markets and ESG ratings. While this is also the trend for listed companies, this appears to be increasingly the case with private versus public equities assets due to their longer ownership duration, beyond kp’s specific case.

Sust Global's solution

Historically, quantifying climate risk has been a big challenge. The data has either been incomplete, inaccurate, difficult to understand, or all three. By providing a standardized and comprehensive view of hazards based on the latest climate models and machine learning techniques, Sust Global provides a new level of climate risk intelligence which enables greater precision and transparency in reporting. It has allowed kp to skip through the often cumbersome process of understanding and assessing data sources and working through the challenge of variable data quality across datasets. As a result, the kp team is able to focus quickly on the outcomes of the climate hazards and analyzing business risks and mitigation strategies.

This climate intelligence quantifies risk across six acute and chronic climate hazards1, across 3 key climate scenarios2, and multiple time periods. In this case, we ran an analysis with a focus on predicted risk over a period of 15 years to align with kp’s strategy framework. The assessment was conducted across all of kp’s operational sites globally, scattered across five continents and eighteen countries, as well as key supply chain locations across the world.

Through the analysis and Sust’s technology, it was possible to turn this climate intelligence into localized business intelligence, thereby facilitating strategic conversations between the sustainability, finance and enterprise risk teams about impacts and mitigation strategies. For example, the kp team differentiated between acute and chronic risks and devised appropriate risk exposure calculations for each. In addition, the clear understanding of which site was exposed to which climate hazard made it clear what mitigating activities could be recommended, and at which general timeline. Investments such as heat proofing for factories, or mitigating activities for water stress, can be discussed tangibly and are currently under consideration, in addition to an understanding of the possible value-at-risk from acute hazards such as floods or cyclones.

In the future, since Sust Global’s data is TCFD-aligned, it enables kp to prepare a compliant climate disclosure with ease. From a strategic perspective, it could be used to support and inform decisions on an assortment of business activities where local climate concerns need to be assessed, such as for site-level risk assessments, or in assessing potential future site locations. Together with the risk function, these issues are now integrated into the broader enterprise risk management framework.

kp recognizes that climate risks are systemic, and sees an opportunity in using Sust’s data to engage and collaborate with other businesses in regions where risks have been identified, to generate collective action towards solutions. Yui Kamikawa, VP Sustainability at kp says: “Sust Global has been at the forefront of improving the science behind climate risks and making data accessible. It delivered clear outcomes and has enabled us to proceed with confidence, allowing kp to have deeper strategic conversations internally on risk mitigation.”

Footnotes

1. Floods, wildfire, tropical cyclones, water scarcity, heatwaves, and rising sea levels.

2. Strong Mitigation (SSP1-RCP2.6), Middle of the Road (SSP2-RCP4.5) and High Emissions (SSP5-RCP8.5).

If you would like to learn more about how Sust Global can help your organization assess physical climate risk, get in touch by completing the form below.