Integrated Report
2022

12.13 Risk and hazards associated with climate change

in PLN millions, unless otherwise stated

The KGHM Polska Miedź S.A. Group is a conscious and responsible participant in the energy transition and adaptation to climate changes and the management of climate risk are of key importance to it. The Group continuously evaluates the risk associated with the climate and the impact on its operations under the process of Corporate Risk Management of the KGHM Polska Miedź S.A. Group, which was described in more detail in the Management Board’s report on the activities of KGHM POLSKA MIEDŹ S.A. and of the KGHM POLSKA MIEDŹ S.A. Group in 2022, Section 2.6. Risk Management.

The negative impact of climate change on the activities of the Group is analysed using the classification presented below.

The Group is exposed to physical climate risk, arising from specified events, in particular related to violent and chronic weather phenomena resulting from changes in the climate, such as storms, floods, fires or heat waves, as well as permanent changes in weather patterns, which could impact the operations of the Group, among others, through disruptions in the supply chain, the continuity of the core business and an increase in operating costs directly related to the core business as well as through more difficult working conditions.

The climate risk related to the transition, to which the Group is exposed, arises from the need to adapt the economy to gradual climate change. This risk category comprises questions related to legal requirements, technological progress towards a low-carbon economy and changes in demand and supply for certain products and services, whose production is associated with the climate risk as well as the growing expectations of stakeholders regarding the Group as to the reduction of its impact on the climate. A detailed description of identified, key climate risks associated with the negative impact of climate changes on the activities of the Group, including parameters used in their assessment and actions undertaken by the Group to mitigate their impact, is presented in the Management Board’s report on the activities of KGHM Polska Miedź S.A. and of the KGHM Polska Miedź S.A. Group in 2022, Section 3.3. Approach to climate risk management.

While assessing the impact of identified climate risks on the Group’s activities, in particular the volatile costs of CO2 emission rights, the increase in costs of electricity, costs associated with research and additional expenditures on development of internal energy sources, the following areas were subjected to detailed assessment:

  • adopted periods of economic utility of fixed assets and their residual values,
  • analysis of the existence of indications of the possibility of impairment of property, plant and equipment and intangible assets,
  • assumptions which are a part of the measurement of loans granted,
  • revaluation of the provision for future decommissioning costs of mines and other technological facilities,
  • revaluation of provisions for additional costs of sales, selling costs and administrative expenses,
  • liabilities and liabilities due to guarantees associated with potential fines and environmental penalties.

As a result of the aforementioned work, as at 31 December 2022 no significant impact of climate risk on the aforementioned areas was identified.

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