Tackling physical climate risk at global food firms

As part of our stewardship support to Brunel Pension Partnership, Chronos helped coordinate an engagement programme on physical climate risks with 20 large consumer staples companies including the likes of Nestlé, Danone and Heineken.

 From increasing pests to decreasing soil quality, floods to droughts - a changing climate poses very real physical risks to these companies. In turn this creates financial risks from supply chain disruption to direct asset damage and higher insurance costs.

 Our work has seen us co-design a programme with Brunel – so it can engage with its target companies to help them recognise and address these risks. We also helped Brunel to liaise with its client investors to build their capacity in effective stewardship by enabling them to engage directly with the companies as part of the programme and to educate them on these issues.

 The project included research, company selection and dialogues, and leading the creation of a methodology to assess companies on their approach - based on literature from TCFD, IIGCC, and UNEP.

 We have reported some early findings from the engagement on our website, and the analysis has provided a series of investment-relevant insights into the strengths and weaknesses of the engaged companies' approaches. For example, there is a clear differentiation between companies in relation to their approaches to risk assessment and management, and in relation to the manner in which they engage with their supply chains.