Are Your Internal Accounting Processes Ready for the SEC’s Climate Risk Interpretive Guidance?

Sure, there are some business risks that are readily identifiable to conform to the SEC’s Climate Risk Assessment Interpretive Guidance.  Things like:

  • Property damage from storms and sea level changes
  • Increased costs related to new pollution controls and fuels
  • Changes in customer procurement requirements.

But read about the supply chain constraint that the UK energy company E.ON brought forward in a Reuters report:

Lack of investment in the vessels used to build offshore wind farms could hinder Britain’s ambitions to shift to renewable energy, the head of E.ON UK’s Robin Rigg wind project told Reuters at the operations center in Workington, northwest England.

Britain aims to install 32 gigawatts (GW) of offshore wind by 2020, enough to meet a quarter of the country’s electricity needs, and although there has been investment in turbines factories and ports, a lack of vessels could curtail targets.

“The targets are very ambitious and the supply chain isn’t there for it to materialize. It definitely has to grow,” Ian Johnson, Robin Rigg offshore wind farm project manager said. “Aside from turbines, vessels to install equipment are expensive,” said Johnson adding that a lack of predictability over upcoming wind farm projects in the past had caused a squeeze on construction vessels as builders rush to use the small stock already built.

Vessel builders in the past have asked: “When’s the next project going to come along? Where’s the continuity for me in the supply chain?”

Reliance on third parties – over which you have little control – to implement business plans could be an overlooked risk in the context of the Interpretive Guidance.  Further, entering into long-term contracts or guarantees with third parties to ensure infrastructure for deployment create additional financial risks.

Leave a Reply

Your email address will not be published. Required fields are marked *