Adapting strategies to survive climate change

Cement producers are developing contrasting strategies as they seek to discover ways to prosper in response to the complex challenges and uncertainties presented by climate change. On the one hand, there are companies seeking to find technical solutions to decarbonise carbon emissions and continue producing clinker. The risk here is that many of the technical solutions are yet to be discovered, making the decarbonisation route uncertain. Others are seeking to diversify away from pollution, selling 'dirty' assets and replacing them with green ones.

Summit Materials Inc falls into the first camp. This week the company released its first ‘Task force on climate-related financial disclosures' report, in which it seeks to identify the risks and challenges ahead for the building materials company, assuming various climate-related scenarios playing out over the century. The company has a dedicated Enterprise Risk Committee (ERC) to continually identify and evaluate environmental and climate-related risks. This is supported by risk liaisons at operating sites and centres of excellence. Risk management has become part of daily operations with short-term risks based on the company's 2020 baseline, medium-term risks linked with meeting 2030 targets and long-term aligned with 2050 targets. The difficulty is nobody yet knows what climate scenario the industry will be facing. The world could see global warming increase from anywhere between 1.5°C and 5°C this century, with rising pressure on natural resources, drought, wetter climates and rises in sea levels.

Summit Materials has been considering the risks and the impact it could face from the possibility of investing in unsuccessful new technologies, changes in customer behaviour and stigmatisation of the cement sector. Planning and predicting the future is a necessity for cement producers. "Approximately, 25 per cent our 2020 baseline impacts can be addressed by 2030 and that 50-75 per cent of those impacts can be addressed with currently available technologies by 2050," states Summit Materials.

Diversification: the fewer carbon emissions the better

TCC Group Holdings, formerly Taiwan Cement Co, favours the diversification approach. TCC Group Chairman, Nelson An-ping Chang, gave an interview this week to CommonWealth Magazine in which he said the company felt compelled to diversify away from its core business of cement manufacturing and to move into green energy, battery energy storage systems, and waste recycling. You might call it balancing the books.

In his vision, lowering carbon emissions from cement manufacture carries risk that can be mitigated through diversification into future-orientated green technologies. With sufficient production capacity, the challenge now is to pivot to new products, combining old with new. This will require a transition period and will impact everything from product development to the workforce required.

“There are only two types of cement workers said to be left: One is he who is mesmerized by yesterday’s cement industry, still focussing on production volume. The others are those who look towards a promising tomorrow, firmly and confidently continuing their path,” explained Mr An-ping Chang.

A period of opportunity

Times have changed for Taiwan Cement and other cement manufacturers. The focus is now on quality, not quantity. The company’s motto has changed from “the more the better” to the view that “the fewer carbon emissions the better”. This leads to new products and new industrial strategies. It should be an exciting time with new opportunities.