Long-term risks

Long-term risks are existing risks associated with current trends that are anticipated to increase, or risks currently not material, but that could develop into major areas of concern for the company, or for society as a whole. We monitor the development of these risks as part of our risk management process and include them in our overall strategic assessment.

The most significant long-term risks we observe are:

  • Increasing public concern arising from environmental/safety properties of specific ingredients in products leading to legislation banning or restricting the use of products containing them and/or customers deselecting products in key markets
  • Failing to listen to, and engage with, an ever-widening field of stakeholders – in particular customers, investors and regulators – in the area of sustainable development and the systematic changes needed for its achievement. This requires extra attention for:
    • Transparency on the economic, environmental and social impact of our strategy and activities
    • A comprehensive human rights framework following UN guiding principles
    • Concerns over tax avoidance by large corporations
    • A persistently negative perception of the role of global corporations in society, leading to reputational and financial damage
  • Increasing short-termism among investors, which could cause businesses to:
    • De-prioritize investments required for long-term and sustainable growth
    • Miss out on future opportunities
    • Excessively focus on short-term financial results at the expense of long-term value creation and identification of long-term risks
  • Impact on business of climate change and the shift towards a under various scenarios:
    • A carbon price leading to higher cost of raw materials
    • Increase in frequency and severity of extreme weather events, leading to supply chain disruption
    • Restrictions on emissions leading to increased demand for low carbon solutions or higher production costs
    • A global shift to a circular economy with major implications for businesses to be an enabler and deliver circular solutions in collaboration with others
Circular economy

An economic system which is restorative and regenerative by design, and which aims to keep products, components, and materials at their highest utility and value at all times, distinguishing between technical and biological cycles.