Management of environmental risks

We regularly make a comprehensive analysis of environmental sustainability factors, to further identify, assess, and manage related dependencies, impacts, risks, and opportunities for Elisa. The purpose of risk assessment is to identify and analyse company and asset level issues that could affect the achievement of specified targets and to identify measures to reduce those risks. 

Process for identifying and assessing environmental sustainability related risks

We describe Elisa’s process for identifying and assessing climate and nature related dependencies, impacts, risks and opportunities, as recommended in TCFD & TNFD- Risk & impact management, A. 

The annual environmental sustainability related risks and opportunity review is conducted by the corporate-level Environment & Energy Working Group and involves various representatives of key functions throughout the organisation. This includes desktop analysis, workshops, an adapted Delphi type of panel with top experts in environmental sustainability, and an open special interest group of Elisa employees. 

From identified certainties in this work, we derive driving factors through systems thinking. Transition and physical climate risk scenarios are selected by utilising various information sources from for example the EU, Cicero, IPPC, TFCD, and TNFD. Lenses such as market risks and technology shifts, reputation risks, policy and legal risks, and physical risks, help us to identify surrounding key uncertainties to enhance the scenarios. Materiality surveys help us gauge expectations from external stakeholders. 

The results of the assessments are approved by the Corporate Responsibility Managerial Board. Major environmental sustainability related risks are brought to the Corporate Executive Board as part of enterprise risk reviews. 

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Process for managing environmental sustainability related risks

We describe Elisa’s processes for managing climate and increasingly also nature related dependencies, impacts, risks, and opportunities, as recommended in TCFD& TNFD- Risk & impact management, B. 

As an example, in our climate risk assessment, we recognise flooding risks from high precipitation. This is a risk to those data and tele centres that are located below sea level. Extreme weather conditions, such as extreme precipitation, increase in the future. Elisa takes insurance to cover flooding risks for our telefacilities. 

To ensure the availability of renewable energy at a reasonable price, Elisa will utilise also power purchase agreements. Utilisation of solar power at base station sites and data centres is another opportunity example. 

Elisa is continuously looking for ways to improve risk management and actively tries to learn from external best practices. It is crucial to engage internal key stakeholders in climate risk management. 

Energy and emission targets, progress status and necessary actions are reviewed quarterly. The management process, where the scope is operational risk management, includes assessment, treatment, monitoring and review of operational risks. The goal is to manage the risk level via acceptance, mitigation or avoidance of risks. 

Not all climate risks will be impactful in the short term. They can nevertheless cause significant risks in the long term, and therefore it is important to acknowledge the effect of such risks even though they would not lead to immediate action. Prioritisation of mitigation actions related to network and data centre projects is mainly based on return on investment. If there are actions that have a longer payback time, but are otherwise significant, they can be assessed separately. 

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Integration into Elisa’s overall risk management

We describe how processes for identifying, assessing, and managing climate-related and increasingly also nature-related risks are integrated into Elisa’s overall risk management, as recommended in TCFD& TNFD - Risk & impact management, C. 

Elisa’s processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management, where we classify risks into strategic, operational, insurable, and financial risks. The key risks associated with climate change are mostly related to energy efficiency, both in terms of energy availability and price, and in relation to malfunction of the telecom operations and services such as networks. 

Climate risk assessment is part of our enterprise operational risk management, and thus also major climate change risks will be managed by the Corporate Executive Board as part of the enterprise risk review. Within the strategy process, climate change risks are prioritised by their expected substantial financial impact, which is evaluated based on the likelihood and economic cost of the risks. The economic cost is the sum of reinvestments, restoration costs and loss of revenue, sanctions, and such, on a best-effort basis. If there are specific reputation risks that are assessed to be high, but which cannot be monetised, the risk item is discussed separately. 

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Nature-related dependencies in value creation by Elisa

Elisa builds an approach together with its supply chain to locate the sources of inputs used to create value that may generate nature-related dependencies, impacts, risks and opportunities, as recommended in TNFD - Risk & impact management, D. 

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Stakeholder engagement for nature-related risk management

We increasingly engage stakeholders, especially in Elisa’s supply chain, in assessment  to nature-related dependencies, impacts, risks and opportunities., as recommended in TNFD - Risk & impact management, E. 

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see also our metrics and targets