Climate-Related Risks and Opportunities

Close-up of the underside of large tanks within manufacturing plant

We take a systemic approach to managing climate risks, and look for opportunities to support the transition to a low-carbon future throughout our operations.

Addressing the transition to a low-carbon economy

The global transition to a low-carbon economy presents risks and opportunities for PPG. Transition risks and opportunities include those related to technology, market changes, reputational impacts, as well as regulations and policy changes. In 2023, we advanced our approach to managing transition risk by validating our scope 1, 2 and 3 greenhouse gas (GHG) emissions targets with the Science Based Targets initiative (SBTi). We're committed to reducing our GHG emissions in line with the goals of the Paris Agreement and have aligned our scope 1 and 2 greenhouse gas emissions approach to the reductions necessary to limit global warming to 1.5 degrees C above pre-industrial levels, and aligned our scope 3 approach to a well below 2 degrees C future. Learn more about our science-based targets in the energy and emissions section.

Managing physical risk at PPG facilities

PPG has a rigorous approach to managing physical climate risk across our facilities. We proactively undertake climate change scenario analysis, climate risk modeling and strategic planning based on guidance from the Task Force on Climate-related Financial Disclosures (TCFD). In 2023, we continued to expand our understanding of the physical climate risks that threaten to impact in our operations. Guided by the outcomes of our most recent climate risk assessment, we are implementing infrastructure improvements to mitigate physical risks at those sites that are most threatened by climate change. Learn more about PPG's climate risk management activities on our website.

Meeting market opportunities

PPG customers and users of our products are increasingly aware of the climate impacts associated with their purchases. We have seen growth in the demand for low impact products across our businesses – from homeowners who want low-volatile organic compound (VOC) and water-based paints to supporting automakers at the forefront of the transition to electric vehicles. Throughout the year, we continued to foster partnerships with our customers and work together to develop new, more sustainably advantaged products.

We also have a clear process that allows the sustainability team to work alongside PPG's businesses to identify market opportunities related to climate change impacts. Learn more in our research partnerships and sustainably advantaged products sections.

Tracking climate-related regulations around the world

In 2023, countries where we operate continued to advance climate-related laws and regulations. We have been tracking these developments through our corporate risk management process, including those regulations related to the EU Green Deal. We will continue to monitor emerging legislation that could impact our activities in the future.

Understanding nature-related risks and opportunities

According to the World Economic Forum's Global Risk Report 2024, biodiversity loss and ecosystem collapse are some of the most severe global risks facing humanity over the next ten years. As we innovate new sustainably advantaged products, we see opportunities to meet this moment by developing biobased and nature-positive products and services.

In 2023, our sustainability team worked with an external consultant to conduct a nature-related screening exercise. The exercise aimed to develop an integrated understanding of the many ways that we depend on and impact natural systems, identify any of our activities that have higher risk of impacting natural systems, and to review our management of nature-related impacts.

PPG relies on natural capital across every aspect of our global business. We transform raw materials into high performing paints and coatings, and rely on a range of ecosystem services for everything from access to clean water to flood mitigation around our facilities. We already have an advanced management approach for many of our impacts on nature.

We have a sophisticated understanding of the chemicals we use, and take responsibility for minimizing the environmental impacts from our products. As discussed elsewhere in this document, we track and report on a range of environmental metrics including water use, waste generation and management, energy use and greenhouse gas emissions. The nature-related screen only helps us further develop our approach to managing nature-related risks, impacts and opportunities.

We will continue to advance our understanding of nature-related risks and opportunities over time and will evaluate the evolving work of standard setters to provide guidance going forward.

For more information about how we approach climate-related risks and opportunities, see below.

To learn more about how PPG is addressing climate change, see our Task Force on Climate-related Financial Disclosure (TCFD) index.

Our approach to climate-related risks and opportunities

To expand our understanding of likely impacts and refine our response to climate change, PPG proactively undertakes climate scenario analysis, risk assessment and planning activities. These activities reflect guidance from the Task Force on Climate-related Financial Disclosures (TCFD).

We conduct climate scenario analysis regularly to consider the resilience of our strategy against a range of possible future scenarios. Climate scenario analysis is a well-established method for developing and testing strategic plans. Our climate scenario analysis includes input from more than 700 participants representing a wide range of business units and functions across PPG. We have a range of possible climate scenarios based on well-established, publicly available resources including:

International Energy Agency Sustainable Development Scenario
Principles for Responsible Investment Inevitable Policy Response (Forecast Policy Scenario)
Intergovernmental Panel on Climate Change RCP 8.5
Intergovernmental Panel on Climate Change RCP 6.0

Graphic showing PPG's approach to climate related risks and opportunities

In addition to our scenario analysis work, we conduct risk assessments to understand our exposure to physical impacts of climate change. Our physical climate risk assessment starts with a high-level, qualitative perspective on climate change stressors with potential to affect PPG’s global portfolio of facilities. We evaluate sites across our portfolio to understand their exposure to these stressors and assign relative risk scores based on site-specific data. Working with a third party, we use global climate models to assess the relative risk of each facility against six climate change stressors: drought, flooding potential, extreme heat, extreme seasonal precipitation, sea level rise and high wind speeds. PPG personnel can explore the outcomes of this analysis through an interactive dashboard, which can be filtered by type of risk, business unit, region, country and type of facility.

Sites with high relative risk scores and those that are most important to our continued operations are included in a more thorough risk assessment. This assessment includes more refined climate modeling and detailed site information, such as site plans and information on critical infrastructure. Results of the climate risk assessment are reviewed with regional and global operations management teams.

We have formal processes in place throughout PPG to ensure we identify and capture climate-related opportunities. For example, we hold regular structured meetings with our customers to understand how PPG can help them meet their environmental objectives – through our existing products and through research and development to address unmet customer needs. Each of PPG's businesses has a dedicated sustainability subject matter expert to ensure that sustainability considerations are integrated into customer engagement across our product lines. This process helps us identify new markets for our existing products, and ensures that we are developing the right technologies to meet our customers' needs.

Managing risks and opportunities in our operations

We regularly update our emergency and crisis management processes to account for climate-related risks. Through these processes, we coordinate the efforts of our local emergency management teams at each location with our regional and global crisis management leadership. Global, regional and local plans consider the risk of natural disaster, infectious disease, supply chain interruptions, employee safety, asset protection, customer impacts and other business continuity requirements.

Each year, the local emergency management team at our facilities around the world must review and update its emergency response plan to reflect current conditions and changes in risk. Emergency preparedness and response is a key element of PPG's environmental health and safety (EHS) Management System. This includes assuring employees are properly trained and the equipment needed to respond to emergencies is available. Each site also performs an emergency response exercise, and our global leadership monitors conformance with these requirements through an internal corporate auditing process. Our regional and global crisis management teams conduct similar crisis response exercises annually.

Transition risks arise from action taken to transition the economy away from fossil fuels through policy, technology change and shifts in market or consumer preferences. These risks also present opportunities for companies focused on supporting the low-carbon transition through enhanced resource efficiency. We focus on resource efficiency through activities to reduce our environmental impact and our emissions reduction targets which have been validated by the Science Based Targets initiative.

Managing risks and opportunities in our value chain

We're also focused on opportunities to support decarbonization along our value chain. We pursue supplier management strategies that help us make more sustainable choices in what we buy and from whom. We work with EcoVadis to evaluate and improve our suppliers' environmental performance, recognizing that efficiency improvements throughout our value chain represent opportunities for saving costs and reducing our environmental impacts. PPG has also analyzed tier one suppliers' carbon emission contribution and reduction potential of top raw materials which contribute to scope 3 emissions. This analysis provides insights on potential scope 3 reductions and also sets the basis for further analysis on upstream value chain transitional risks related to shifting to a low carbon economy.

Our products and processes can help consumers live more sustainably and help industries reduce their impact on the planet. We identify products in our research and development pipeline that are sustainably advantaged, and are constantly working to increase the percentage of our sales that come from sustainable solutions.

Creating sustainably advantaged products and supporting more responsible processes along our supply chain are just a couple of the tools that we use to combat climate change. Industry-wide change and legislative support are important magnifiers of these efforts. Through our Government Affairs department and membership with trade associations and coalitions, we engage directly and indirectly on an ongoing basis with policymakers at the local, state and national levels on issues related to climate change. Two key focus areas are energy efficiency and clean energy generation. We support an "all-of-the-above" approach to energy generation, which includes clean energy generation methods such as wind and solar. We believe that clean energy generation must occur in a measured way, without significant price fluctuations and without harming our production, suppliers and business customers.

We are constantly exploring ways to better support the growing industries that will aid the transition away from fossil fuels. As a producer of advanced coatings that go into clean energy generation, we closely follow the advanced energy manufacturing industry. We frequently support the advocacy efforts of wind, solar and other clean energy stakeholders. We also work with alternative energy providers to source more renewable electricity for our operations.