Risks & Opportunities













& Cybersecurity

Ethical Supply

Product Stewardship

Responsible Governance

Sustainability Governance

& Environment

Ethical Supply

Sustainable Governance

Sustainable Sourcing
& Recycling Services

Sustainable Sourcing
& Recycling Services


Product Quality
& Production Capacity

Sustainability Governance


Product Quality
& Production Capacity

Product Stewardship

& Cybersecurity

Employee Engagement

Employee Health,
Safety & Wellbeing

Sustainability Governance

& Environment


Sustainability Governance



Sustainable and ethical supply

Risk description

In the short term, potential disruption in supply chains due to factors including COVID-19 restrictions, changes in trade regulation or geopolitical events and subsequent delays at borders and ports, container transportation shortage and high energy prices remains a real risk. A further source of stress in the supply relates to stricter application of regulations on transboundary movements of waste and/or bans by carriers, ports or countries to accept waste or dangerous goods. Regarding the supply of metals, securing adequate volumes of raw materials is essential in the ongoing viability of our product and service offering and in achieving our growth objectives. Responsible sourcing is a key priority and competitive edge for Umicore: when sourcing materials or through indirect procurement, we check suppliers and conduct due diligence based on a risk assessment to ensure that no harm is inflicted on people (e.g., Human Rights violations), the environment or society. More details about what we expect from our suppliers can be found in Society. Insufficient availability of raw materials such as palladium, rhodium or battery nickel units, combined with a lack of alternatives, can impact metal prices as described in Metal price.

In the medium term, price volatility and limited availability of supply remain a concern, in particular for battery materials for which demand is expected to soar for certain platinum group metals, the use of which is currently closely linked to internal combustion engine technology. The uncertain grade mix for battery materials may lead to inadequate supplies. Other materials such as germanium face long-term supply challenges due to changing market conditions, where there is a trend for suppliers to move downstream. With regard to sustainability and the impact of Umicore’s activities on society, it is crucial we further deploy the Umicore Let’s go for Zero strategy, with a supply chain that is fully certified against environment, social and governance criteria and decarbonization targets for scopes 1, 2 and 3.

In the long term, regarding supply, Umicore requires certain metals or metal-containing raw materials to manufacture its products and feed its recycling activities. Some of these raw materials are comparatively scarce and require very specific sourcing strategies. Obtaining adequate supplies of these materials is important for the ongoing success and growth of our business.

Risk profile

Regarding battery materials in particular, demand is expected to increase massively in the coming years and decades, as is competition for the sourcing of the required materials. Regarding certain precious metals and platinum group metals in particular, physical supply is currently tight and sensitive to any supply or demand disruption in the short term, while sensitive to the pace of electrification and alternative drive train technologies such as fuel cells in the longer term.

The impact of COVID-19 and measures taken to contain contagion are expected to continue having an impact on the availability of raw materials and in general on the supply chain, but that risk is expected to decrease and stabilize through 2023. Conversely, geopolitical risks are increasing.

Existing and upcoming laws at national and EU level on due diligence and sustainable product policy have increased awareness about the topics of responsible sourcing and sustainable value chains, in particular for designated conflict minerals (tin, tantalum, tungsten and gold) and more recently also for battery materials (cobalt, nickel, lithium). Requirements for robust due diligence management systems, compliance and reporting will only increase in the coming years for the entire supply chain, both for impact on Human Rights, and for environmental, social and governance (ESG) criteria. Increased standards are also an opportunity for Umicore because of our long-standing experience in due diligence and responsible sourcing and because they will create a more level playing field for the industry.

Risk mitigation

Umicore has implemented policies and measures covering Human Rights, the right for workers to organize, collective bargaining, equal opportunities and non-discrimination, banning of child labor, banning of forced labor, consistent with International Labour Organisation (ILO) standards, as supported through a Global Framework Agreement on Sustainable Development with IndustriALL Global Union.

Umicore’s policies and charters such as the Code of Conduct, Human Rights Policy and the Umicore Global Sustainable Sourcing Policy (UGSSP) illustrate our long-standing and growing experience in ensuring we only buy from suppliers who can guarantee sustainable and ethical sourcing.

In addition to these general policies, Umicore also has specific risk-based policies in force, designed to safeguard the environment and to protect Human Rights in our supply chain: Responsible global supply chain of minerals from conflict-affected and high-risk areas and Sustainable Procurement Framework for Cobalt, which are aligned with the OECD ‘Due Diligence Guidance for Responsible Supply Chains from Conflict-Affected and High-Risk Areas’ for which Umicore receives annual third-party validation.

Both policies include a robust due diligence system, which includes background screening of suppliers, a risk assessment based on country, material and supplier risk and risk mitigation actions, in combination with onsite visits and third-party audits for critical suppliers. Under the due diligence system of the Cobalt Framework, the identification of ‘red flags’ or ‘orange flags’ triggers engagement with the supplier on the related issue and an internal decision-making process involving senior management in appropriate follow-up. Umicore remains the first cathode material producer to offer certified materials from a clean and ethical origin.

Both policies are currently in the final stages of an extensive review, which will include a broadened scope for environmental, social and governance (ESG) criteria and a strengthened risk assessment and risk mitigation approach.

In addition to our continued engagement in sustainable cobalt sourcing, in 2021 Umicore also implemented due diligence in the supply of the other raw materials for batteries, e.g. nickel and lithium. The approach is directly inspired by Umicore’s experience with cobalt and follows the basic steps of the Sustainable Procurement Framework for Cobalt.

Furthermore, Umicore continues to ensure that its production operations are certified as conflict-free and receives site and metal-specific responsible sourcing certifications from the LBMA, RJC and RMI. For more information, see Society.

Regarding managing risks of critical materials and supply disruption, mitigation actions can vary depending on the materials and the position of the business unit in the market. Beyond responsible sourcing, we ensure that materials can be supplied from several reliable suppliers, we closely monitor developments in other regions and investigate other projects to diversify sourcing and we seek out secondary raw material sources and negotiate long-term contracts.

Metal price

Risk description

Umicore’s main risk in the short term is related to the volatility of metal prices. Earnings are exposed to risks relating to the prices of the metals which are processed or recycled. These risks relate mainly to the impact that metal prices have on the surplus metals recovered from materials supplied for recycling, and concern platinum, palladium, rhodium, gold, silver and a wide range of base and specialty metals.

Umicore also faces transactional price risks on metals. The majority of its metal-based transactions use global metal market references. If the underlying metal price were constant, the price Umicore pays for the metal contained in the raw materials purchased would be transferred to the customer as part of the price charged for the product. However, because of the lapse of time between the conversion of purchased raw materials into products and the sale of products, the volatility in the reference metal price creates differences between the price paid for the contained metal and the price received. Accordingly, there is a transactional exposure to any fluctuation in price between the time raw materials are purchased (when the metal is “priced in”) and the time the products are sold (when the metal is “priced out”). For more information on the structural risk and on the transactional and inventory risk related to the metal prices, see Statements, note F3.

Materials produced by Umicore contain precious or scarce metals which are partly sourced from in-house recycling operations and, for the balance, procured from primary metal producers. Umicore’s ability to procure the required quantity of such metals is key in determining our ability to produce the materials which have been ordered by our customers. The current crisis in Ukraine could have an influence on Umicore’s supply of certain metals such as palladium and nickel in view of Russia’s position as major global producer. Potential sanctions or other trade disruptions could in particular lead to delay or cessation of supply which could impact global car production and Umicore’s Catalysis production levels and earnings. Such events would also fuel metal price volatility.

The availability of metals such as nickel, lithium and cobalt - as described in Sustainable and Ethical Supply - is the main long-term risk.

Due to the liquidity of the metal markets for cobalt, rhodium and palladium, Umicore’s impact on the metal price is limited.

Risk profile

Prices for precious metals strengthened further in 2021, reaching historically high levels for precious metals and PGMs. The price of rhodium in particular increased significantly in the first half of the year, in a context of tight supply and high demand from the automotive industry. It then decreased back to 2020 levels following the semiconductor supply shortage, which impacted the automotive and many other industries.

The prices of cobalt, nickel and lithium increased over the course of the year 2021. These increases are mainly driven by the growing demand for EV batteries.

As described in the Sustainable and ethical supply risk, metal scarcity is increasing because of tight supply and demand and other factors such as geopolitical tensions or trade regulations.

Risk mitigation

For some metals quoted on futures markets, Umicore hedges a proportion of its forward metal exposure to cover part of the future price risks.

Over the course of 2021, Umicore entered additional forward contracts securing a substantial portion of its structural price exposure for certain precious metals in 2022, 2023 and 2024, thereby increasing earnings predictability. For 2022, based on the respective currently expected exposures, the following lock-ins have been secured: close to two thirds for palladium, more than half for gold, somewhat less than half for silver and close to one third for platinum and rhodium. For 2023, the expected lock-in ratios are close to a third for gold, silver and palladium and a minor portion for platinum and rhodium. For 2024, only a minor portion has been locked in for the expected gold, silver and palladium exposures. For rhodium in particular, Umicore managed to enter forward contracts locking in a minority of expected exposures, despite the absence of a liquid futures market.

The Group’s policy is to hedge the transactional risk to the maximum possible extent, primarily through forward contracts. For a selection of metals, either no derivatives markets exist, or the existing market does not offer the required liquidity to enter forward contracts. This is increasingly the case for metals gaining importance, such as cobalt and lithium. To mitigate the price risk on its transactions in these metals, Umicore maximizes the use of back-to-back hedging, matching the price reference of Purchases and sales.

Umicore is continuously increasing production of precious and scarce metals from its recycling capabilities, thereby securing a significant proportion of its metals needs. In addition, the group maintains close commercial relationships with leading primary metals producers from which it procures metals through annual or evergreen contracts.


Risk description

The main industries served by Umicore are automotive (clean mobility materials, recycling), consumer electronics (rechargeable battery materials, recycling, coating and electroplating solutions) and non-ferrous metal mining and refining industries (recycling activities). Umicore is sensitive to any major growth or global reduction in activity levels or market disruptions in these industries. The changes in the automotive industry create the main risks for Umicore today.

In the short term, Umicore has limited visibility on automotive demand due to the ongoing semiconductor shortage. The unclear pace of electrification also poses uncertainty in terms of demand of our products. Electrification will reduce the demand for automotive catalysts and boost the demand for rechargeable battery materials. Increased demand for rechargeable battery materials requires more production lines and sites, entailing challenges in hiring and training people, acquiring the right qualifications against the right timelines and available CAPEX. This lack of visibility of demand for rechargeable battery materials is a risk in both the short and medium term. Geopolitical conditions can be a factor in market uncertainty in the short and medium terms.

The pace of electrification also has an influence on Umicore’s catalysis and recycling activities. Since catalysts are produced with platinum group metals (PGMs), a reduced demand for catalysts has an impact on PGM prices and availability both for Umicore and society. To ensure efficient production of rechargeable battery materials, it is imperative that we have a consistent supply of metals as described in Sustainable and ethical supply.

In the long term, the transition to electrification has a positive impact on the production of rechargeable battery materials and a negative impact on the production of automotive catalysts. This changes the competitive environment. Through its current customer portfolio, Umicore is exposed to mid-nickel platforms which are being replaced, much faster than initially anticipated, by high-nickel platforms. Accordingly, customers are scaling back demand projections for mid-nickel cathode material applications; also in the first half of 2021, Umicore’s NMC (Nickel Manganese Cobalt) volumes reflected an unfavorable customer and platform mix in China.

Umicore’s customers – car manufacturers – concentrate the number of platforms for automotive catalysts. The market for rechargeable battery materials is becoming more crowded as new players enter. At the same time, more and more OEMs (original equipment manufacturers) are starting to produce rechargeable battery materials – in addition to being Umicore’s customer, they are becoming Umicore’s competitor.

This has an impact on Umicore, but with its positioning, Umicore is also influencing the changing market structure for rechargeable battery materials for the automotive industry. Umicore is uniquely positioned to give the market a closed-loop solution for cathode materials, as we are both producing cathode materials and recycling batteries. Furthermore, Umicore’s recycling services are positively impacting society by enabling a shift towards an industrial future with low impact.

Risk profile

As confirmed in the qualitative scenario analysis of our climate related risks and opportunities, the electrification of mobility is increasing Umicore’s risk profile for the catalysis business and at the same time is increasing Umicore’s opportunity profile for the rechargeable battery materials business.

Risk mitigation

Notwithstanding the limited visibility on automotive demand caused by the global semiconductor shortage, Catalysis is expected to continue to benefit from its strong market position in gasoline catalyst applications in Europe and China, which will remain, even in fast electrification scenarios. Umicore works continuously to maintain its excellent cost position with a globally optimized production footprint and a low break-even point, which resulted in market share gains in 2021. We have the right product and technology portfolio with strong demand from our customers, also for the next waves of emission legislation such as EURO 7. These strengths will feed the value creation potential over the next decade of Umicore’s Automotive Catalysts activities in a context of declining internal combustion engine volumes.

In Energy & Surface Technologies (E&ST), Umicore is actively diversifying its customer and platform exposure and is currently in advanced qualifications with its high-nickel cathode material technology with various cell and car customers. Upon successful qualification, production for these applications is expected to ramp up to significant volumes during the second half of 2023. Increased intimacy with car OEMs and qualifications for the right platforms are ever more important, which is why we are solidifying our relationships with customers to improve our supplier status. The planned JV with Volkswagen will secure access to a significant part of the European EV market. Umicore’s agility in our operations and supply chain equip us to adapt quickly to changes in demand.

The market risk is intimately associated with the metal price risk. As described in the section Metal price above, we hedge a proportion of our forward metal exposure to cover part of the future price risks.

The complementarity of our activities has proven to be a true competitive edge. In E&ST and Catalysis we serve the automotive market by enabling electrification on a mass scale and by offering cutting-edge technologies for clean combustion engines. Through our Recycling activities, we close our own and our customers’ materials loop and offer a unique sustainable and circular approach that will be ever more important in a world of raw materials scarcity.

Umicore will further strengthen its market position with our ambition and plan to capture growth from the next wave of sustainability-driven markets, such as fuel-cell catalysts and battery recycling.

For more information, see Financial and Operations.

5 Technology and substitution

Risk description

Umicore is a materials technology group with a strong focus on the development of innovative materials and processes. The choice and development of these technologies for existing and new markets represents the single biggest opportunity and risk for Umicore.

In the short term, the main technology risk is linked to whether and when the European Union will adopt the new EURO 7 emissions standard for gasoline and diesel light duty and heavy-duty vehicles, as this would have important consequences for Umicore’s technologies.

The substitution of internal combustion engines by electrical vehicles and fuel cell cars presents an opportunity for Umicore in the short and medium term. Apart from the opportunity for Umicore’s battery materials, Umicore can leverage its catalysis expertise in hydrogen applications. Umicore’s risk/opportunity depends on how well the development of our technologies will correspond to such new demands.

Achieving the best cost-performance balance for materials is a priority for Umicore and its customers. There is always a risk that customers will seek alternative materials for their products, should those of Umicore not provide this optimum balance. The risk is especially present in businesses producing materials containing expensive metals (especially those with historically volatile pricing characteristics).

In achieving an optimal cost-benefit balance, the cost efficiency of our production processes plays a key role. Hence, there is a risk that we could fall behind the competition in our operational excellence and digitalization.

It is crucial for Umicore to consistently develop winning technologies, such as in battery recycling and for cathode materials. For example, lithium iron phosphate (LFP) battery chemistry is a mainstream technology in China. This chemistry is not produced by Umicore and there is a risk that LFP could become widely adopted elsewhere. A switch to solid state batteries – as a substitution for lithium-ion batteries - is an opportunity in the long term as this battery technology calls for more sophisticated materials solutions that may require Umicore’s expertise.

Umicore’s activities have a lasting positive impact on society. Umicore upskills its workforce by offering learning and development opportunities in areas such as digitalization and technology as described in Innovation. We are continuously improving our technologies to minimize the environmental impact from our activities. Umicore’s R&D in automotive catalysts, batteries and fuel cells contribute to clean mobility and our recycling developments make industry more sustainable.

Risk profile

Given the pace of change in the market, Umicore’s opportunity profile is increasing, but at the same time, the risk profile is also increasing.

Risk mitigation

Timely introduction of key technologies is essential. As described in the Market risk, Umicore closely monitors the market and makes sure a close relationship with its customers is maintained to focus on the right technology trends at the right time. We prioritize key development projects and allocate the necessary resources. We are continuously working on the efficiency and digitalization of our R&D.

As described in the Regulatory and legal context risk, the environmental permit for the smelter on our Hoboken site is a risk for our license to operate. To mitigate this risk, Umicore has leveraged robotic process automation (RPA) to automate the ‘wind barometer’ process which steers which activities on the site can be conducted according to the weather forecast. We are also evaluating whether we can engineer the slags on our Hoboken site towards a cement replacement product.

To support our opportunity in hydrogen technology, Umicore has set up a dedicated ‘Fuel Cells’ business unit and in our New Business Incubator there is a portfolio of projects around hydrogen.

To remain a pioneer in battery recycling we continuously develop and improve our battery recycling technologies taking into account technical, economic and environmental aspects and building on a decade of experience. The newest generation will be introduced in 2022.

For cathode materials, we investigate a range of chemistries and prepare them to be ready for the market. We design products both for performance and for cost-driven segments. In line with the trend to lower cobalt and nickel contents in the cost-driven segment and to mitigate the risk posed by LFP, we are developing our high lithium manganese (HLM) solution.

Umicore patents disruptive technologies. In 2021, Umicore registered 69 new patent families.

For more information, see Innovation.

6 Information security & data protection

Risk description

Umicore’s production plants and services are highly dependent on the availability of IT services. Cybersecurity includes our hardware, software and information protection. Due to cyber incidents, Umicore’s servers or network could be blocked and data breaches could jeopardize the confidentiality of our data. Unavailability of services, disruption of the supply chains or interruption of our production facilities due to cyber-attacks could have a major impact on our customers and our financial results. Any compromise to the confidentiality of intellectual property would negatively impact our competitive advantage. Unauthorized modification of financial data would jeopardize accurate reporting to shareholders. Whether in the short, medium or long term, any cyber incident or data breach would have an immediate impact.

Beyond Umicore’s own operations, we would be impacted if any of our main suppliers were to experience a cyber incident. Cyber incidents can be local or global and if Umicore is attacked, this could have consequences for our customers and as an example the automotive industry could be impacted.

Risk profile

Cyber attacks may be very focused and advanced. The expanding threat landscape and expanding digital footprint is leading to an increase in cyber attacks. The risk profile is increasing because there are more cyber attacks and they are becoming more sophisticated as the attacks occur in multiple layers.

In addition, due to the increased use of a digital work environment (on site and at home), the role of IT services in delivering seamless access to all corporate resources as well as ensuring information security is more important than ever.

In 2021, there was no change in opportunity profile.

Risk mitigation

Umicore protects its data for confidentiality, availability and integrity.

Umicore has put in place in-service training sessions for our employees about phishing and all employees are part of a mobile device management platform to protect Umicore’s applications and data. In 2021, Umicore launched the ‘I stay alert campaign’ on eight topics, including general topics such as confidential information and clean desk for all employees as well as topics such as trade secrets, social engineering and HR security for a specific target group of employees. The materials for these awareness campaigns will remain available and a training package is being developed.

Umicore regularly continues to assess and improve its information security, and the state of cyber resilience of its IT landscape, against evolving threats. A security operation center analyzes the logs of the systems and warns us of any suspicious movement. We have ourselves tested by ethical hackers and scan all our hardware and software to exclude technical vulnerability.

A security roadmap is being implemented which includes projects in preparation for an ISO/IEC 27001:2013 certification. We have passed the internal audit and the external audit has been conducted. When Umicore passes that audit, certification would be granted in the first half of 2022.

Third party expert security assessments are conducted, and both the corporate cyber security team and the corporate security department are being expanded. Umicore consistently increases its investments in security-related IT systems and applications such as backup processes, virus and access protection, authentication and encryption tools. Security-related IT controls are being extended and are tested as part of Umicore’s external audit process.

7 Talent attraction and retention

Risk description

The attraction and retention of skilled people are important factors in enabling Umicore to fulfil its strategic ambitions and to build further expertise, knowledge and capabilities in the business. This represents Umicore’s most important risk, because being unable to do so would compromise our ability to deliver on our goals in the short, medium and long term.

Umicore’s main short term risk remains linked to keeping our employees healthy during the coronavirus pandemic. On-site COVID-19 infections were kept to a minimum and no production site was closed in 2021. We will also have to recruit new employees due to a big wave of retirements at some production sites in the coming years.

In the medium term, Umicore is faced with the challenge of ensuring a safe working environment in an industrial operation combined with a deep need to foster and operationalize a new safety culture. Employee safety impacts the employees, their families and our operations. Employee wellbeing is key to both employee retention and recruitment.

Talent management poses a medium to long term risk. In a world of growing digitalization, there is a need to change the mindsets. New competencies need to be acquired as quickly and efficiently as possible and if we cannot offer these, it may be more difficult to engage and retain our employees. Umicore aspires to have an agile workforce, so we can adapt and quickly respond to change – key elements of maintaining a competitive advantage.

Umicore’s efforts to strengthen diversity and inclusion are an opportunity both for the Group and to increase our impact on society. Umicore goes beyond gender diversity and creates awareness with our focus on diversity of thought. As a growing company, we are looking to recruit more employees and thus create more employment around our production sites.

Risk profile

The risk profile of talent attraction and retention remains unchanged. The war for talent is still very real. At the same time, the short-term risk linked to the coronavirus pandemic has decreased, because there is a slowdown in people leaving the organization looking for stability due to the pandemic.

As Umicore is growing, our opportunity profile is increasing. Recruiting more people generates more opportunities to boost diversity in the company’s workforce.

Risk mitigation

Employer branding campaigns, pro-active sourcing and reinforced recruitment teams are some of the initiatives we take to mitigate our main risk of talent attraction and retention. We have reinforced talent management structures, both globally and regionally, to provide sufficient internal mobility opportunities for managers and retention actions for operators. Employee wellbeing is a strategic priority.

In response to the COVID-19 pandemic, all prevention measures were taken. Employees respected distances, CO2 monitoring devices were installed in workplaces (meeting rooms, offices, control rooms etc.), ventilation systems were checked and where needed improved, working from home was possible and masks were recommended, including when this was not mandatory. The situation is monitored globally by a dedicated CEO-led task force – with a focus on protecting employees’ health.

Following the Umicore’s Group EHS Guidance Note, units and sites identify occupationally linked health and safety hazards and risks. Workplace injuries and occupationally related health symptoms are thoroughly investigated, reported and discussed at the site’s safety committee. This information contributes to the set-up, maintenance and, where needed, improvement of a health and safety management system with the aim of preventing all workplace-related injuries and health symptoms.

A process safety management system is deployed on all sites following strict process risk analysis and risk reduction methods. Regular internal health and safety audits evaluate the quality of the implementation.

We are improving the company culture in our production site in Hoboken, to mitigate our safety risk. Active leadership programs are in place to stimulate engagement on all levels and measures endorsed by the shop floor are implemented. Safety programs focus on behavioral aspects, improvement of equipment and processes, administrative measures and include in-service training.

In the chapter Employees, many initiatives and programs illustrate how Umicore is mitigating the risks linked to talent management and how we are developing our diversity of thought.

8 Climate and environment

Risk description

In the short term, many of the climate and environmental risks are either regulatory or linked to the impact of our operations on the environment. Increasingly stringent regulations on energy use and emissions can induce higher operational costs and our license to operate is predicated on managing the impact of our operations in the communities where we operate. Any incident in a plant can affect emissions in air or water and increase noise, impacting the immediate residential surroundings – which is in fact a risk on any time horizon. There is also an environmental risk linked to the shipment of materials. Many of the materials Umicore processes, such as scrap and residues, are classified as dangerous goods and maritime and air transport are increasingly reluctant to ship this hazardous material. The scarcity of transport could impact Umicore’s operational efficiency. There is also an impact on society, as a leakage of hazardous materials during transport could have negative consequences for the environment and for people’s health.

In the medium term, Umicore experiences the market risk of increasing requirements for carbon footprint of products and processes. Increasing requirements for environmental impacts such as biodiversity and land use could represent a risk and the rising cost of water is a risk in the medium and long term, as well as access to renewable energy, which is both a risk and an opportunity.

The consequences of climate change are the main long-term risk for Umicore.

Umicore has conducted climate-related risk analyses with the support of external providers ERM and PwC. Scenarios were chosen for relevance to Umicore and to represent the entire spectrum of possible future worlds, from Paris-aligned, through business as usual, to strongly increased physical risks.​ Short term is defined as until 2025, medium term until 2030 and long term after 2030.

​In 2021, Umicore conducted a climate-related transition risks scenario analysis of a 1.8°C scenario (RCP2.6, Paris-aligned) and a 3.0°C scenario (RCP4.5), based on the IEA ETP and WEO 2020 reports, for our own operations with a timeframe of 10 and 30 years. Umicore’s climate-related transition risks and opportunities could be market, reputation, policy & legal and technology related. ​

Based on our qualitative scenario analysis, in a 1.8°C scenario, Umicore has a transition risk in the automotive catalysts business as demand for catalysts will be impacted given the foreseen declining demand for cars with internal combustion engines.​ Most other Umicore product lines, e.g. rechargeable battery materials, fuel cells and recycling services, show transition opportunities in both the 1.8°C and 3.0°C scenarios, the degree of which is linked to the pace of the shift towards electric mobility. The impact of these scenarios is described in the Market risk.

For the climate-related physical risk analysis, we chose the 3.0°C scenario (RCP4.5) and the worst-case climate change scenario (RCP8.5) until 2050 in which we identified both chronic and acute physical risks.

For both climate-related physical risk scenarios, climate change causes extreme natural events, chronic deviations in temperatures and precipitation patterns, and rising sea levels. This could impact our sites or supply chain: for example, Flanders, which is an area where Umicore has several production sites, has been declared an area in risk of drought. Umicore’s main physical risks are related to flooding and water availability.

Risk profile

The climate and environmental risks from a regulatory or operational point of view remained the same.

The opportunity profile has increased, because lower carbon footprint products in the clean air, e-mobility and recycling sectors are in high demand from customers. The ongoing transition to a lower carbon economy continues to present Umicore with opportunities to expand and develop processes in ways that can mitigate or address climate change and environmental risks.

Risk mitigation

Umicore plays a key role in the transition to a low-carbon future as our materials tackle global trends for clean air and e-mobility, and our closed loop business model tackles resource stewardship.

Our facility in Hoboken is the world’s largest and most complex precious metals recycling operation, processing over 200 types of raw material and recovering over 20 different metals. We ensure that a high volume of the metals we process come from secondary sources – production scraps, residues and end-of-life materials. We can also recycle customers’ residues and production scrap to help them maximize their material efficiency and then transform the recovered materials into new products. In total we recover 28 metals from our closed loop activities and we continue to adapt our processes to recycle new and more complex end-of-life products. As described in the Regulatory and legal context and in Environment, we are mitigating the risk concerning the environmental permit in Hoboken. Umicore’s recycling activity is the best mitigation to climate change, because recycling metals emits less greenhouse gases than mining metals.

To mitigate the impact of our operations, Umicore keeps to the most stringent environmental standards for air and water and works every year to improve our energy efficiency and environmental footprint despite our growth and increased production. Umicore also manages its historical environmental legacy, ensuring adequate financial provisions are in place, which are reviewed twice a year. For more information, see Environment.

To address the market risk of increasing requirements for the carbon footprint of products and processes, Umicore performs life cycle assessments on selected products and services on a rolling and ongoing basis to sharpen insight on environmental performance, through the right choice of the chemistry, energy mix, and raw materials, including recycled materials. Umicore maps its sites in water stress areas and keeps track of water types and consumption to mitigate our risk with respect to water availability and rising costs of water. Our Procurement & Transportation department is purchasing renewable energy worldwide. These opportunities are increasing in all regions where Umicore operates.

Umicore supports the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and while full alignment with all recommendations will take more than one reporting cycle, we intensified our analysis in the past year. In 2019, we started with an analysis of physical risks and in 2021, we conducted a qualitative transition risk scenario analysis. The results of the TCFD recommended qualitative scenario analysis were discussed with the management board in 2021. Next steps in our TCFD implementation roadmap including quantifying financial impacts from climate risks and integration into our risk management system.​

Umicore’s businesses, strategy and financial planning reflect many climate-related risks and opportunities. Our global footprint and diverse site locations reduce our exposure to physical risks. New sites have been chosen considering proximity to customers, access to skilled workforce, excellent logistics, infrastructure and green energy. The focus of our products and services, our investments in R&D and operational excellence, our policies for collaboration with our suppliers and the objectives in our ‘Let’s go for zero’ strategy are a few examples of these strategic choices. They are increasingly embedded in our ongoing financial planning and decision making through their integration in the BU budgeting process and the development of the ESG dashboard. In 2021, we conducted an upskilling for members of the management board focusing on TCFD reporting and climate scenario analysis. Further analysis is planned and will be repeated or refined on a recurring basis to identify risks based on current scientific findings. ​