Larsen and Toubro – Amruth Chinnappa CT – 2024

Summary

Amruth Chinnappa performed a Climate Scenario Analysis for the Larsen & Toubro Group to assess the impact of Climatic hazards on project sites/locations. He developed a bespoke tool to calculate hazard likelihood and impact.

Goals

The L&T Group is composed of several business units (internally referred to as “IC – Independent Company) and has operations across 50+ countries. Climate Scenario Analysis is a useful method to evaluate the effect of a changing climatic future on the company and its operations and assets. This would equip the company to be better prepared to handle the risks through proper mitigation and/or adaptation plans and sustain stakeholder value creation over the long term. 

Amruth was employed to consult on incorporating the best practices of this analysis and prepare a framework to conduct the analysis in the future.

Solutions

Amruth employed a mix of primary and secondary research complemented by expert interviews to prepare a Climate Scenario Analysis documentation for the group. He did this through a multi-step process:

1. Benchmarking and secondary research to establish the best practices in the domain: Expert interviews were conducted to identify material topics for the company and formulate focal questions.
2. Research on Climate Scenarios and the IPCC scenarios: Amruth identified relevant sources of information and employed methods to streamline the data collection.
3. Discussions were conducted with the in-house risk and insurance teams to build a repository of impacts.
4. He identified a gap in the availability and format of climate information and built a tool to evaluate hazards at any project site in India. This would drastically reduce the time taken to assess the relevant information
5. The Scenario analysis took into consideration physical and transition risks, across key strategic sites for the company.
6. The financial impact of hazards was also incorporated into the tool to accommodate losses from hazards.

Potential Impact

The Scenario analysis and tool would help the company:

• Understand climate impact on project sites/locations
• Account for losses from Climate impacts by adding necessary costs to the project financials
• Allow a cost-benefit analysis on the incorporation of abatement strategies in project costs
• Aid in preparedness of project sites/locations to handle climate impact
• Accommodate in a long-term strategy for capital investments for mitigation and adaptation measures.