Helpline/Hotline Communities Portal Shareholder Portal

Climate Change Management

Risks and Opportunities Derived from Climate Change

We understand that Climate Change is a reality, so we are committed to continue developing and implementing actions that will allow us to protect ecosystems through the mitigation of our emissions without ceasing our productive operations. We have adapted our production and logistic operations according to specific needs and risks present in each project, incorporating climate change into our parameters of periodic evaluations, in order to make necessary improvements as needed.

SQM Información corporativa

Opportunities

In SQM Iodine Vegetal Nutrition we developed a climate change strategy that is focused on our products, operations and value chain with the aim of providing the world with key products to reduce human impact on the environment; for example through lithium it is possible to boost electromobility.

  • Solar Salts, Investing in Efficiency and Clean Energy: In order to mitigate the effects of climate change, is necessary to build a more renewable energy matrix, along with the current announcement to eliminate coal plants in our country and other places around the World. Accordingly, we see an increase in our Solar Salts line of business, since they are used in concentrated solar plants for storage and therefore allowing us to generate energy on a 24/7 basis. This is why we are looking to grow in this market. 
  • Water-soluble Fertilizers: The use of this type of fertilizers allows a more rational use of water for fertigation applications, increasing the quality and yield of a variety of crops by reducing the use of fertile soil and water. Therefore, we are constantly seeking to increase our production and quality of new specialty fertilizers.
  • Low Socio-environmental Impact: When it comes to our operations, we are always striving to identify and evaluate new technologies that might allow us to continue performing our functions with the least possible impact. We are focused on being the company with the lowest carbon footprint in all our lines of business.
  • Value Chain: To strengthen our developed strategies, SQM Iodine Plant Nutrition is constantly seeking for new supply alternatives that work on having a low GHG impact, as well as working hand in hand with our transporters to reduce our carbon footprint through changes and improvements inside their fleet, and promote electromobility. 

Physical Risks

  • Logistical problems while transporting products in Chile and other parts of the World due to port closures.
  • Problems at ports due to heavy tidal waves, flooding, increased costs for shipping products in alternative ports. Heat waves associated with worker safety. Strong winds that cause product loss.
  • Problems at ports due to change in biodiversity on the coast, which might imply a risk due to protected marine flora and fauna arriving, adding new environmental impact events to the operation that had not been considered before.
  • Change in precipitation patterns and extreme variability in weather patterns such as increased rainfall, which could affect costs, delivery schedules, production plans, and physical and material risks, among others. Increase average temperatures could cause a change in process efficiency and worker health, higher electricity use and, therefore, higher GHG emissions.
  • Permanent physical risks such as: rising sea levels causing problems at ports, such as the port of Tocopilla, preventing product loading and embarkment.
  • An increase in the severity and frequency of extreme weather events, such as floods, could have an impact on our production operations.
  • Alluvial risks implying road closures, physical safety issues, people and equipment issues and blocked roads and accesses.

Transition Risks

  • Political and Legal: New barriers for the entry of our products, increased mandatory reports, increased carbon pricing (green tax) and exposure to litigations.
  • Technological Risks: Substitution of existing products for another that might have lower emissions and lower energy transition costs. 
  • Market Risks: Increased ESG expectations from our customers and increased raw materials costs.

Regulatory Risks

  • Carbon pricing mechanisms in the countries where we operate. For example, in Chile we have a tax rate of 5 UD/ TCO2 and we are already seeing changes by modifying the tax threshold that currently affects facilities with equipment that has more than 50 MW in thermal capacity installed for an emission threshold limit of >20,000 TCO2 eq. 
  • One potential risk is that all of our emissions will have to pay said tax in the future. 
  • International regulations associated with climate change that puts an entry barrier for our products when arriving at their destination markets. For example: Carbon taxes at the border.
  • Stigmatization of the sector and increased stakeholder concerns or negative comments from stakeholders.