Annual Report 2010 - Outokumpu

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Physical risks
Extreme weather events associated with climate change could also have a less direct impact on Outokumpu's operations
since physical risks such as property damage or loss of production through floods, hurricanes and/or drought may be
exacerbated. Normal measures intended to mitigate this type of risk have however been incorporated into the Group's
risk management and associated policies. Currently, only one of Outokumpu's production facilities, a tube mill in Florida,
is located in an area defined as a "regional hotspot".
Opportunities
Even though the unpredictable consequences of climate change represent a significant challenge for Outokumpu, they
also open up new business opportunities. As it is a sustainable material, stainless steel helps both the Group's
customers and society in constructing low-carbon solutions. The remarkable properties of stainless steels make a
significant contribution to achieving improved efficiency in the transportation, construction and manufacturing sectors, as
well as in the household goods segment. Outokumpu products also assist in tackling global challenges such as the need
for clean water.
In 2010, Outokumpu's production remained at a lower level than normally, and this resulted in the Group having a
surplus of emission allowances. Outokumpu sold 500 000 EU Allowance Units (EUAs) during 2010. To optimise the cost
of compliance within the EU Emissions Trading Scheme, Outokumpu has invested EUR 1.5 million in the Testing Ground
Facility (TGF), a carbon fund managed by the Nordic Environmental Finance Corporation. The aims of the TGF fund
include purchasing Emission Reduction Units for its investors at financially attractive terms from projects which achieve
verified reductions in emissions of carbon dioxide. Similar types of carbon fund investments were assessed by the Group
in late 2010 but a decision was made to refrain from investing at that time.
Outokumpu Annual Report 2010 – Corporate Governance – Climate change risks