As a company with global production operations, we are exposed to risks of possible damage to personnel, goods and our reputation. These include physical risks from droughts, storms, floods, extreme heat, and wind. Mitigation measures such as audits, consultations and training on environmental protection and occupational health and safety minimize these risks to people and the environment. We monitor these risks at our sites and those of our suppliers and contract manufacturers, ensuring continuity of plant and equipment. By adhering to high technical standards, our Code of Conduct, and all legal requirements in environmental protection alongside occupational health and safety, we preserve goods and assets with comprehensive insurance policies providing further financial protection.
We continuously monitor regulatory risks associated with the transition to a low-carbon economy, which could materialize, in particular, through rising carbon prices via emissions trading systems, taxes or changes in energy legislation. We aim to mitigate these risks through comprehensive strategies, including our energy and CO2 management initiatives and efforts to reduce process emissions, all of which are included in the implementation of our inaugural transition plan. Mainly, we classify these as possible to likely risks with moderate impacts. However, highly improbable cases with a significant or critical impact on EBITDA pre or free cash flow cannot be fully ruled out.
Climate resilience analysis is a vital tool for identifying and evaluating the risks and opportunities that climate change presents to our business. In 2022, we conducted a qualitative assessment of climate risks and vulnerabilities across our upstream and downstream activities and our own operations. Building on this foundation, we aligned our efforts with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) by undertaking quantitative climate scenario analyses, specifically focusing on upstream activities and our own operations, while excluding downstream activities. This assessment identified climate-related risks and opportunities across three potential climate pathways: a 1.5°C Paris Agreement-aligned scenario, a 2.7°C current trajectory scenario and a 4.0°C fossil-fueled development scenario, using a 2050 time horizon. All three scenarios are based on those created by the Intergovernmental Panel on Climate Change (IPCC). Our analysis encompasses both transition and physical risks and opportunities related to our business activities.
In line with our commitment to risk mitigation, we continue to develop innovative and sustainable approaches, foreseeing no relevant short-term deviations from our expectations regarding impacts on EBITDA pre or free cash flow.
For further details on climate-related risks, please see our Climate Resilience Analysis.