Vodafone 2024 Annual Report

69 Vodafone Group Plc Annual Report 2024

Strategic report



Other information

(3) Manage As part of our enterprise risk management framework, climate change is discussed and prioritised, relative to other risks, during the principal risk assessment process. During FY24, climate change was consolidated as a sub-risk of ESG risk, in recognition that climate is one of several wider ESG risks that we intend to manage holistically. In addition, this aligns with our internal governance structures for ESG, which encompass all aspects of our Protecting the Planet and wider Purpose strategy. ESG risk was considered a watchlist risk, partly due to the time horizon of climate-related risk being mostly outside the immediate three-year business planning cycle. Read more about our ESG governance arrangements on page 33 We will continue to monitor ESG risk as this agenda continues to evolve in the coming years. In addition, due to the nature of the priority climate-related risks to our business and strategy, many elements are already captured in existing principal risks, such as extreme weather events leading to technology failure, adverse policy environment resulting in increased costs or increased energy costs arising due to adverse changes in macroeconomic conditions. This approach enables us to capture a more holistic picture of the climate-related risks, both in the short term and long term. As required by our risk management framework, once a risk is identified and assessed, a risk owner is responsible for developing and implementing the mitigating actions and controls. This year, we incorporated the key mitigating actions for our highest priority climate-related risks and opportunities into our CTP and assigned accountability to leaders in relevant business functions for managing and monitoring these. Click to read our Climate Transition Plan www.vodafone.com/ctp (4) Assure and monitor We use a three lines model, as detailed in the Group risk management framework, when managing risks. Relevant assurance providers, such as control owners in the first and second line, are responsible for reviewing the policies, procedures and other relevant information to check whether the controls are effective and update them as necessary. Read more about our Group risk management framework on pages 57-63 (5) Report As described in the Governance section of this report, reporting of our climate-related risks is integrated into our enterprise risk management framework and processes, which are overseen by ARC. The Group Risk team reports Vodafone’s principal risks, watchlist risks and emerging risks to the ExCo and the Board, including any material climate-related risks that are identified through risk analyses. During the year, if climate-related risks are identified at operational level, they are reported to the local risk and compliance committee within each market and escalated to the Group Risk and Compliance Committee if required. Read more about our climate governance arrangements on pages 64 to 65 Metrics and targets We have set targets to reduce GHG emissions from both our own operations and across our full value chain. In FY24, we set region- specific net zero targets for our operational emissions (Scope 1 and 2) in recognition that the transition pathway and challenges are fundamentally different in Europe and Africa. Although our transition pathways differ by region, we are retaining our overall near-term science-based target to reduce the emissions from our own operations (Scope 1 and 2) by at least 90% by 2030 across our global business, against a FY20 baseline.

The Protecting the Planet section of our Annual Report, together with our ESG Addendum and Methodology document, details our approach to measuring and reducing GHG emissions. We measure and report our Scope 1, 2 and 3 emissions (including all 15 categories of Scope 3). We also have metrics in place to measure energy use; one of the key underlying factors in our exposure to climate-related transition risk.

Read more about our climate metrics and targets in the Protecting the Planet section on page 38 to 42 Click to read our ESG Addendum: investors.vodafone.com/esgaddendum Click to read our ESG Methodology document: investors.vodafone.com/esgmethodology Total Scope 1 and Scope 2 emissions (market-based) (million tonnes CO 2 e) 1 Scope 3 emissions (million tonnes CO 2 e) 1,2 Climate-related risk/opportunity metrics




0.69 0.91 1.02 6.07 6.92 6.91

Energy use (gigawatt hours) 1 5,217 5,052 4,926 Carbon enablement (million tonnes CO 2 e) 32.8 24.9 13.5 Notes: 1. Information relating to 2023 and 2022 has been restated to reflect portfolio changes completed during FY23 and FY24. 2. Data for 2022 and 2023 has been restated to reflect changes to our methodology for calculating Scope 3 emissions, see our ESG Addendum Methodology document for more information: investors.vodafone.com/esgmethodology. Climate-related considerations are factored into our executive remuneration, by way of an annual emission reduction target. This is linked to our near-term science-based target to reduce the emissions from our own operations (Scope 1 and 2) by at least 90% by 2030 across our global business, against a FY20 baseline. 3.3% of executive long-term incentive plan is linked to this climate metric. We continue to explore how we can integrate climate resilience into our reward structures, objectives and incentives. Read more about how ESG is incorporated into our remuneration policy on page 108 We continue to measure our exposure to physical risks, for example, the percentage of our high-value assets that are vulnerable to physical risks in Europe. We report annually on the carbon emissions avoided through the use of our digital solutions, which we consider to be one of our most significant climate-related commercial opportunities, known as ‘carbon enablement’. Whilst these are important steps forward on our climate-related risk disclosure journey, we recognise that we have not yet set targets or put metrics in place to measure our full suite of climate-related physical and transition risks. We remain committed to setting these metrics and targets in line with the refreshed list of our priority climate-related risks and opportunities. The establishment of metrics and targets will form part of the implementation of our transition plan, which commenced from 1 April 2024. We intend to develop metrics and targets within the coming year. Our transition plan also outlines the areas of uncertainty, dependency on key external factors and risks to the delivery of our targets. Currently, we are also considering the opportunity to use an internal carbon price as part of our decision-making. An internal carbon price puts a financial value on the climate impact of our business decisions (such as purchasing goods or undertaking capital projects). We have begun to explore potential options for an internal carbon price, for evaluation and possible implementation in future years. Click to read more about how we measure carbon enablement in our ESG Addendum: investors.vodafone.com/ esgaddendum Read more about our targets for enablement on page 41

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