66 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Climate-related risk continued
In addition to our strategic CTP programme, our internal global ESG policy and standards, owned by the Chief External and Corporate Affairs Officer, consolidates the minimum requirements for environmental management. All operating companies are required to adhere to this policy and standards, mandating the implementation and delivery of CTP objectives and targets and building resilience, in line with our strategy across our global business. Click to read more about our climate transition plan: vodafone.com/ctp Strategy Drawing on empirical research, internal expertise and economic modelling, our analysis enables us to comprehensively evaluate the potential impact of climate change on our business and operations over the short-, medium- and long-term time horizons. During FY26, extreme weather events (storms and flooding) led to localised network disruptions in Portugal, Ireland, and Mozambique. The impact was mitigated through resilience measures and asset damages were limited to a number of masts affected by high winds. By assessing our exposure under a range of climate future scenarios, including those aligned to a 2°C or lower pathway, we can stress test our strategy and business resilience whilst understanding the potential financial implications. Repeating the quantitative analysis this year has enabled us to compare results over time, strengthening the consistency and reliability of our overall assessment. In a changing regulatory and policy environment, combined with the complexity of assessing climate-related risks (particularly transition risks), and the challenges of long-term planning, we recognise the inherent uncertainty in long-term climate projections. Nevertheless, conducting the analysis annually allows us to track directional changes, refine assumptions as new data emerges, and maintain transparency over how our exposure evolves. Read more about our approach to climate-related risk assessment on page 67
Our priority climate-related risks and opportunities 1 Physical risks
Transition risks (3) Energy costs:
(6) Greenwashing risk: Risk of reputational damage, loss of revenue, and legal costs due to misleading claims. We could be exposed to litigation and legal penalties associated with unintentionally making misleading claims about the environmental impact of Vodafone (e.g. within corporate reporting or brand communications) or the benefits of our products and services (at a product marketing level) or by failing to substantiate claims, which could lead to financial and reputational damage. The modelling quantified economic impacts, but does not quantify broader reputational effects. Time horizon: Short term Transition opportunity (7) Customer enablement: Opportunity for revenue growth from the sale of connectivity and new technology solutions (such as Internet of Things and digital platforms) to business customers that supports decarbonisation of industry across all economic sectors. For example, smart digital solutions will enable our enterprise customers to improve operational efficiency, minimise waste and manage resources. Time horizon: Inconclusive Note: 1. As described in the Risk Management section of this report, these climate-related risks and opportunities have been prioritised based on their potential severity, likelihood and time horizon relative to the full range of climate-related risks and opportunities identified through our risk analyses. Their prioritisation does not indicate the significance of the risk or opportunity relative to other risk categories, nor does it indicate the significance of any impact on Vodafone’s financial position. We therefore refer to these as our ‘priority’, rather than ‘material’ risks.
(1) Extreme weather (referred to as acute): Site damage and/or business interruption caused by extreme weather events, e.g. riverine flooding and coastal inundation. Our network infrastructure is already experiencing the effects of extreme weather, and these impacts remain manageable under our current resilience measures to avoid major operational impact, asset impairment or financial loss. Coupled with geopolitical risks, more frequent and severe events could disrupt supply chains (critical components from China) and critical logistic routes (such as coastal ports), posing potential future operational and financial risk exposure. Time horizon: Long term (2) Rising average temperatures (referred to as chronic): Business interruption associated with rising temperatures, assessed as a component of extreme heat weather hazard. We recognise that rising average temperatures could damage network equipment and other above-ground infrastructure or cause operational failure (particularly if located in exposed outdoor locations, e.g. radio towers), as well as cause disruption in our supply chain. It could also lead to increasing consumption of energy for cooling infrastructure, data centres and offices, which could increase operating costs. A higher frequency of hot days could be more pronounced in our African and southern European markets (such as Greece and Portugal). Our investment in heat resistant technology supports managing this risk. Minimal impact over the assessed time horizons
Increased cost of energy, electricity, and carbon pricing. Increasingly volatile energy prices and overall higher energy costs, partially driven by carbon pricing and demand for renewable electricity certificates outstripping supply. This risk is particularly prevalent in markets with high dependency on fossil fuels (such as in Africa, where we continue to operate diesel generators where sites cannot be connected to the grid) and non-renewable energy. However, carbon pricing will also drive an increase in cost to procure carbon-intensive products and raw materials, as third parties upstream in the supply chain look to pass through higher costs. Time horizon: Long term (4) Regulatory compliance costs: Increased cost of compliance due to additional resource requirements. As governments introduce policies to support the climate transition, our regulatory corporate sustainability reporting and disclosure compliance costs are expected to increase during implementation phases as they are transposed into law across our markets. However, requirement delays (due to EU Omnibus I Directive) have revised our timelines. Minimal impact over the assessed time horizons (5) Expectations of business customers: Risk of market share loss if lagging behind competitors in decarbonisation activities. We could be exposed to revenue loss if climate performance continues to be a differentiator for business customers’ supplier selections, and Vodafone does not follow its intended decarbonisation pathway, fails to keep pace with the low-carbon products and services offered by competitors, or rising business customer expectations for adhering to climate- related requirements. Time horizon: Long term
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