Vodafone 2026 Annual Report

Vodafone Group Plc Annual Report 2026

Strategic report

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Climate-related risk continued

Our exposure to risks and opportunities across a range of scenarios Our FY26 quantitative scenario analysis examines our climate risks and opportunities against three temperature pathways: 1.5°C (Paris-aligned), 2°C (Paris upper limit-aligned) and 4°C (business- as-usual). Our methodology starts with evaluating the maximum value at risk, representing the plausible worst-case scenario. Then we apply probability factors to assess the likelihood of the risk materialising, enabling us to determine a residual risk exposure through an assessment of current and planned mitigation activities. Our FY26 climate-related risk analysis indicates limited regional physical risk exposure in the short and medium term, with potential greater long-term exposure from coastal inundation and riverine flooding under a 4°C pathway. The exposure to transition risks at a Group-level (expectations of business customers and greenwashing risk) could be significant if left unmitigated in the 1.5°C and 2°C scenarios across the short term, with a potential heightened exposure to energy costs across the long term across both the 1.5°C and 2°C scenarios. Managing greenwashing risk exposure remains a short-term priority. In FY26, we strengthened governance of environmental claims and improved controls around marketing approvals. Assessing this risk continues to present challenges from both a financial modelling and reputational risk perspective, given evolving legislation, the subjective nature of potential legal action and uncertainty around stakeholder expectations. While our modelling captures potential economic impacts, broader reputational effects remain unquantified. We therefore adopt a conservative approach by assessing a material impact of ‘greenwashing’ in the short term and will continue to enhance our framework and monitoring as regulatory requirements develop. 1.5°C Paris-aligned scenario Under a 1.5°C scenario, acute and chronic physical risks remain operationally manageable across all

terms, with only modest increases expected in isolated acute events in the long term. FY26 incidents (e.g. Ireland storm) demonstrated that localised disruptions can be restored swiftly without material impact to high-value property. Transition-related pressures are more pronounced in this scenario: faster policy tightening, higher- carbon price trajectories, and higher energy costs heighten medium-to-long term exposure to cost increases and commercial scrutiny, especially in Africa where our dependency on fossil fuels is currently greatest. Failure to meet increased business customer decarbonisation expectations could put revenue at risk. Greenwashing risk also becomes more acute given stringent regulatory requirements, and a heightened demand for substantiation and transparency over environmental claims. There could be market growth opportunities as customers seek internet- enabled technology solutions to help adapt to physical changes in the climate. 2°C scenario Paris upper limit scenario Overall exposure remains contained and stable, reflecting a transition trajectory average between the 1.5°C and 4°C scenarios. Physical risks are manageable across all time horizons, supported by robust network design and continuity processes. Transition-related pressures (energy and carbon cost trends) are moderate across the short- and medium-term, with evolving customer sustainability expectations presenting a limited exposure across all time horizons, while exposure to greenwashing risk could present a similar exposure as assessed for the 1.5°C scenario. The combination of continued decarbonisation efforts, regulatory preparedness and energy optimisation initiatives supports resilience across all time horizons. 4°C business-as-usual scenario In a 4°C scenario, near term physical impact remains modest but long-term exposure (beyond 2040) becomes more pronounced, particularly due to higher likelihood of coastal inundation and riverine flooding hazard causing site damage if no additional resilience measures are introduced.

Our scenario analysis Scenarios

Description

1.5°C Paris- aligned scenario

– Global decarbonisation trajectory and policies implemented in line with achieving 1.5°C pathway by 2100. – Uses Representation Concentration Pathway (‘RCP’) 1 2.6 Economic constraints aligned to Shared Socioeconomic Pathway 2 (‘SSP2’) 2 . – Global decarbonisation trajectory to the upper limit of the Paris agreement. – Assumes Nationally Determined Contributions (‘NDCs’) are successfully delivered up to 2030. Post-2030, cost-effective emissions reduction measures are implemented. – Uses RCP 4.5 (averaged between RCP 2.6 and RCP 8.5). Economic constraints aligned to SSP2. – Emissions continue to increase in line with current business-as-usual pathway, with no further climate policy intervention. – Uses RCP 8.5. Economic constraints aligned to SSP2.

2°C scenario Paris upper limit scenario

4°C business-as- usual scenario

Time horizon Physical scenarios Short term 0 to 3 years (to 2029) Medium term 3 to 5 years (to 2031)

Link to business-planning horizons Aligns with our enterprise risk management framework and long-range business-planning cycle.

Aligned with timeframes used for internal planning purposes. Long term 5 to 25 years (to 2050) Aligned with planning horizons for long-lived infrastructure assets, in line with global targets for reaching net zero.

Category Physical risks

Description

Our scenario analysis approach Quantitative scenario analysis of physical risks to Vodafone infrastructure assets by region (2025–26). Quantitative scenario analysis of transition risks at a global level, with qualitative inputs (2025–26).

Risks related to the physical impacts of climate change, both event driven (acute) and longer- term (chronic) shifts in climate patterns, and which may have financial implications for companies.

Transition risks Growing external pressures to transition to a lower-carbon economy result in changes to the regulatory or market environment, in ways that could negatively impact company costs, revenue or market share.

Opportunities

A shifting business landscape in a net zero world opens new market and investment opportunities.

High-level qualitative scenario analysis only (2024).

Notes: 1. RCPs are four greenhouse gas concentration trajectories adopted by the Intergovernmental Panel on Climate Change (IPCC), representing alternative global warming outcomes to 2100. 2. SSPs are five IPCC scenarios describing plausible future global socioeconomic conditions to 2100.