13
Vodafone Group Plc Task Force on Climate-related Financial Disclosures Report 2023
Overview
Risk Management
Metrics and Targets
Governance
Strategy
Strategy continued
Building climate resilience into our business strategy Given the uncertainty of the transition to a low-carbon economy and the temperature increase limits achieved globally, the results of the scenario analysis, summarised in Figures 5, 6 and 7, enable us to better understand and build resilience to prepare for the potential worst-case impacts of climate change. From our analysis we know that transition risks could potentially be most significant under Scenario 1 (Early policy action: Smooth transition) and Scenario 2 (Late policy action: Disruptive transition) though there are differences in their timings and in the materiality of financial impacts. On the other hand, Scenario 3 (No policy action: Business as usual) could have the biggest financial impact due to the more severe physical climate-related risks. In FY22, we built on our previous climate scenario work and considered our resilience against key climate-related risks and opportunities. We engaged relevant stakeholders from across the business to understand the current processes and policies in place which enable us to mitigate and/or monitor climate-related risks and capture climate-related opportunities. For each material risk and opportunity, we mapped the current controls in place and the strength of those controls. Overall, we have mitigation actions in place for all identified key risks, which we are continuing to integrate into our business strategy and financial planning to build our climate resilience. Our current financial planning period extends out to three years, enabling risk mitigation actions for our short-term climate-related risks (0-3 years) to be incorporated. Our financial planning process incorporates the allocation of capital for operations, which includes the purchase of new or replacement equipment. Decisions in this area are increasingly considering climate-related risks and opportunities such as energy efficiency or the potential to reduce our carbon footprint. Whilst longer term climate-related risks (5-28 years) are not captured as part of our financial planning process, we identify and monitor them so that we have a view of how our business could be impacted as the world moves towards net zero by 2050.
Resilience to physical risks We have controls in place across the business which build resilience against the impacts of physical climate risks. These are centred on damage to our infrastructure and disruption to network services. We are continually improving climate resilience of our physical infrastructure to help us adapt to the warming climate and mitigate exposure to physical risks. Mitigation measures are built into the key stages of each asset’s lifecycle, from acquisition to maintenance, and cover climate adaptation as well as damage response. During the acquisition of assets, including buildings and network equipment, we have policies and guidance in place to incorporate the assessment of environmental risks. Our internal technology resilience policy also requires each asset to go through a physical risk assessment on a yearly basis, which also includes evaluating environmental risks. We also have reactive measures related to asset maintenance in place, such as processes and teams dedicated to disaster recovery and business continuity. Lastly, we have insurance policies designed to mitigate the financial impact of physical risks, which cover claims on asset loss and damage.
Resilience to transition risks We also have controls in place across the business which build resilience against transition climate-related risks. In 2020 we set an approved Science-Based Target to reduce our own emissions (Scope 1 and 2) to net zero by 2030, in line with reductions required to keep warming to 1.5°C. This supports our 2040 target to achieve net zero emissions across the full value chain (scope 1,2 and 3). These targets are approved by the Board and sit at the centre of our Planet strategy. Transitioning our business model to become net zero by 2040 will help to minimise our exposure to certain transition risks. If the transition to a low-carbon society is achieved, we can expect this to be driven at least in part by significant changes in policy and regulation that could impact our business model. Our public affairs, legal and tax teams across the Group, as well as in local markets, monitor any new or emerging climate-related regulation. We actively engage in energy policy-making processes both bilaterally and together with others through industry forums to understand, prepare for and respond to changing policy and regulation.
Powered by FlippingBook