Vodafone 2023 TCFD Report

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Vodafone Group Plc Task Force on Climate-related Financial Disclosures Report 2023

Overview

Risk Management

Metrics and Targets

Governance

Strategy

Risk Management Embedding climate into our risk management framework

Risk management is defined in the TCFD recommendations as “a set of processes that are carried out by an organisation’s Board and management to support the achievement of the organisation’s objectives by addressing its risks and managing the combined potential impact of those risks”. It is recommended that organisations disclose their processes for identifying, measuring and managing climate-related risks, as well as describing how these processes are integrated into the organisation’s overall risk management.

Integration of climate-related risks into our risk management processes

2. Measure After the list of potential risks and opportunities is put together and updated, we evaluate the materiality of each by assessing their likelihood, impact and time horizon using our Group risk management framework and involving subject matter experts across the organisation. Our risk management framework uses a likelihood scale that estimates the percentage chance of a risk materialising within three years. However, as climate change is an issue that spans decades, we recognise that for the purpose of climate risk assessment we need to adapt our time horizons. Hence, during the climate risk assessment conducted in FY23, we used the following time frames: short-term (impact could be felt in the next 0-3 years), medium-term (impact could be felt in the next 3-5 years), long-term to very long-term (impact could be felt in the next 5 to 28 years). The rationale for choosing these time horizons is explained on page 7. The materiality assessment is conducted yearly to ensure the implications of all key risks and opportunities are understood in the context of the ever-changing business and physical environment. We will update the risk scores as necessary in response to the changing circumstances or as improved data or modelling for these risks and opportunities becomes available. Our most recent full scenario analysis was conducted in 2020, using three climate scenarios described in Figure 9 to explore and assess the resilience of our business to climate change. This helped us to better understand which of the identified and prioritised climate-related risks could potentially have the largest impact on Vodafone across different time horizons, and informed our efforts to better manage and monitor the risks. We used external data sets on climate drivers and internal data sets on our business activities to model a time-series for the potential impact of material risks under each scenario between 2020 and 2050. To follow up on the initial scenario analysis, this year we conducted a more targeted scenario analysis focusing on a subset of our assets. We focused on the potential impact physical climate-related risks could have on our infrastructure. Read more about this study on page 8

We used an iterative process for climate-related risk management since the beginning of the TCFD programme. When considering both physical and transitional climate risks, we benefit from the enterprise risk management framework already in operation. The framework is defined centrally and implemented in each of our markets. This approach allows risk management and reporting to balance the importance of consistency of approach, measurement, and risk categorisation across the organisation, with the value of local expertise and risk action plans. Climate change is discussed and considered during the principal risk assessment process and this year it was once again placed on our risk watchlist, which includes material risks to Vodafone Group that fall outside of our principal risks list. In addition, due to the nature of the material 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 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. The process we have established for climate-related risk management is outlined in Figure 8. We have aligned it to our Group risk management framework stages: Identify, Measure, Manage, Assure and monitor, and Report. 1. Identify We use the following sources to identify potential climate-related risks and opportunities: 1. any new and relevant climate change publications and data; 2. relevant sector literature outlining potential impacts of climate change on the telecommunications industry; 3. TCFD guidance on potential risks and opportunities; 4. risk and opportunity disclosures from telecommunications sector companies; 5. existing climate-related risks and opportunities by Vodafone and disclosed in our Annual Report

Figure 8 Vodafone’s risk management process

1. Identify

2. Measure

5. Report

4. Assure and monitor

3. Manage

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