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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 continued
3. Manage 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. Since the identified top climate-related risks to Vodafone are those that the business had been already managing, we had also already mapped the risk ownership across the Company. 4. Assure and monitor We use a three lines model, as detailed in the Group risk management framework, when managing risks. The control owners are responsible for reviewing policies, procedures and other relevant information to check whether the controls are effective and update them as necessary. 5. Report We have various mechanisms for reporting on climate-related risks and opportunities. As described in the Governance section of this report, the Group risk team reports material climate-related risks to the Audit and Risk Committee once a year. In addition, we have local risk and compliance committees, as well as functional risk and compliance committees (‘RCC’), where key risks are reported. Any material and relevant climate-related risks can be reported to RCCs if and when appropriate. Next steps in our TCFD programme: As we mature and evolve our Group risk management framework, as well as our approach to climate-related risks, we will continue aligning climate-related risk management practices. Further information on our risk management process can be found our Annual Report: vodafone.com/ar2023
Figure 9 Vodafone’s climate scenarios
1. Early policy action: Smooth transition
<2 °C
2. Late policy action:
<2 °C
3. No policy action: Business as usual
>3 °C
Disruptive transition
What it means? – Early decisive action by society to reduce global emissions – Coordinated policy action towards low-carbon economy – Actions sufficient to limit global warming well below 2°C in line with the Paris Agreement What is the impact? – High level of transition risks compared to business as usual scenario – Physical risks are limited compared to business as usual scenario
What it means? – Delay in the policy response needed to reduce global emissions – Severe policy changes required to compensate late start – Ultimately, global warming is limited to 2°C – Late, sudden action means that risk velocity is greater What is the impact? – Highest level of transition risks compared to other scenarios – Physical risks are limited compared to business as usual scenario
What it means? – Governments fail to introduce further policies to address climate change beyond those already known and in place – Global temperatures increase above 3°C What is the impact? – Limited transition risks compared to other scenarios – Physical risks are highest under this scenario
These scenarios were selected because they: – Meet the TCFD recommendations to
– Are modelled on a 30-year timespan to 2050 that aligns to the Paris Agreement and other governmental net zero 2050 targets – Are referenced by the International Energy Agency (‘IEA’), which uses policy pathways in its analysis of climate scenarios
– Consider macroeconomic impacts of physical and transition risks with some granularity – Are applicable to a business context
assess business resilience under different climate-related scenarios, including a 2°C or lower scenario – Are aligned to the Bank of England’s reference climate scenarios that are used to stress-test the UK financial system against climate change
Further details on the assumptions and input parameters on each of our scenarios are outlined in Appendix 1 of this report.
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