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Vodafone Group Plc Task Force on Climate-related Financial Disclosures Report 2023
Overview
Risk Management
Metrics and Targets
Governance
Strategy
Appendix 1: Climate scenario parameters Appendices
Early, smooth transition <2 °C
Late, disruptive transition <2 °C
Business as usual, no additional action >3 °C
Overview
Transition to a carbon-neutral economy starts early and the increase in global temperatures stays well below 2 °C , in line with the Paris Agreement. There is early and decisive action to reduce global emissions in a gradual way, with clearly signposted government policies implemented relatively smoothly.
Global climate goal of keeping temperatures well below 2 °C is met, but the transition is delayed and must be more severe to compensate for the late start. To compensate for the delayed start a deeper adjustment is required, as evidenced by a steeper increase in global carbon prices in a late attempt to meet the climate target. Under this scenario, physical risks increase more quickly than in the early policy action scenario and transition risks are severe. Global temperatures increase to between 1.5-2 °C above pre-industrial levels Increase in physical climate-related impacts Estimated range – $135-$6,050 USD/tCO 2 e in 2030, $245-$14,300 USD/tCO 2 e in 2050 (IPCC SR1.5) – Delayed and disjointed policy response – Lack of certainty for businesses – Significant jump in carbon price beyond 2030 Global emissions continue to increase, before rapidly decreasing in order to reach net zero by 2050 Significant increase in energy prices. Likely that changes will be sudden and disruptive Significant increase in renewable energy mix by 2050 – nearly all fossil fuels replaced Increase in investment in mitigation technologies (e.g. energy efficiency, demand management) Consumer preferences continue to shift towards low-carbon product and services Transition risk modelling: REMIND-MAgPIE 1.7-3.0 – Delayed 2 °C with CDR (Disorderly, Alt) Physical risk modelling: CMIP5 mean model from the World Meteorological Organisation – RCP 2.6
Where no policy action beyond that which has already been announced is delivered, resulting in above 3 °C of warming. Therefore, the transition is insufficient for the world to meet its climate goal. This scenario tests the organisation’s resilience to both chronic changes in weather (e.g. rising sea levels), as well as more frequent and extreme weather events (e.g. flash floods). Therefore, under this scenario, there are limited transition risks, but physical risks are significant. Global temperatures increase to over 3 °C above pre-industrial levels Significant increase in physical climate-related impacts resulting in damages, displacement and economic instability Estimated range – $15-$220 USD/tCO 2 e in 2030, $45-$1,050 USD/tCO 2 e in 2050 (IPCC SR1.5) – No further policy action – Current country level commitments are maintained
Assumptions
Parameters Physical
Global and regional temperature trends
Global temperatures increase to between 1.5-2 °C above pre-industrial levels Increase in physical climate-related impacts
Frequency and severity of climate-related physical impacts, e.g. extreme weather, humidity etc.
Estimated range – $135-$6,050 USD/tCO 2 e in 2030, $245-$14,300 USD/tCO 2 e in 2050 (IPCC SR1.5)
Transition Carbon price pathway
Carbon-related policy/ regulation
– Early global policy response – Increase in carbon price
Emissions pathway
Global emissions decline 45% by 2030, reaching net zero by mid-century
Global emissions continue to increase
Commodity and energy prices
Significant increase in energy prices
Energy prices maintained
Energy mix
Significant increase in renewable energy mix by 2050 – nearly all fossil fuels replaced Rapid increase in investment in mitigation technologies (e.g. energy efficiency, demand management) Consumer preferences continue to shift towards low-carbon products and services Transition risk modelling: REMIND-MAgPIE 1.7-3.0 – Immediate 1.5 °C with CDR (Orderly, Alt) Physical risk modelling: CMIP5 mean model from the World Meteorological Organisation – RCP 2.6
Share of renewable energy mix increases but fossil fuels remain the largest source of energy Modest investment in mitigation technologies. Greater investment in adaptation technologies No change in demand for low-carbon goods and services. Increase in adaptation services required Transition risk modelling: REMIND-MAgPIE 1.7-3.0 °C – Nationally determined contributions (NDCs) (Hothouse world, Alt) Physical risk modelling: CMIP5 mean model from the World Meteorological Organisation – RCP 8.5
Technology
Consumer preferences
Underlying climate models used
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