64 Vodafone Group Plc Annual Report 2025
Strategic report
Governance
Financials
Other information
Climate-related risk continued
Building climate resilience into our business strategy As a fixed and mobile network operator, we have a large number of assets and infrastructure spread over a wide geographical area in all of the markets in which we operate. This means that our business is exposed to climate change impacts and transition risks across Europe and Africa. However, our analysis indicates that Vodafone’s underlying business model is relatively resilient to climate-related risk. Vodafone’s physical risk exposure is not expected to result in significant business interruption, cost or asset impairment, with a relatively limited range of impacts expected across the range of scenarios analysed, particularly in Europe. This is partly due to the level of resilience that is already built into our network infrastructure and because the majority of our assets (such as radio equipment) are relatively short-lived, with opportunity to adapt our network as part of our routine end-of-life equipment replacement programme. However, more widespread operational disruption (within both our own operations and in our value chain) due to extreme weather events and extreme heat can be expected over the medium- to long-term in the no policy action scenario, particularly in Africa. Our CTP incorporates the management actions required to build resilience into our business in response to Vodafone’s priority climate-related risks and opportunities. Our latest analyses, outlined in this report, have informed the CTP activities that have been integrated into our long-range business and financial planning cycle. Governance and accountability have been put in place to monitor and manage the implementation of the CTP. Click to read our Climate Transition Plan: vodafone.com/ctp
Realising opportunities In both the 2°C and 1.5°C scenarios, there is a potential commercial growth opportunity from the sale of digital solutions or connectivity services that could help our customers to decarbonise their businesses. Digital connectivity can help to tackle environmental challenges by enabling technology solutions to support the clean energy transition and drive energy and resource efficiency across all sectors of the economy, from energy to transport, agriculture, buildings and manufacturing. The 4°C scenario also presents growth opportunities from the sale of digital solutions and connectivity services that could help our customers adapt to more extreme physical changes in the climate. However, due to data unavailability and a high degree of uncertainty in the extent to which the adoption of digital technology would be accelerated because of climate-related trends, our quantitative scenario analysis did not reach a definitive conclusion on the financial value of this opportunity.
Resilience to physical risks With regard to physical risk (which our scenario analysis indicates is relatively limited), Vodafone has insurance arrangements in place to cover loss or damage to assets from a range of natural disasters and weather-related events such as flooding, fires and storms (although these policies do not specifically refer to these as climate-related events). In recent years, we note that insurance claims have been made to cover damage to infrastructure. For example, in relation to flooding in Germany and storms in Italy and UK, these claims relate mostly to damage to our mobile access base station network, rather than our higher-value assets, such as data or technology centres, and are not considered to be financially material at this stage. Based on our analyses to date, we have not identified any material financial risks relating to the cost or availability of insurance as a result of climate change. Protecting our infrastructure assets from being damaged or disrupted by climate-related weather events is central to the climate resilience of our business and network services. 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 requires each critical asset to conduct a physical risk assessment annually, which includes evaluating environmental risks. Our business continuity procedures are implemented to minimise service disruption or operation downtime and limit revenue loss and damage to brand trust, such as re-routing traffic through alternative base stations in case an asset is damaged. We also have reactive measures in place
related to asset maintenance, such as processes and teams dedicated to disaster recovery. Lastly, we have insurance policies designed to transfer any significant financial impact of physical risks, which cover claims on asset and contents loss and damage. Building resilience into our operations and network infrastructure is a well-established part of our business-as-usual process, irrespective of whether climate change has been explicitly named as a primary risk driver. We intend to continue to build resilience to the physical risks of climate change and will continue to integrate any additional high-priority climate adaptation actions beyond our current planning, procurement, network resilience and business continuity practices into our business plans over the coming years. Resilience to transition risks Achieving decarbonisation in line with our published CTP will enable us to reduce our exposure to transition risks related to energy costs and the expectations of business customers, in both a 2°C and 1.5°C scenario. Our analysis indicates that Vodafone has several existing and planned measures in place to manage transition risks faced by our business in the 2°C and 1.5°C scenarios. These include the strategic implementation of our CTP, programmes in preparation for compliance with forthcoming climate-related regulations and existing governance activities related to greenwashing, as well as other policies, procedures, and monitoring activities. The implementation of our risk management activities aims to manage and reduce the impact of the transition risks associated with climate change across all scenarios. Read more about our Protect the Planet goals and strategy on pages 34 to 38
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