Vodafone 2025 Annual Report

Vodafone Group Plc Annual Report 2025 65

Strategic report

Governance

Financials

Other information

Climate-related risk continued

Risk management The management of climate-related risks follows the process defined by our Group risk management framework, which is defined centrally and implemented in each of our markets. At an operational level, the Group Head of Risk and Head of Sustainable Business jointly coordinate the annual programme to identify and assess climate-related risk. Our approach to climate- related risk assessment is outlined below. (1) Identify To identify potential climate-related risks and opportunities, we review the relevant sources of information such as media articles, publications, industry peer disclosures and industry white papers, in addition to reviewing our previous analyses. We engage with relevant internal and external experts to gather views on the evolving nature of climate-related risks for the telecommunications sector and examples of any climate change impacts that might already be materialising. Through our qualitative analysis concluded in 2024, we identified seven climate- related physical and transition risks and opportunities that we have prioritised for our quantitative risk assessment and climate scenario analysis this year. (2) Measure Our climate-related risk assessment uses quantitative scenario analysis to assess the likelihood and impact severity across our full suite of physical and transition risks across our global footprint.

The severity of an impact is considered relative to the extent of potential financial impact through business drivers as well as damage to brand and corporate reputation. This year, we developed a quantitative model to deepen our understanding of the potential financial risk exposure over different time-horizons and temperature pathways. This risk model incorporates Vodafone’s greenhouse gas (‘GHG’) emissions data alongside economic forecasting and modelling, including sector growth, carbon price, energy mix and sector decarbonisation rates. It models the materialisation of potential costs, loss of revenue, asset impairment and business interruption in relation to each risk. This assessment provides us with a potential inherent risk faced by our business. In assessing the likelihood of an impact, we consider the potential probability that it will materialise based on current trends, forecasts and projections, levels of uncertainty as well as current or planned mitigations that we have in place. This assessment provides us with a view of the residual risk exposure to climate change. Our FY25 scenario analysis process and outcomes are detailed under the strategy section of this report. Our latest scenario analysis consolidates previous qualitative and quantitative analysis performed on our physical assets, combining into one place the assessments conducted regionally across Europe and Africa. We intend to review our scenario analysis annually to reflect the most up-to-date data and climate-related information and the results of our annual assessment will inform how we prioritise and manage the risks identified. Read more about our definitions for scenarios and time horizons on page 63

(3) Manage As part of our Group risk management framework, climate change is discussed and prioritised, relative to other risks, during the principal risk assessment process. For FY25, climate-related risk continues to be managed as a sub-risk of ESG risk because climate change is a key element of ESG and is managed holistically. In addition, this aligns with our internal governance structures for ESG, which encompasses all aspects of our Protecting the Planet and wider purpose strategy. ESG risk is considered to be a watchlist risk, partly due to the time horizon of climate-related risk being mostly outside the immediate three-year business planning cycle. Read more about our ESG governance arrangements on page 31 We will continue to monitor ESG risk as this agenda continues to evolve in the coming years. In addition, due to the nature of the priority 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 arising due to adverse changes in macroeconomic conditions. This approach enables us to capture a more holistic picture of climate-related risks, both in the short term and long term. As required by our Group risk management framework, once a risk is identified and assessed, a risk owner is responsible for developing and implementing the mitigating actions and controls. As such, we continue to incorporate the key mitigating actions for our highest priority climate-related risks and opportunities into our CTP and assign accountability to leaders in relevant business functions for risk management and monitoring. Click to read our Climate Transition Plan: vodafone.com/ctp

(4) Assure and monitor We use a three lines model to manage risks, as detailed in the Group risk management framework. Relevant assurance providers, such as control owners in the first and second line, are responsible for reviewing the policies, procedures and other relevant information to check whether the controls are effective and update them as necessary. Read more about our Group risk management framework on pages 55–60 (5) Report As described in the Governance section of this report, the reporting of our climate-related risks is integrated into our Group risk management framework and processes, which are overseen by the ARC. The Group risk team reports Vodafone’s principal risks, watchlist risks and emerging risks to the ExCo and the Board, including any material climate-related risks that are identified through risk analyses. During the year, if climate-related risks are identified at operational level, they are reported to the local risk and compliance committee within each market and escalated to the Group RCC if required. Read more about our climate governance arrangements on pages 61–62 We publish an annual, external disclosure on Vodafone Group’s climate-related risks and opportunities, as enclosed within this report. In addition, Vodacom Group publishes a standalone report, which also discloses details of our climate-related risk and opportunity assessment for our markets in Africa. Click to read Vodacom Group’s latest TCFD report: vodacom.com/reporting-centre.php

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