Scenario analysis To understand the risks and opportunities our business faces considering climate change, we conducted a quantitative scenario analysis using two distinct scenarios: a “<2°C” scenario (“Scenario 1”), where global warming is limited to less than 2°C with net zero achieved by 2050, and a “4°C” scenario (“Scenario 2”), where the goal of net zero by 2050 is not reached. A summary of the scenarios selected is provided in the diagram below. These scenarios are chosen to reflect the diverse spectrum of possibilities that could unfold due to different levels of global effort to curb climate change. In the context of these scenarios, “transition risks” refer to the challenges associated with the shift towards a lower carbon economy, while “physical risks” denote the potential damage caused by climate change itself. In terms of the risks selected, these were based on physical locations and the nature of our business in key locations of North America, the UK, Europe and Asia Pacific. We are in the process of flowing this into our financial planning and will continue to do so as we mature our climate action planning and reporting.
Under Scenario 1, we anticipate higher transition risks due to rapid shifts in regulatory and market conditions, but the physical risks would be significantly reduced due to the effective global action on climate change. Conversely, Scenario 2 predicts lower transition risks but considerably higher physical risks due to the lack of substantial progress towards climate goals. We’ve further broken down these risks by timeline, classifying them as short term (less than one year), medium term (one to five years) and long term (more than five years). The table below offers a comprehensive overview of NCC Group’s potential exposure to both transition and physical risks under each scenario. While our current analysis is qualitative, we are working towards quantifying these risks and opportunities as we progress towards our net zero targets and continually improve our data collection across Scope 1, 2 and 3 emissions. At this point, we don’t foresee a significant impact on our Financial Statement disclosures based on our materiality assessment results and known near to mid-term regulatory developments. However, we will continuously monitor both transition and physical risks, adjusting our mitigation strategy as necessary.
Short-term risk (<1 year 2025)
Medium-term risk (1–5 years 2026 to 2031)
Long-term risk (>5 years 2031)
Risk type
Risk
Risk impact
Scenario
Low
Low
High
Physical risk
1
Rising sea levels
Risk to NCC Group offices located in high risk areas, as well as colleagues’ homes and clients’ business premises, resulting in business disruption
Low
High
High
2
Low
Medium
High
Transition risk
1
Increase in taxes and levies
Disruption and increased costs to ensure compliance with new legislation
Low
Low
Low
2
Low
Medium
High
Margin risk
Impact on results due to extra costs incurred to lower emissions
1
Low
Low
Low
2
Medium
High
High
Reputation risk Increased stakeholder concern and changing client behaviours
1
Low
High
High
2
Low
Medium
High
1
Supply chain risk
Substitution of existing products and services with lower emission options
Low
Low
High
2
Financial planning We recognise the potential implications of climate-related risks and opportunities on our financial planning. We anticipate shifts in our future business model and strategy in response to evolving market conditions due to climate change. We foresee potential changes in client preferences towards more sustainable products and services, along with possible disruptions in our supply chain due to extreme weather events. These factors are thoroughly considered in our business strategy development. Our business strategy has been designed to be resilient to future economic and climate-related scenarios. And by running regular scenarios we can test that resilience and ensure it’s considered in future business strategy development, enabling us to adapt accordingly, without disrupting or negatively impacting current operations. The scenarios are based on industry insights, which are used in the expert input into our ongoing materiality assessment.
During FY24 we prioritised drafting our Carbon Reduction Plan working with Positive Planet. We set interim reduction targets based on FY24 GHG emissions, with the final base being set by our FY25 GHG emissions. Targets are aligned to science-based targets and at this stage we have chosen not to verify these. The publication of our Carbon Reduction Plan will enable us to begin work on integrating climate considerations into our financial planning process when appropriate. Our aim continues to be to incorporate climate considerations to influence future investment decisions by the Group, reducing our carbon footprint, and gradually divesting areas that carry high climate-related risks. For now though, we are actively working to improve our operational efficiency and addressing things we can directly influence to reduce our impact on the environment and realise cost savings.
NCC Group plc — Annual report and accounts for the year ended 30 September 2025 25
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