Governance and risk
Directors' Report
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Introduction Business performance Stakeholders Sustainability
Contents
Key judgements and uncertainties Assumptions made in scenario analysis
Climate-related scenarios represent potential future states based on assumptions about global responses to climate change. While the Group’s strategy and targets reflect current conditions and best estimates of future trends, there is inherent uncertainty as to which, if any, of the scenarios will eventuate. Assumptions underpinning the analysis may not prove accurate, and actual outcomes may differ materially. Key judgements in the Group’s scenario analysis relate to the selection and interpretation of transition pathways aligned to recognised emissions scenarios. These provide a structured basis for analysis, however, uncertainty remains regarding the pace and coordination of global decarbonisation, including policy development and technological adoption. In determining which climate-related risks and opportunities to include in quantitative scenario analysis, the Group applied judgement having regard to data availability, methodological maturity, and the ability to generate decision-useful information. The Group also considered whether such analysis could be undertaken without undue cost or effort. Accordingly, quantitative analysis has been performed where sufficiently robust and supportable estimates could reasonably be developed, with other climate-related risks and opportunities assessed on a qualitative basis. ¢
Physical risk: climate-related scenario analysis b. R1 Weather related impacts to infrastructure and operations Climate projections were applied to assess future climate hazards under the following climate scenarios.
RCP 2.6 / SSP1-2.6
RCP 4.5 / SSP2-4.5
RCP 8.5 / SSP5-8.5 1
Represents a scenario where radiative forcing from atmospheric CO 2 concentrations reach 2.6 W/m2 by 2100, leading to average warming of 1.8°C.
Represents a scenario where radiative forcing from atmospheric CO 2 concentrations reach 4.5 W/m2 by 2100, leading to average warming of 2.7°C.
Represents a scenario where radiative forcing from atmospheric CO 2 concentrations reach 8.5 W/m2 by 2100, leading to average warming of 4.4°C.
Physical climate-related risk was assessed across the Group’s road network in Australia and North America using an asset-level modelling approach supported by an external climate risk data provider. Road assets, including equity-accounted assets, were grouped into segments by asset type (open roads, tunnels and bridges) and mapped to geographic points to assess location-specific exposure to climate hazards. Each geographic point was analysed using engineering-based methods that assess exposure and vulnerability to both acute and chronic hazards, incorporating third-party climate hazard, exposure and generic asset (open road, tunnel, bridge) vulnerability data.
This modelling was supplemented by an actuarial analysis of historical losses from extreme weather events, informed by the Group’s insurance coverage. While not forward-looking, this provides a useful baseline of current climate-related risk. Financial effects were estimated for both asset damage (maintenance expenses) and traffic disruption (toll revenue reduction), using insured asset values and revenue data at the time of assessment during the reporting period. Accordingly, outputs should be interpreted as indicative of potential inherent exposure rather than precise forecasts.
1 Modelling results referenced here are based on RCP 8.5 climate projections. As discussed above SSP3-7.0 climate projections have also been used for other aspects of the Group’s climate risk assessment approach based on data availability and applicability
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