Business performance
Figure 12: Climate scenarios 1.5°C scenario Government-led transition aligned with Paris Agreement Introduction of new government policies and taxes drives a rapid reduction in global emissions, achieving net zero by 2050 and avoiding the worst physical impacts (aligned to RCP 2.6)
2°C scenario
4°C scenario
Business as usual Emissions will continue to rise with little or no shift towards a low carbon future. Physical impacts will be extreme and become more severe from 2040 onwards (aligned to RCP 8.5)
Market-led transition The transition towards net zero is led by the market, supported by government incentives. Net zero will be achieved around 2070 (aligned to RCP 4.5)
Testing resilience through climate- related scenarios Within the business, we use three climate scenarios associated with global temperature increases to test possible future conditions (Figure 12). We have considered each of these scenarios to understand the possible short, medium, and long term impacts to our organisational strategy, major projects, and operational assets. The scenarios align with TCFD recommendations, the Australian Government’s commitment to meet the United Nations Paris Agreement, and the IPCC’s Representative Concentration Pathways (RCP 2.6, 4.5, 8.5). Through implementation and use of each scenario, a consistent set of assumptions inform our risk assessment and management process. Each of the scenarios present opportunities across the various time horizons. These include asset efficiencies through improved design, sustainable finance, adoption of innovative technology, the use of lower carbon materials, 1 and uptake of electric vehicles (see Figure 13 for a more detailed summary of threats and opportunities). These scenarios and the CCAPs are also used to inform and test our business resilience preparatory activities. This includes undertaking response exercises and testing our ability to withstand disruptive events, including those based on climate and severe weather-related scenarios. Read more in our FY24
Financial reporting impacts Integrating climate-related risks (threats and opportunities) into our financial disclosure and reporting framework is an area of ongoing focus and priority. Developing a financial reporting framework that considers expected mandatory climate-related financial disclosures is complex due to: changing global weather pattern uncertainty; evolving government policy responses; and accelerating stakeholder expectations. Incorporating physical and transitional climate scenario considerations into financial forecasts is also methodologically complex. We have considered potential financial reporting impacts and disclosures related to climate-related risks in our financial statements, with reference to the AASB Practice Statement 2: Making Materiality Judgements, which provides guidance on making materiality judgements when preparing financial statements. Based on the qualitative risk data from our CCAPs and the continued focus on asset resilience and business continuity programs, we are currently not aware of any material near-term 2 financial reporting impacts from climate-related risks. However, further analysis of climate-related risks is planned in FY25 to determine the associated financial impact projections across our assets and value chain, including additional analysis of transitional climate-related risks.
From FY25, our priority is to build on scenario analysis and CCAP work completed to date and integrate the potential medium and long term impacts of climate-related risks into asset adaptation strategies and forward planning, including financial forecasts. We will continue our assessment of climate- related financial impacts, using qualitative risk data from our CCAPs and the latest science- based climate assumptions relating to the incidence and severity of acute and chronic climate-related events. We also intend to investigate transitional climate-related risk drivers and scenario- based assumptions, such as changing commodity prices, new technologies or shifting travel patterns, for incorporation into our financial forecasts in line with expected mandatory climate-related disclosure requirements. Given the complexity of physical climate- related risk modelling, the ongoing risk assessment process and changes and evolution of our response to climate-related risks, there may be material changes to our financial results and the carrying amount of assets and liabilities in future reporting periods. As we better understand the potential financial reporting impacts of climate-related risks, we will update the assumptions underlying the financial models to reflect any material climate-related risks. Read more on our assessment of potential financial impacts of climate-related risks in Note B3 on page 121.
Sustainability Data Pack, transurban.com/reporting
1 S ee page 47 for recent examples of lower-carbon material use 2 Transurban’s Climate Change Risk and Adaptation Guideline defines climate-related risks identified out to 2030 as short-term. Here, “near-term” refers to more immediate financial reporting impacts
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