CLIMATE ANALYSIS REPORT CONTINUED
Risk description
Our response
FY 2025/26 progress
Risk description
Our response
FY 2025/26 progress
Climate-related risks: transition risks
4 Increasing costs of commodity and raw materials Some of our products use raw materials, such as copper and aluminium, which
1 Capital markets shifting investment to low-carbon activities Our growth strategy relies on both organic sales generation and acquisitions. Both require capital investment. We may need to raise additional funding in the capital markets. The shifting of investment to
Our products are designed and customised for specific applications and are priced according to project specifications and material costs at the point in time, which to some extent protects the Group from price fluctuation. Furthermore, our products are designed in applications and are often protected by our design IP, preventing customers switching to low-cost suppliers. Our supply chain is resilient, as tested and proven during the pandemic and, more recently, during the disruption caused by conflict in the Middle East. We source materials and components from multiple suppliers where possible, except for those specified by customers. Copper and aluminium have similar conductivity and can be interchangeable in some cases.
■ A Group-led initiative was set up during the year to enable our operating businesses to share materials and components sourcing information and seek help if needed. ■ Several operating businesses have introduced dual-sourcing for critical components.
Our strategy focuses on markets with structural, sustainable growth, such as renewable energy, electrification of transportation, industrial automation and connectivity, all of which support the transition to a low-carbon economy. We constantly work to target ‘green’ markets and reduce our greenhouse gas emissions, and improve capital market perceptions of our performance in these areas by providing timely and transparent disclosures.
■ 79% of revenue
are also used in electric vehicles and electrification projects. Prices of such
from target markets (FY2025: 79%). ■ Publicly demonstrated our continuing commitment to environmental governance by maintaining our Carbon Disclosure Project (“CDP”) rating at B.
materials are expected to continue to rise as supply cannot meet rapid increases in demand. Significant price rises may cause customers to switch to low-cost suppliers. The raw material shortage may impact our ability to continue to supply certain products. Timeframe Short – long term
low-carbon or green activities may impact our ability to raise capital or increase our cost of capital, in turn reducing our ability to invest in the existing business or acquire new businesses. Timeframe Medium – long term
2 Changing customers’ preference to low-emissions alternatives
The majority of our customers are industrial OEMs. They may adopt an aggressive approach to reducing emissions in their value chain. This could mean developing low-emission versions of their products to reduce their downstream emissions, or engaging suppliers with lower-emission products and processes to reduce their upstream emissions. Timeframe Medium – long term
We have long-lasting relationships with our customers. Our business model of designing and manufacturing customised electronics means that we work closely and collaboratively with our customers, which allows us to support them in the development of new low-carbon products and ensures environmental compliance. We have set emission reduction targets and made good progress against these. This helps our customers reduce their Scope 3 emissions. We also work closely with our customers and suppliers to find better solutions to reduce carbon emissions where possible, such as replacing plastic packaging with sustainable options.
■ Reduced Group Scope 1 and 2 emissions for
Climate-related risks: Physical risks
continuing operations by 68% against the CY2021 baseline, including acquisitions.
5 Acute risks – Extreme weather events such as cyclones or floods Increased severity of extreme weather events, such as cyclones and floods, may disrupt production activities and incur higher operating costs. Timeframe Short – long term
The Group has 69 sites globally, including 41 manufacturing facilities across Asia, Europe and North America. Some production activities can be transferred to other locations to ensure business continuity, if necessary. We have experience in moving manufacturing between sites where circumstances require us to do so.
■ Developed an in-house bespoke climate analysis tool to enable ongoing monitoring of specific risks to our sites. ■ The resilience of our operations was demonstrated when our operating sites in Thailand and Sri Lanka were hit by flooding during the year, yet were able to continue their operations with only minimum impact on short-term productivity.
3 New and emerging technologies substitute our customers’ existing products and services
6 Chronic risks – Gradual changes in key climate variables such as temperature, humidity and precipitation Rising average temperature causes heat stress, drought, wildfires and changes in rainfall patterns. Some of the Group’s manufacturing sites are in areas exposed to heat stress and precipitation, and some are at risk of rising sea levels. Our workforce may be affected if the average temperature ■ We continue to monitor the ongoing risk at our most vulnerable sites. ■ Approved capital
We supply to industrial OEMs. If our customers’ existing products and services become obsolete, our ability to achieve growth well above GDP may be impacted. Timeframe Short – long term
The impact of this risk is minimised, as our product and technologies portfolio and customer base are broad. We do not rely heavily on single customers or end markets. Our customer concentration is considered low, with the top ten customers representing around a quarter of Group revenue. We continue to focus our attention on supporting customers in markets which are essential for the transition to a low-carbon economy, such as renewable energy.
■ Completed one
acquisition during the year, Storm Interface, and the acquisition of Trival Antene was completed on 1 April 2026. The acquisitions give the Group exposure to new verticals, such as the defence sector.
Using our new in-house Climate Analysis Tool, we have identified a number of sites that may be affected by changing climate patterns in the next 30 and 80 years. The analysis showed rising temperatures and precipitation were likely to impact a number of our businesses. Based on the insured asset value of each site and the predicted future impact, we have prioritised fifteen sites for further analysis and investigation. We are now working on plans that aim to mitigate the key risks within the next ten years. For leased properties at high-risk sites, relocation may also be considered when the lease is up for renewal.
expenditure for electric air-source heat pumps at our site in Noratel Poland will also protect our employees from increasingly high summer temperatures.
continues to rise. Our supply chain may also be disrupted, causing delays and cancellations. Timeframe Medium – long term
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discoverIE Group plc Innovative Electronics
Annual Report and Accounts for the year ended 31 March 2026
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