3. Task Force for Climate Related Financial Disclosures (TCFD)
Our assessment of climate-related risks and opportunities considered the current and future strategic control measures to enhance the resilience of our business strategy under both of our chosen climate emission scenarios. Over time, we will continue to assess our business and forthcoming Environmental, Social and Governance (ESG) strategies against our identified climate-related impacts. This will include current and emerging risks and opportunities across the regulatory landscape, such as imposed limits on emissions, as well as the most prevalent transition risks to our business strategy. A predicted global temperature increase, between 1.7°C and 3.2°C, in line with current climate change policies, pledges and commitments. If the world continues on its current trajectory, this is seen as the most likely scenario. A global temperature increase, between 3.2°C and 5.4°C, where carbon emissions continue growing, unmitigated. With no mitigation, this is deemed the worst-case scenario.
Medium-emission scenario (RCP 4.5)
In 2021, we reasserted our promise to ensure our impact on social, economic and environmental facets of society remained positive. The promise underlined our commitment to aligning with the Task Force on Climate-related Financial Disclosures (TCFD) and included the development of a climate scenario risk mitigation plan. We recognise that our operations and business model, both now and in the future, face climate-related risks. Recent global events and weather patterns illustrate the reality of climate change. For this reason, we understand that we have a role to play in the effort to tackle climate change and in addressing the risks which it poses to our business. In 2022, we have focused on enhancing our understanding of climate-related financial risks and opportunities and their potential impact on our business. Our approach is structured in line with the four TCFD recommendations and supporting disclosures:
Climate scenarios
High-emission scenario (RCP 8.5)
We developed our climate scenario analysis in line with the latest climate science released by the Intergovernmental Panel on Climate Change and the UK Met Office, identifying two Representative Concentration Pathways (RCPs) as the basis for our modelling. 1 The RCPs represent two contrasting, potential climate-change futures. To inform our scenario analysis, we adopted a portfolio-wide approach to consider the most significant climate-related risks and opportunities for the business across the UK. This process used the latest climate data from the Met Office to identify the projected climate changes across England, Scotland and Wales. 2 For each identified climate-related risk and opportunity, we assessed the significance across three chosen time horizons: short term (2022 to 2030), medium term (2030 to 2040) and long term (2040 to 2050). Consistent with TCFD requirements, we considered the following. • Transition risks: policy and legal, technological, market and reputation impacts associated with the implementation of measures to reach a low carbon economy. • Physical risks: direct damage resulting from climate change. These can be event-driven (acute) or long-term shifts (chronic) in climate patterns. • Opportunities: realised benefits of climate change arising from new policies, operational efficiencies and resource efficiencies, capitalising upon the low carbon market and technological drivers.
• Governance (see pages 36 and 37)
• Strategy (see page 23)
• Risk management (see page 31)
• Metrics and targets (see page 26)
A summary of our performance against each supporting disclosure is outlined in the sections below, and a reference table can be found on page 26. TCFD Strategy In 2021, we declared our commitment to combatting climate change and in 2022 we continued to act upon this, taking steps in the identification of our climate-related risks and opportunities. We developed a robust approach to climate scenario analysis, using this to inform how climate-related risks may impact our business.
1 Representative Concentration Pathways (RCPs) were defined by the Intergovernmental Panel on Climate Change (IPCC). The RCPs are considered a method to set different scenarios under economic, social and physical assumptions that might occur because of climate change, and compare global carbon emissions
against pre-industrial levels, projecting the effects from now until the end of the century. 2 UK Climate Projections 2018 (UKCP18): Science Overview Report, Met Office, 2018.
Whistl Annual Report 2022
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