NCC Group plc Annual Report 2022

Strategy

TCFD recommended disclosure

NCC Group disclosure

Developments in FY22

Focus areas for FY23

Strategy

• See tables describing risks and opportunities

• Implemented a TCFD working committee across the business

• To monitor actions arising from risk register

A. D escribe the climate related risks and opportunities the organisation has identified over the short, medium and long term. B. D escribe the impact of climate related risks and opportunities on

• Not considered material to NCC Group; however, there are opportunities arising that should be maximised • Scenario analysis undertaken; only two office locations at risk of rising sea levels with mitigations in place reducing risk

• Reviewed risks and opportunities, mitigations and associated financial impact

• To map NCC Group’s net zero journey

the organisation’s businesses, strategy and financial planning.

• Obtained independent risk report on office locations at risk from flooding and extreme weather conditions

• To further review sea level analysis and scenario planning and assess if the risk changes

C. D escribe the resilience of the organisation’s strategy, taking into consideration different climate related scenarios, including a 2°C or lower scenario.

• Energy source: use of lower-emission sources of energy, introduction of an electric/hybrid salary sacrifice car scheme for all UK colleagues creating reduced costs, exposure to future fossil fuel price and improves colleague engagement and wellbeing (medium to long term) • Market: can sell into industries which are significantly changing due to climate change resulting in increased revenues, e.g. oil and gas companies expanding into alternative energy, smart meters, electric vehicles, IOT technology to reduce waste, cloud data centres, etc. (short to medium term) • Resilience: increased investment opportunity due to responsible, sustainable business model (short to long term) Scenario analysis One of the physical risks is our office locations due to two (Amsterdam and Delft) being at risk due to rising sea levels. We have undertaken modelling on different scenarios (see Metrics and Targets section); however, global temperature rises and extreme weather are not expected to have a fundamental impact on our business model. If sea levels rise above 5m, then the risk increases, but existing flood defences are expected to mitigate any near-term impact and the ability to now work remotely has been tested. Furthermore, our leases on these offices expire between 2023 and 2025 so this risk does not impact the useful life of the infrastructure for NCC Group. Qualitatively, at a 4°C scenario (i.e. business as usual) our physical risks will likely materialise without intervention from local land management/governments. However, as we aim to align to a 2°C world, our transition risks will need to be modelled and assessed on an ongoing basis. Once we have mapped out our net zero journey and timelines in calendar year 2022, we will review our scenario analysis and assess the resilience of NCC Group against our risks, but at this time, with the information available, we don’t believe there is an impact on our strategy under a 2°C scenario. Financial planning Due to the mitigations noted in our full TCFD report, and the nature of our industry, we do not believe the current climate related risks pose a material financial impact to our business; however, we do have significant opportunities that we are working to maximise. For future acquisitions, capital expenditure, research and development or general operating costs and revenues, we will ensure climate related issues are considered within the financial planning process.

We are taking responsibility for reducing carbon emissions and being able to articulate the impact of climate change – both opportunities and risks – on our financial performance. Climate related risks A new strategic risk has been identified (cross-refer to Principal Risks section) in relation to climate change within the Group’s principal risks and uncertainties and associated operational risks beneath that. Through our risk management framework (see Risk Management section on pages 64 to 72), we have identified and assessed climate related risks and categorised into the short (<1 year), medium (1–5 years) and long term (>5 years). We have also identified the impact that the risks have on the business, client services and supply chain and the corresponding mitigations in place to reduce the risk. All risks identified affect the Group in its entirety except where specific locations have been highlighted. Examples of the types of climate related risks and opportunities faced by NCC Group include the following: Transition risks • Greenhouse gas emissions: increased costs associated with more taxes and levies (medium term) • Move to net zero: increased costs required to lower emissions (long term) • Margin risk: impact on service charge out rates and associated erosion of profit margin due to increased costs because of climate risk (medium term) • Reputation: failure to comply with climate change related (medium term) • Regulations to achieve goals may negatively impact public perception (medium term) • Supply chain: increased supply costs and delayed deliveries (medium to long term) Physical risks • Extreme weather (acute): causing business disruption and loss of service delivery and therefore revenue (short to long term) • Sea level rises (chronic): increased likelihood of flooding in Delft and Amsterdam offices causing increased insurance premiums (long term) Opportunities • Resource efficiency: more efficient modes of transport, recycling,

hybrid working and efficient buildings creating less cost and improved colleague engagement and wellbeing by removing unnecessary travel (medium to long term)

NCC Group plc — Annual report and accounts for the year ended 31 May 2022

41

Made with FlippingBook Online newsletter maker