Disclose the organisation's governance around climate-related risks and opportunities
- Climate action is an integral part of business strategy and risk management, driven by the board, with implementation through an organisation-wide governance structure.
- The board has capacity and competence (through the use of board committees or similar arrangements) to respond to climate-related risks and opportunities effectively (including connected issues of technology and innovation), involving senior members of the board and executive function. This enables the board members to set the organisation’s climate strategy, including targets and periodic progress reviews.
- The risk management and audit committee reviews group level climate-related risks periodically and oversees climate-related financial disclosures.
- The organisation acts as a positive agent for regulatory and policy change, playing an active role in environmental policy development forums, assisting the government in its rationale and responding on any policy consultations.
- Board and management are committed to transparency on climate lobbying activities, both in respect of direct advocacy and indirect representation via trade associations; and ensure alignment between those practices and expectations of the board and shareholders.
- Organisation leads and also participates in various cross-industry initiatives in connection with its climate-related risks and opportunities impacting its business.
- Where appropriate to the organisation, consider if a climate transition plan (i.e., a company’s commitment to get to net zero and when) should be presented to and voted on by shareholders.
- Remuneration and financial incentives for executives are linked to progress towards achieving short, medium and long-term climate targets.
- Cross-functional teams including members from across the asset owner’s functional groups work collaboratively on the detailed delivery of the climate strategy and to review implementation of projects.
- The asset owner has established governance structures focussed on carbon abatement across its portfolio of assets and projects and has developed systems for prioritisation of climate projects, carbon pricing and benefits.
- Active engagement with whole supply chain on carbon reduction and climate risk mitigation.
- Climate-related risks and opportunities are integrated into standard board agendas and take into account all broad strategic fields which may be impacted: e.g. capital investment, financial planning, remuneration, mergers, acquisitions and divestures.
- Include within the company’s articles of association (perhaps as part of the company’s purpose), a reference to its commitment on climate change commitments, minimising climate-related risks and maintaining sustainable assets.
- Have a system in place for internal controls, to ensure any emerging risks and uncertainties are taken into account in the company’s accounting judgments, disclosures, processes, audit and financial statements.
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where such information is material
- Have two targets – the first for reduction from a set period in the past to the near future and the second from now to say 30 years from now.
- Play active role in UN conferences: for example be a principal partner of COP27 and work closely with the UK government and other sponsors to create a successful and ambitious climate change conference in Egypt in 2022.
- Invest in research and development in accelerating hydrogen blending into the transmission infrastructure, working with laboratories, industry leaders and academic institutions.
- Work closely with the Science Based Targets initiative (SBTi) to increase the ambition of scope 3 target to cover emissions across entire value chain.
- Ensure the supply chain is behind the strategy, carrying out workshops in partnership with your supply chain.
- Install electrical vehicle charging points across asset portfolio.
- Work with a delivery partner to fund and develop innovative solutions around renewable energy (for example solar) such that energy on-site is from on-site renewable sources.
- Receive the prestigious climate change ‘A’ score from CDP Climate Change for actions in corporate sustainability for cutting emissions and moving towards a low-carbon economy.
- Partner with a battery storage/hydrogen specialist.
- Support the development of vehicle charging infrastructure in the UK, and low-carbon alternatives, such as hydrogen, for heavy transport.
- Operate an environmental sustainability policy which establishes environmental compliance and environmental sustainability performance requirements for all operational and non-operational activities.
- Work towards procuring all electricity from REGO-backed renewables, and look towards direct purchasing from renewable projects through power purchase agreements.
- Use of smart data to gather information from assets, including office occupancy, to help decide how to control energy-intensive service equipment.
- Develop an engagement programme with customers to increase collaboration on energy usage.
- Establish an internal shadow price of carbon to help them consider the cost of carbon emissions in their investment decisions.
- Measure supply chain against internal scorecard.
- Invest in improvements to active travel (cycle and walking routes) and public transport, deliver more electric vehicle charging points, and start work on designing a new zero carbon heating network and upgraded electricity distribution network to support the shift away from fossil fuels to renewable energy.
- Install water efficient fixtures in all refurbishment projects and identify further opportunities for rainwater harvesting.
- Acknowledge that the energy system is transitioning from high to low carbon and coincide this change with a shift to more decentralised generation, including renewables and battery storage. As the volume of intermittent and distributed generation increases, acknowledge a more resilient and flexible system will be required.
Disclose how the organisation identifies, assesses and manages climate-related risks
- Ensure all climate-related risks are registered on the risk register, updated on an ongoing basis and fully integrated into the organisation’s overall risk management and governance processes (including, as relevant, at individual project level).
- Consider transition risks and ensure that they are factored fully and consistently into future financial long-term forecasts for those areas of the balance sheet whose recoverability is assessed based on expected future cash flows, including property, plant and equipment, expansion assets in the course of construction, intangible assets, investment properties and deferred tax assets.
- Introduce climate component to procurement processes with pre-acquisition due diligence and in vendor reports prior to exit.
- Implement ERM process for managing climate-related risks on an ongoing basis across the asset owner's operations, including through the training of staff and the integration of early warning indicators and mitigation strategies into risk management governance procedures.
- Outline in strategy plans, all-risk management actions and an execution plan for each of the identified climate-related risks.
- Ensure that the useful economic lives of existing assets are appropriate, particularly with regard to the physical risks identified as well as with regard to published net zero sustainability strategy.
- Operate all portfolio properties in line with ISO 50001 Energy Management System ensuring to measure, manage and monitor energy performance. Where this is not possible, outline financial impact of mitigation/no-mitigation scenarios.
- Develop properties using well-defined sustainability brief for developments and with consideration to the risks of climate change.
- Identify ongoing approach for measuring how climate-related risks are prioritised using risk assessment tools.
- Complete risk analysis and continue to monitor specific climate change at key operating locations (covering major operating sites and major supply chain and logistics networks), using globally accepted climate change scenarios.
- Complete risk analysis and continue to monitor transition risks impacting the business (including green material and energy demand, impact on supplier pricing, risk of increased regulation and potential for non-compliance with net zero carbon operating environment).
- Identify climate change induced physical risks in the form of supply chain disruption including potential delays due to adverse weather conditions as well as capital project delays including unplanned costs and loss of production.
- Assess financial impact of executing actions for addressing climate-related risks as identified in strategy over time horizons that allow for appropriate financial planning.
Metrics & targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material
- Adhere to the United Nations Science Based Targets initiative and follow guidance from Intergovernmental Panel on Climate Change (IPCC).
- Utilise metrics to assess climate-related risks and opportunities in line with the organisation’s strategy and risk management process.
- Use appropriate science-targets to manage climate-related risks and opportunities, which take account of the specific profile of the business and refine and update the optimum methodology to monitor performance against these targets.
- Report on comprehensive metrics. Examples include:
- energy use, including like-for-like performance for controlled assets;
- energy performance concerning the MEES regulations and EPCs;
- electricity purchased via renewable energy sources;
- water use in controlled assets;
- proportion of portfolio with sustainability ratings (e.g. BREEAM, Code for Sustainable Homes and SKA);
- Waste resulting from offices and buildings.
- Provide assurance of the organisation’s reported GHG emissions against International Standards on Assurance Engagements.
- Implement ISO 14001-certified Environmental Management System and Environmental Sustainability Standard.
- Measure and report in accordance with the World Resources Institute and World Business Council on Sustainable Development Greenhouse Gas Protocol.
- Regular verification of methodology for measurement of emissions against relevant best industry standard(s) applying to all aspects of the organisation’s operations.
- 100% of scope 1, 2 and 3 emissions independently assured against ISAE 3410 Assurance Engagements on Greenhouse Gas Statements.
- Collect and report data complying with the UK Government’s Streamlined Energy and Carbon Reporting (SECR) Requirements.
- Collaborate with supply chain and incentivise the tracking, collection and sharing of actual carbon data.
- Develop and implement systems to track, and report on actual carbon emissions data at scope 1, 2 and 3.
- Report on all operational and construction sites and both permanent and temporary offices.
- Obtain third-party certification of performance against targets on all projects.
- Use both location and market-based approaches to measure energy emissions depending on the circumstances.
- When renewable energy is used, use the market-based method to reflect the emissions from renewable electricity tariffs that a company has chosen to purchase that are backed by Renewable Guarantees of Origin (REGO) certificates.
- Undertake further research and analysis to better understand and measure how climate-related issues translate into potential finance impacts for the business.