Climate change and Downer’s TCFD response

TCFD disclosure

Climate change presents a challenge to enhancing liveability, sustaining the modern environment, Downer’s business operations, and the natural environment. While Downer’s business portfolio is diverse, it has limited exposure to the effects of climate change through fixed, long lived capital assets. Downer’s diverse portfolio allows us to be flexible and agile to redeploy assets to high growth areas as markets change. This diversity of portfolio strongly positions Downer to mitigate and manage our exposure to climate risks and to maximise the business opportunities it presents.

Downer accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of the science related to climate change and supports the Paris Agreement in transitioning to net-zero emissions by 2050 to limit global temperature increase to 1.5°C by the end of this century. Downer considers climate change to be one of its material issues.

In FY19, Downer implemented the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) in assessing the financial implications of climate change on Downer. In its implementation of the TCFD recommendations, Downer used climate scenario analysis as a key step to understand the resilience of the business under different climatic futures.

Global scenarios were used to inform a top-down assessment of how the physical climate might change, the hazards that our workforce might be exposed to, and how the services Downer provides to key sectors and markets may change. This was particularly important to Downer, as our company Purpose is to create and sustain the modern environment by building trusted relationships with our

customers. The scenario analysis informed strategic planning processes by looking longer-term to critically assess the products and services provided by the business in changing markets.

The scenario analysis was fed directly into Board strategy sessions and to Executive forums, where it remains a permanent consideration of the Board strategy. Further to the scenario analysis outcomes, broader sustainability issues are discussed at Board level. From a tactical perspective, Downer undertakes an annual exercise to test our strategic position on the back of the scenario analysis.

The outcomes of the scenario analysis contributed to a change in the overall strategy of the business. In February 2020, Downer announced it would shift investment in high capital intensive activities to lower intensive and lower carbon activities. Climate change and sustainability were also elevated to retain market share and to secure new customers. This strategic shift will support Downer’s decarbonisation pathway and market position in a low-carbon economy.

TCFD governance
TCFD risk management
TCFD strategy
TCFD scenario analysis
GHG emissions reduction target

Downer recognises the uncertainties, challenges and opportunities that climate change presents and, despite the impacts of COVID-19, Downer remains committed to partnering with our customers and supply chain to achieve our long-term GHG emissions reduction target.