Climate resilience CSL conducted scenario analysis in the reporting period to stress-test the potential effects of its inherent climate-related risks and opportunities on its business model and strategy over time. The analysis for transition risks used a low emissions scenario developed by Network for Greening the Financial System (NGFS) Net Zero 2050 scenario. The analysis for physical risks used a high emissions scenario anticipating 4°C global warming by 2100, developed by the Intergovernmental Panel on Climate Change (IPCC). We did not assess transition risks under the high emissions scenario or physical risks under the low emissions scenario, as we determined that these risks were unlikely to be material. For example, physical climate risks were not expected to have a material impact under the low emissions scenario. These scenarios were selected based on the ability to stress-test CSL’s business, providing a worst-case scenario for physical risks (high emissions scenario) and consistent with the Paris Agreement aligned to a less than 2°C pathway perspective for transitional risks (low emissions scenario). The scenarios were supplemented by publicly available sources and industry data to consider sector-specific conditions under each pathway. The time horizons used for scenario analysis are the same as applied for the climate-related risk and opportunity identification and prioritisation. Climate-related scenarios and resilience Climate-related scenarios CSL’s business resilience under this scenario High emissions, high physical risks scenario IPCC: Shared Socioeconomic Pathway (SSP) 5–8.5 Key scenario assumptions: • I nternational policy response to climate change is slow and adaptation measures to reduce emissions are halted • A bsence of policy in various jurisdictions leading to high warming outcome • G lobal energy mix remains unchanged, with fossil fuels the dominant source • P hysical impacts from climate hazards will become more pronounced Areas of uncertainty: • C limate modelling and the accuracy of long-term climate projections is limited • T he granularity of climate models limits local detail and topography, which may reduce or increase the impacts of climate hazards Under a high emissions scenario, where this could be quantified, the financial effects of physical risks were found not to be material. CSL’s business operations and value chain are sufficiently agile and diversified to respond to localised physical impacts. Whilst still not considered material as per CSL’s Enterprise Risk Management Framework, the impacts of the aggregate physical risks disclosed are expected to be more pronounced in the medium to long term. Despite more pronounced impacts in the medium and long term, CSL’s strategy and business model are assessed to be resilient. Regardless, CSL does undertake activities to adapt to/mitigate the impacts of these disclosed risks. Details on efforts to increase CSL’s resilience to these climate-related risks are further elaborated in each risk table (see section on pages 146–147). 1.5°C low emissions, high transition risk scenario NGFS: Net Zero 2050 scenario Key scenario assumptions: • I nternational stringent climate policies to achieve net zero by 2050 • I nnovation is accelerated (including carbon dioxide removal use) • E lectricity grids decarbonise rapidly, and onsite fossil fuel sources are replaced with renewable alternatives • E nergy transition and transition to a low-carbon economy are accelerated Areas of uncertainty: • F uture policy is uncertain and expected to be inconsistent across the markets in which CSL operates • T he availability of renewable energy and certainty of future prices Under a low emissions scenario, where this could be quantified, the financial effects of the transition risks were found not to be material. As a biotechnology company, CSL’s operations have limited exposure to carbon pricing risks, and demand for CSL’s products are expected to continue under a low emissions scenario. Regardless, CSL does undertake activities to adapt to/mitigate the impacts of these potential risks. Details on efforts to increase CSL’s resilience to these climate-related risks are further elaborated in each risk table (see section on pages 146–149). Key assumptions for carrying out scenario analysis While assessing CSL’s resilience across the scenarios, CSL applied significant assumptions for its operations and value chain: • N o additional strategic responses/controls are considered, such as engineering climate controls, e.g. flood gates, increased renewables or policy interventions such as emergency response plans, beyond what is currently deployed or planned by 2030. • Energy mix used for short-term carbon pricing impacts considers what is planned to meet CSL’s near-term SBT. • C SL’s energy mix remains unchanged for medium- and long-term analysis of carbon pricing impacts beyond 2030 assumptions. • The analysis focused on CSL as a whole, rather than on separate business units (CSL Seqirus, CSL Behring and CSL Vifor). 2. Assessed assets represent greater than 90% of CSL’s Total Fixed Asset Value, excluding leases and impairments. Sustainability Report 150 Sustainability Report
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