How we manage climate change 

We recognise that climate change is a critical issue for our stakeholders as well as for wider society. The impact of climate change also poses potential risks and opportunities to our business which need to be effectively managed on behalf of all our stakeholders.

In our 2021 Annual Report we confirmed that we support the recommendations provided by the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD), which call on companies to disclose the impacts of climate change on their business. In 2022, we took action to disclose in line with the TCFD and a summary our achievements is detailed below. Full details of these disclosures can be found in our 2022 Annual Report.

Climate achievements and priorities overview

The Board has the ultimate responsibility for the management of risks and opportunities relating to climate change. The Audit and Risk Committee considers climate risk in detail as part of its broader risk oversight remit. Executive governance of climate-related matters is undertaken through the Environment Oversight Group with strategic matters considered at Country Management Team (CMT) meetings.

Achievements in 2022

  • The Board reviewed and endorsed actions designed to enable compliance with the TCFD.
  • The Audit and Risk Committee approved changes to our Enterprise Risk Management Framework (ERMF) concerning climate-related risk.
  • The formal responsibilities of the Board and its Committees were updated to include explicit reference to climate.

2023 focus areas

  • Enhance reporting to the Board and its Committees on relevant external climate-related developments.
  • Incorporate climate considerations into key decisions taken by the Board including strategic planning.
  • Develop management information for the Board to assist with oversight of our management of climate-related risks.

The Group looks to create robust assessments about the risks and opportunities of climate change and ensure these are considered appropriately when making key decisions, such as strategic planning, budgeting and project oversight. 

Achievements in 2022

  • Insight into the risks and opportunities of climate change on our business model was developed.
  • Assessments were made about the future impact of climate on the Group’s business and strategy.
  • We reviewed externally-developed proposals for green lending products in our European home credit markets.

2023 focus areas

  • Embed new processes to ensure climate-related issues serve as an input to key decision-making processes at Group and market level.
  • Progress scenario analysis to provide greater insight on the resilience of the Group’s strategy in different climate scenarios.
  • Identify targets relating to climate and report on progress regularly to the Board.

The Group seeks to understand the risks from climate change which will impact its operations, business model and customers over time.

Achievements in 2022

  • Climate risk was incorporated as a key risk in the Group’s risk management framework.
  • Climate risk was regularly reviewed through existing risk governance forums.
  • Climate risk was assessed by a cross-functional group of subject matter experts over different time horizons and the output of this work was endorsed by the Board.

2023 focus areas

  • Enhance KPIs for monitoring climate risk.
  • Refine internal control arrangements for this risk category.
  • Identify specific risks through credible scenario analysis processes.

The Group has in place targets for greenhouse gas (GHG) emissions and other environmental impacts and can accurately measure these. 

Achievements in 2022

  • Scope 1 and 2 emissions reported in line with GHG Protocol and verified independently.
  • Scope 1 and 2 emissions increased by 1% as normal business operations resumed post-pandemic.

2023 focus areas

  • Creating a credible transition plan which aligns to the 1.5°C pathway.
  • Develop credible emissions-related targets.
  • Measure other climate targets including those for energy use, paper use, and waste and recycling.

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