Climate Scenario Analysis Comparison

Science-based target under development aligned to 'well below 2°C' pathway, requiring absolute reduction in carbon emissions with no provision for offsets. Decarbonisation roadmap identifies four technology levers needed to reach net zero by 2050, with no known technology mix enabling absolute zero emissions by 2050, necessitating offsetting for residual emissions.

Orderly scenario: Stable conditions, increased demand for climate-resilient seedlings, access to green financing. Too Little Too Late: Moderate-to-high physical impacts, supply chain disruptions, increased demand for carbon sequestration. Hot House World: Frequent extreme weather, severe supply chain disruptions, labour shortages in Brazil, but increased demand for resilient genetics and building materials. Scenario analysis conducted in FY24 using workshops with management and external consultants (WSP NZ); no quantitative financial modelling performed. Company considers scenarios appropriate and continues to use them.

Fisher Funds used FSC Climate Scenario Narratives aligned with NGFS scenarios to assess portfolio resilience. Orderly scenario represents medium transition risk and low physical risk with steady emissions decline (3.4% p.a.). Too Little Too Late represents high transition risk and medium physical risk with delayed global action (1.0% p.a. emissions reduction). Hot House World represents low transition risk but high physical risk with minimal emissions action (0.4% p.a. reduction). Analysis identified physical risks across Financials (23% of portfolio), IT (19%), Health Care (19%), Communications (18%) and Industrials (13%) sectors. Transition risks identified in IT, Health Care, Communications and Industrials sectors. Portfolio TVaR remains flat at 2% of portfolio value (2050 scenario). Portfolio VaR remains flat at 0.2% of portfolio value (2050 scenario).

Orderly 1.5C scenario: Coordinated global action, progressive policy, rapid technology uptake, transition risks initially increase short-medium term then reduce. Too Little Too Late >2C: Misaligned delayed transition, varied societal pressure, moderate carbon pricing, delayed technology development, transition risk increases rapidly short-term then plateaus, physical risk climbs steadily. Hothouse >3C: Minimal action, limited social pressure, policy reversal, limited technological change, limited transition risk but significant acute/chronic physical risks materialize, exponential financial impacts long-term. Booster considers scenarios sufficient for investment management purposes despite some inputs now outdated.

Physical risk assessment across 26 sites shows overall portfolio low risk for flooding, coastal inundation, coastal erosion, and sea level rise. Landslide risk identified as low overall with 4% of properties at high risk. Climate variables (temperature, wind, rainfall) assessed across medium-term horizon. Transitional risks vary by scenario: 1.5°C Orderly scenario assumes immediate ambitious policies with enabling regulations and reduced implementation costs; 2.0°C Disorderly scenario assumes delayed policy response post-2030 with rapid catch-up and supply chain disruptions; >3.0°C Hot House scenario assumes no additional decarbonisation policies with severe physical impacts and limited transition risks. Key drivers identified include policy/regulation, market changes, and technology trends. Financial impacts quantified in some scenarios (e.g., carbon price ranging from $35-$250/tonne CO2e by 2050).

Green Light (orderly transition): Rapid decarbonisation with SAF available mid-2030s, green hydrogen from mid-2030s, EV mass adoption by 2035, NZ population 6.04M by 2050, sea level rise 0.22m by 2050. Amber Light (disorderly transition): Delayed renewable fuel development, SAF not available in quantity until post-2040, green hydrogen post-2040, slower EV adoption, NZ population 5.94M by 2050, sea level rise 0.24m by 2050. Red Light (no decarbonisation): Minimal renewable fuel technology advances, conventional fuels continue, NZ population 6.94M by 2050, sea level rise 0.28m by 2050, extreme physical impacts. Channel positioned to operate across all scenarios; jet fuel demand expected to remain stable/grow in all scenarios due to NZ geography and tourism/export importance.

Orderly scenario: About half of North Island expected to decrease in suitability for Sauvignon Blanc; remainder of North Island and bulk of South Island expected to have small to moderate gains. Marlborough expected to increase slightly. Disorderly scenario: Some current Sauvignon Blanc vineyards in Gisborne and Hawke's Bay negatively impacted; Marlborough increases slightly; 17 additional hot days (>25°C) per year mid-century in Hawke's Bay; 33 days by end of century. Hothouse scenario: By end of century, most North Island expected to have substantial losses in suitability; South Island expected to have gains; Canterbury and parts of Otago overtake Marlborough in suitability. For Barossa Valley: Orderly scenario shows 25-85% increase in days over 35°C by 2090, 15% rainfall reduction by 2050, 5-35% increase in severe fire weather days by 2050. Disorderly scenario: 7.4-15% rainfall decline by 2050, 23% increase in irrigation water demand by 2050s, 50% more hot days by mid-century, irrigation water demand not met in 55% of years by 2050s. Hothouse scenario: 60% time in drought by 2090, greater bushfire risk with smoke taint risk.

Scenario analysis performed by Deloitte (2018-2024) informed quantum and timeframe of risks. Physical risks: short term (2030), medium term (2050), long term (2070). Transition risks: short term (2030), medium term (2040), long term (2050). Analysis considered Downer's entire value chain; transition risk analysis focused on Transport and Utilities business units and fleet supply chain; physical risk analysis considered direct operations and downstream customers. Scenarios stress-tested strategy against significant physical and transition risks. Orderly scenario assumes immediate policy reaction and rapid technology change with steady carbon price increases. Disorderly scenario assumes delayed policy until 2030 then rapid change with regional variation and stagnant then rapidly rising carbon prices. High climate change scenarios assume limited mitigation with slow technology change focused on adaptation.

Scenario analysis conducted in FY23 identified 16 risks and 11 opportunities. RCP 2.6 (best case) assumes major policy turnaround, net zero by 2050, rapid green tech adoption, strong mitigation/adaptation policies. RCP 4.5 (intermediate) assumes GHG stabilisation by 2050, most significant transition impacts, delayed/disorderly transition, slower green tech development. RCP 8.5 (worst case) assumes continued emissions rise, >3°C warming, mixed impacts with rising healthcare demand, supply chain disruptions, uncoordinated climate adaptation. Physical hazards identified for Australia: heatwaves, extreme heat, bushfires, drought, extreme rainfall, wind, coastal flooding (NSW, WA, VIC, SA, QLD, TAS). New Zealand: extreme rainfall (Auckland), coastal flooding (Wellington). Group's business characterised by low-to-moderate climate vulnerability. No material current impacts experienced in FY25.

Physical risk assessment shows moderate overall exposure with flooding as key hazard. Flood exposure (current day) is relatively modest with 69 sites showing high/very high exposure. Increases in risk due to climate change are modest, with only 12 NZ sites showing risk grading increase under RCP 8.5 scenario. Annualised flood loss ~$11m/year, increasing ~5% by 2100 under SSP1/SSP2 and ~12% under SSP3. Transition risks are assessed as more significant than physical risks, with 80% of business activities vulnerable to at least one material transition risk. All business activities can take advantage of transition opportunities.

Scenario analysis used to identify range of possible climate-related risks and opportunities across physical and transition factors. Orderly scenario shows relatively subdued physical and transition risks. Disorderly scenario shows highly disruptive transition but avoided major physical impacts. Hothouse scenario shows severe physical impacts with some irreversible changes and focus on adaptation. Analysis feeds into strategic planning process to test resilience of corporate and business strategies.

Fonterra acknowledges that New Zealand's emissions profile is unique with ~50% from agriculture. The company supports a 1.5°C pathway and the Zero-Carbon Amendment Bill. It notes that New Zealand's climate-efficient dairy production and regions less severely impacted by climate change present opportunities. However, achieving proposed methane targets (24-47% reduction by 2050) requires breakthrough technologies not yet commercially viable. Fonterra's on-farm emissions intensity has improved ~15% since 2008 but remains sensitive to production volumes and feed inputs. Manufacturing emissions have reduced 1.4% toward a 30% target by 2030.

Fonterra committed to Paris Agreement targets (below 2°C, pursue 1.5°C). Science-based target approved by SBTi for manufacturing emissions (30% reduction by 2030 from FY15 baseline). On-farm emissions: NZ Biological Emissions Reference Group identified potential 10-21% reduction by 2030 and 22-48% by 2050 relative to baseline, but requires comprehensive breakthrough mitigations not yet technically/commercially viable. Current trajectory shows 5.7% manufacturing reduction (FY20) and 6.2% on-farm reduction (NZ, since 14/15), indicating progress but acceleration needed.

Orderly scenario (1.4°C by 2050): Rapid, sustained emissions reductions; strong policy coordination; rapid technology change; medium transition risk (higher short-term); low physical risk. Disorderly scenario (1.6°C by 2050): Delayed policy action until 2030s; reactive policy responses; high transition risk; medium physical risk. Hot House World (3+°C by 2050): Minimal policy action; slow technology change; low transition risk; high physical risk with routine disruptions to freight network. Physical risks (weather disruption, asset damage, sea-level rise) rated Very High across all scenarios in short-term. Transition risks (carbon pricing, accelerated vehicle transition, supply constraints, finance/insurance aversion, customer expectations) rated High to Very High across scenarios. All of Freightways' business activities currently exposed to transition risk due to reliance on fossil fuels. Route and Premises Exposure Assessment (FY24) identified: NZ routes - 18% exposed to high/extreme sea-level rise disruption by 2050; 69% expect low/moderate storm increase; 5% exposed to moderate/high rainfall. Australia routes - 21% exposed to moderate sea-level rise impact by 2050. NZ premises - 45% exposed to high/extreme storm increase; 6% exposed to sea-level rise. Australia premises - minimal exposure to hot days, rainfall, fire danger; no depot exposure to sea-level rise.

Physical risks assessed as low for 97% of Core Portfolio; pluvial flooding is most significant physical risk but concentrated in few assets. Transition risks (market, regulatory, reputation) are primary concern across all scenarios. Orderly scenario drives near-term demand for Green Star and energy-efficient space. Disorderly scenario creates supply constraints and cost escalation for low-carbon materials. Hot House scenario poses long-term stranded asset risk and insurance cost increases. Early movers in sustainable development gain competitive advantage.

Net Zero 2050 scenario: Swift transition driven by consumer preferences for eco-friendly products; companies adapting quickly gain competitive edge; new business models (rentals, sharing) grow; natural fibres resurge; supply challenges as retailers align with decarbonizing suppliers; governments implement strict climate policies. Delayed Transition scenario: Early climate action sidelined by economic pressures; inconsistent policies; companies struggle to balance decarbonisation with consumer cost concerns; delayed investments in circularity; by late 2020s/early 2030s, severe physical impacts shift sentiment toward rapid decarbonisation; governments enact stringent measures; spike in demand for decarbonisation tech creates fierce competition; by 2050, retail aligns with low-carbon economy but delayed start results in higher costs and missed opportunities for local firms. Current Policies scenario: No new climate policies; global priorities shift to food/energy security; emissions growth unchecked; long-term planning difficult; by 2030s-2040s, worsening chronic and acute impacts force retailers to invest heavily in adaptation; by 2050, chronic impacts combined with acute events severely disrupt sourcing and logistics; rising commodity prices and frequent shortages lead to public disorder.

Fisher Funds adopted FSC Climate Scenario Narratives for the Financial Services Sector. Orderly scenario represents medium transition risk and low physical risk with steady emissions decline (3.4% per annum). Too Little Too Late represents high transition risk and medium physical risk with delayed global action and 1.0% per annum emissions reduction. Hot House World represents low transition risk and high physical risk with minimal emissions reduction (0.4% per annum). Portfolio TVaR for transition risk is 4% of portfolio value (2050 scenario), declining from -3% in base year. Portfolio VaR for physical risks remained at 0.7% of portfolio value in both years. None of the potential climate-related risks were confirmed to have impacted investee entities during the 12-month period ending 31 March 2025.

Orderly scenario: immediate policy action, fast technology change, moderate physical and transition risks. Disorderly scenario: delayed policy until 2030-32, then rapid change, moderate physical and high transition risks, supply chain constraints. Hot House World: no additional climate policy, extreme physical risks, low transition risk but severe financial/economic disruption. Key drivers identified: insurance, extreme weather events, scarcity of low carbon materials, spatial strategies, land use change. Portfolio assessed as not at significant risk from sea-level rise by 2050, but moderate risk from flooding under Scenario 3 long-term. Insurance retreat likely for floodplain properties by 2040-2050.

Scenario analysis indicates transition impacts will be broadly similar in scale but different in experience between Orderly and Disorderly scenarios, with immediate steady evolution contrasted to delayed followed by violent readjustment. Physical impacts increase significantly under BAU scenario. Orderly Transition avoids worst catastrophic climate events but imposes significant near-term transition risks. Disorderly Transition results in abrupt tipping point in early 2030s with steep, disruptive policy response. BAU scenario leads to widespread climate-related catastrophes, deep economic retrenchment, and permanent changes to climate, economic and social systems. Mainfreight's approach remains consistent with managing for each scenario based on current context and outlook.

Fisher Funds used FSC Climate Scenario Narratives aligned with NGFS scenarios (Net Zero 2050 Orderly, NDCs Too Little Too Late, Current Policies Hothouse) to assess portfolio resilience. Orderly scenario represents medium transition risk and low physical risk with steady emissions decline. Too Little Too Late represents high transition risk and medium physical risk with delayed global action. Hot House World represents low transition risk but high physical risk with minimal emissions reduction. Analysis identified potential climate-related physical risk events across sectors with potential financial impacts on investee entities, though none were confirmed to have impacted entities in the 12-month period ending 30 June 2025.

MCK developed entity-level scenarios tailored to hotel operations, drawing from tourism and property sector archetypes. Orderly scenario assumes immediate policy action, fast technology change, moderate physical risk, and moderate-to-high transition risk. Disorderly scenario assumes delayed policy action until mid-2030s, then rapid transition, with high transition risk and moderate physical risk. Hot House scenario assumes no additional climate policies, slow technology change, extreme physical risk, and low transition risk. Under Orderly scenario, NZ tourism thrives with low-impact experiences by 2050; under Disorderly, tourism sector struggles due to late adaptation and high costs; under Hot House, some tourism operators unable to continue. Physical climate impacts increase across all scenarios, with sea level rise ranging 0.2m (Orderly) to 0.32m (Hot House) by 2050. MCK's portfolio shows resilience to physical risks in short-to-medium term across all scenarios.

Under Orderly scenario: high transition risk short-to-medium term, low physical risk medium-to-long term. Under Disorderly scenario: high-to-extreme transition risk short-to-medium term due to delayed investment and sudden policy shift post-2027, with carbon price rising from USD $22.42 to USD $461.45 by 2035. Under Hot House World: little-to-no transition risk but high-to-extreme physical risk long-term. Orderly scenario assumes early decarbonisation investment, strong technology uptake, and consumer acceptance of price premiums. Disorderly scenario characterised by supply shocks, resource scarcity, and conflicting market signals. Hot House World scenario features frequent severe weather events, reactive government response, infrastructure damage, and shrinking primary commodity logistics markets.

Scenarios based on Aotearoa Circle's 'Climate-related risk scenarios for the 2050s' (Marine/Seafood Industry) and Network for Greening the Financial System, adapted for NZKS. Kahawai describes orderly net-zero transition with carbon-neutral aquaculture by 2050, flexible marine governance, and NZ competitive advantage. Disorderly scenario shows delayed emissions reduction until 2030, slower decarbonisation, reactive business responses, higher costs. Mako describes rapid climate disruption, increased environmental stressors, slow government policy, prohibitive adaptation costs. Physical impacts range from +0.8°C coastal sea surface temperature (Kahawai/Disorderly) to +1.5°C (Mako); sea level rise 0.23-0.28m; ocean acidification 8.0-7.94 pH; dissolved oxygen decline 1-2%. Current management responses do not differ significantly across scenarios due to commercial viability constraints or limited optionality. NZKS became Aotearoa Circle partner in FY25 to collaborate on Seafood Nature, Climate and Te Ao Māori Scenarios (finalising FY26). No material change expected to currently disclosed risks/opportunities from updated scenarios.

Under 1.5°C scenario (Tū-ā-pae): smooth transition to net zero, subdued physical and transition risks, regenerative practices build resilience, thriving rural communities, strong international reputation. Under 2°C scenario (Tū-ā-hopo): delayed policy action until 2030, then rapid implementation, costly and disruptive transition, compound weather events around 2030 cause significant damage, stranded assets emerge, some farm operations lost but diversified farmers most successful. Under 3°C scenario (Tū-ā-tapape): unabated emissions, severe physical impacts, irreversible changes (ice sheet loss, sea level rise), high adaptation costs, food production falls until innovation enables indoor farming, little regard for biodiversity, community tension over water allocation. Key insight: productive, climate-resilient rural land likely to become increasingly scarce and valuable globally. NZL's broad strategy of purchasing high-quality land and partnering with skilled tenants stands under any scenario. Geographic and sectoral diversification critical for resilience.

Orderly scenario: Effective decarbonisation policies, rapid but steady emissions decline, moderate transition risk, lower physical risks. Disorderly scenario: Delayed policy response until mid-2030s then abrupt, highest transition risks, medium physical risks, supply chain volatility. Hothouse World: Limited effective policies, emissions continue rising, lowest transition risks but extreme physical risks including frequent blackouts, supply chain failures, workforce shortages, social inequity. Scenario analysis tested resilience of business model and strategy; outputs informed Board strategy day and transition planning.

Orderly scenario: Transition risks initially increase in short/medium term before reducing as society shifts to low carbon economy; physical risk remains relatively low; global economy benefits from stable transition. Too Little Too Late scenario: Misaligned and delayed transition; transition risk increases rapidly in short term, plateaus in medium term, increases again in long term; physical risk climbs steadily; wide-ranging acute and chronic impacts result in significant financial impacts. Hothouse scenario: Minimal action; limited transition risk but significant materialisation of acute and chronic physical risks; environmental outcomes severe with coastal flooding, water stress, droughts; financial impacts felt across all economies. Fund's diversification across regions and property end-uses helps mitigate idiosyncratic climate impacts across scenarios.

Radius Care undertook scenario analysis across three climate scenarios to identify climate-related risks and opportunities and assess business model resilience. Physical risks (heat, storms, coastal erosion) escalate from medium to high impact across scenarios. Transitional risks (insurance, disease) also increase in severity. Baseline scenario assumes current policy settings; Orderly assumes strong climate policies and rapid decarbonisation; Hothouse assumes policy failure and severe climate impacts. All identified risks affect all locations from Northland to Invercargill. No material opportunities identified in analysis. Company has not been significantly impacted by climate events to date due to geographic spread away from coastal areas and waterways.

Scales commissioned Climate Projection update from Urban Intelligence in August 2024 following NIWA release of downscaled AR6 climate forecasts. Update revalidated appropriateness of adopted scenarios. Scenarios based on Agri-Adaptation Roadmap with supplementary modelling by Urban Intelligence using GIS platform for physical changes across assets and geographies. New Zealand sites evaluated using Urban Intelligence Resilience Explorer™. International climate data from CMIP5 multi-model ensembles for Australia, Europe, USA. Orderly scenario assumes 89% renewable energy by 2050 with widespread CCS; Disorderly assumes 76% renewable energy with rapid shift post-2030; Hothouse assumes 46% renewable energy with limited transition efforts.

Scenario analysis identified 12 physical and transition climate-related risks and 7 opportunities across three scenarios. Net Zero 2050 scenario: immediate smooth transition, strong consumer demand for low-emissions products, robotics/automation growth, increased mineral demand, strong political ambition, climate litigation risk. Delayed Transition scenario: economic pressures dominate 2020s, climate action deprioritised, panic-driven policy response in late 2020s/early 2030s, haphazard policies with externalities, farmer impacts, fast consolidation in protein sector, increased operating costs, customers demand emissions data, disjointed international policy, insurance/finance access hinges on transition planning. Hot House World scenario: no additional climate policies, physical impacts continue, acute events cause infrastructure closures, chronic impacts degrade coastal infrastructure, legacy infrastructure unreliable, workforce stress and attrition, supply chain disruptions, geopolitical tensions, some businesses find opportunities in resilient systems and innovation. All areas of Scott's business susceptible to climate change impacts; physical and transition risks will impact different areas differently depending on geography and sector.

Orderly scenario: rapid low-carbon transition with significant shift from road to rail and coastal shipping; altered cargo structure with lower agricultural output and reduced petrol imports. Disorderly scenario: business-as-usual until climate disasters trigger sudden transition; severe cargo volume changes and stranded assets. Hot House scenario: continued fossil fuel reliance; cargo volumes increase due to stable agricultural output in Southland. Physical risks range from moderate (Orderly, Disorderly) to extreme (Hot House). Transition risks highest in Disorderly scenario. South Port's business model exposed to maximum plausible physical and transitional risks across all scenarios.

Orderly scenario: High transition risks in short-term (2-5 years) due to stringent climate policies and customer demand for low-carbon products; low physical risks. Disorderly scenario: Low transition risks short-term but high medium-term (2030-2050) as NZ rushes to meet net-zero goals; medium physical risks. Hothouse scenario: Low transition risks but extreme physical risks medium-to-long term (2030+) due to severe climate impacts. Most material short-term risks and opportunities relate to transition to low-emissions economy; physical risks remain low in short term.

Orderly scenario: immediate technology-driven transition with stringent climate policies; high transition risks in short-term but lower physical risks. Delayed & Disorderly: slow transition until 2030 then rapid change; high volatility and complexity in medium-term; medium-high physical risks. Hot House World: only current policies preserved; low transition risk short-term but extreme physical risks increasing over time; economic costs diverge significantly after 2040. thl's material CR&Os assessed across all three scenarios; impacts vary by timeframe and scenario.

Orderly scenario: High transition risk short-to-medium term; low physical risk. TAG becomes leading used EV retailer by 2050. Disorderly scenario: Medium physical risk, high transition risk post-2035. Moderate pace of transition; ICE vehicles remain in rural areas. Hot House scenario: High physical risk long-term; low transition risk. ICE market remains strong short-to-medium term; used car market transitions slowly to LEVs/hybrids. All scenarios show TAG's business model can adapt due to rapid inventory turnover and integrated ecosystem.

Ventia assessed exposure to climate risks and opportunities across all sectors using four future climate scenarios (1.5°C to >3.0°C warming). Three clear climate-related themes identified: (1) Enhancing collaboration with customers on resilience; (2) Leveraging ability to support transition (service offerings, efficient services); (3) Understanding long-term contract exposure to climate risks. In >2.0°C scenarios, more frequent and severe weather events will impact personnel safety and workforce attraction/retention. Fixed-risk long-term contracts carry higher financial risk if climate impacts not adequately priced. Transition scenarios show clients increasingly requesting environmentally efficient services, creating competitive advantage opportunity for Ventia.

Physical risk scenario analysis of Australian mortgage portfolio found 3.5% exposed to higher physical risk under RCP2.6 by 2050, increasing to 3.9% under RCP8.5. Transition risk analysis identified five sectors (2.1% of Australian business and institutional lending) facing higher growth constraints under 1.5°C scenario. New Zealand analysis shows 2.1-3.5% of portfolios exposed to heightened coastal risk under RCP8.5. Agribusiness analysis completed modelling farm productivity impacts under different climate scenarios with and without adaptation measures.