Coles Group Limited

The Group runs an annual climate-related risk and opportunity (CRRO) assessment within its risk management process (p. 42). It identified six risks and one opportunity that could reasonably be expected to affect its prospects over the short, medium and long term (pp. 42, 45). Not all met the quantitative materiality threshold but were disclosed where they could reasonably be expected to influence primary users' decisions (p. 42).

Transition risks (Table 1)

• Energy system volatility, rising prices and supply disruptions (p. 46)
• Changing policy, regulatory and legal requirements to decarbonize and manage climate risk, described as the introduction of a mandatory carbon price (p. 47)
• Dependency on third-party suppliers and logistics partners to reduce emissions and adopt low-carbon practices (p. 48)
• Delayed adoption of low-emissions technology, including conversion of refrigeration and HVAC assets (p. 49)

Physical risks

• Growth and/or production of agricultural raw materials affected by extreme weather and climate conditions (p. 50)
• Resilience of store and supply chain operations, including manufacturing (p. 51)

Opportunity (Table 2): offering more sustainable products to meet changing customer preferences (p. 52).

Time horizons (p. 45): short term 0–4 years (FY30), medium term 4–10 years (FY36), long term 10–24 years (2050). Each is marked against them: all span short, medium and long term except the carbon price risk (medium and long).

Business model and value chain (p. 41). Coles has a supermarket and liquor store footprint and digital platforms; revenue comes primarily from sales of fresh food, groceries, general merchandise and liquor, and other services. Products come from domestic and international suppliers via centralized distribution centers; manufacturing supports supply in meat, dairy and convenience. This supply model reflects exposure to value chain emissions and climate-related risks, particularly in upstream sourcing. Scope: Supermarkets, Liquor, QuiteLike, Coles 360, Coles Financial Services and joint ventures (Flybuys, QVC).

Where effects are concentrated

• More than 90% of value chain emissions are indirect (Scope 3), so the Group relies on suppliers (p. 48).
• Carbon price sensitivity modeling (low-warming scenario) indicates the greatest exposure is across the upstream supply chain, particularly emissions-intensive suppliers contributing to Scope 3 FLAG emissions (p. 54).
• Supermarkets account for about 85% of total energy costs (p. 46).
• Automated Distribution Centres (ADCs) and Customer Fulfilment Centres (CFCs) carry greater concentration risk if one facility is affected (p. 51).

Effects on the business model. Transition risks already influence operations through decarbonization activities and targets (p. 54). No changes to the business model are anticipated (p. 53); how capital planning, sourcing and asset design could shift under each scenario is on pp. 54–55.

Transition plan (p. 56). The Group's first Climate Transition Plan (CTP), released in August 2026, covers risks and opportunities, emissions reduction and resilience in its own operations, decarbonization and resilience across the value chain, internal and external mobilization, and nature and circularity. Key assumptions: more control over emissions reduction in its own operations than in the value chain; emissions projections based on internal growth forecasts; acquisitions and divestments may require re-baselining of targets. Dependencies and limitations: capital allocation beyond the corporate planning horizon is uncertain; delivery depends on regulation, technology, supplier engagement, consumer behavior, government policy, energy market reforms and enabling infrastructure; business growth may increase absolute emissions.

Responses and resourcing (pp. 46–56). 100% renewable electricity (onsite solar and large-scale generation certificates), an Origin Energy alliance deploying rooftop solar and Battery Energy Storage Systems (BESS) without Group capital, energy efficiency projects, refrigerant transition, a supplier engagement target and a FLAG target (pp. 46, 54). A decarbonization plan with funded programs toward near-term Scope 1 and 2 targets has annual capital and expenditure projections embedded in corporate plans and budgets; the refrigeration ambition is a move to lower-GWP or natural refrigerants by the end of 2050 (p. 56).

Current effects (p. 45). The CRROs had no material impact on financial position, financial performance or cash flows in the period. Approximately $112 million of separately identified capital expenditure was deployed on managing climate-related risks. No significant risk of material adjustment to carrying amounts of assets or liabilities is expected in the next 12 months.

Anticipated effects (Tables 1 and 2, pp. 46–52). Each item is set out under current period, FY27, short- to medium-term, long-term, and mitigation and adaptation financial effects.

• Refrigeration (p. 49): capital expenditure of $109 million in FY26, approximately $111 million in FY27, approximately $115 million per annum in the short term, $131 million per annum in the medium term and approximately $163 million per annum over the long term, within existing capital planning.
• Energy costs, carbon price, agricultural supply and store and supply chain disruption (pp. 46, 47, 50, 51): no material impact in FY26 or anticipated in FY27, and none expected in the short to medium term. No material long-term effect is expected for the other three; long-term energy cost effects are described as too uncertain for quantitative information to be useful.
• Supplier dependency (p. 48) and the sustainable products opportunity (p. 52): significant measurement uncertainty, so quantitative information is not disclosed. Affected line items are named, such as cost of sales and administration expenses (p. 46).

Resilience assessment (p. 53). The Group concludes its strategy and business model are expected to remain broadly resilient under both the low- and high-warming scenarios, based on the scope, assumptions and limitations of the assessment, and it anticipates no change to its business model. Areas of uncertainty: timing of climate legislation, including a carbon price and the refrigerant phase-out pathway; pace and cost of grid decarbonization; availability and cost of lower-emissions technologies; and suppliers' ability to transition. Funding and capital allocation processes are intended to provide flexibility. Carbon price sensitivity modeling under the low-warming scenario indicates impacts could be material, mostly in the upstream supply chain (p. 54). Responses: Tables 3 and 4 (pp. 54–55).

How the analysis was done (pp. 43–45). Scope: the Group's operations and, where relevant, parts of the value chain where CRROs are concentrated (p. 43). Three scenarios (temperature increase by 2100): 'Sustainability – Paris aligned' (SSP1-1.9, 1.5°C), 'Middle of the road' (SSP2-4.5, 2.7°C) and 'Fossil-fuelled development' (SSP5-8.5, 4.4°C). The first and third are the primary stress-test scenarios (used in FY24 and FY25, refined in FY26); the middle scenario was used for anticipated financial effects. Time horizons: 0–4 years (FY30), 4–10 years (FY36) and 10–24 years (2050). Climate data was modeled by ClimSystems using CSIRO and Bureau of Meteorology projections (p. 44).