Commonwealth Bank of Australia

Risks identified (p.123). The climate materiality assessment identified two risks that could reasonably be expected to affect the Group; neither is expected to have a material financial impact over the horizons assessed.

Each risk lists the scenarios considered and the risk types it amplifies. Risks come from material risk types rated "high" or "very high" and are disclosed in aggregate where drivers are shared (p.122).

Opportunities (p.123). Opportunities from banking activities and Australia's transition to net zero were assessed; none is expected to have a material current or anticipated effect over the short, medium or long term. The report points to the table on p.101 for how the Bank supports customers.

Time horizons (p.91). Short term about 3 years (the Group's strategic planning cycle), medium term about 10 years (divergence of physical impacts under different scenarios), long term about 30 years (maximum contractual term for home loans). Current term is the next 12 months.

PwC reviewed the two risks and p.123 against 9(a), 10(a) and 10(b) (p.383).

Business model and value chain (p.95). The Bank creates value by delivering essential banking services: accepting deposits, providing lending and credit, facilitating payments and transactions, and managing capital and risk. The value chain covers people, processes, technology and external relationships.

Where effects concentrate (pp.95–96, 120–121). Lending accounts for more than 97% of total emissions (operational emissions are less than 3%) and is where climate risks and opportunities are most likely to emerge, through customer cash flows, asset values and sector performance, increasing credit risk. Australian housing is 62.9% of total funded exposures. Flood risk is the largest share of the 2.3% of Group total committed exposures (TCE) vulnerable to physical risk, with the City of Brisbane area holding the largest concentration of flood-vulnerable properties. Corporate transition exposure sits mainly in dairy and livestock, then air and road transport.

Effects (pp.123–125). Impacts are described as largely indirect, arising through customers: lost income and financial stress, insurance availability and affordability, falling collateral values, higher default risk in agricultural and regional portfolios, and credit risk in sectors or regions affected by the transition. Branches, technology infrastructure and critical suppliers may also be disrupted. Opportunities are delivered through existing products and services.

Transition plan (p.380). For paragraph 14(a)(iv) the report states the Group has no standalone climate-related transition plan and points to pp.98–117 for strategy, goals, targets, actions, assumptions and dependencies.

Strategy and resourcing (p.98). The strategy supports the transition to net zero by 2050 and climate resilience, managing climate risk across the portfolio and physical risk across operations. It is resourced primarily through existing business activities and planning and allocation processes; internal capital expenditure, operating expenditure and investments specifically deployed to climate were assessed as not material for separate quantitative disclosure (p.380).

Financed emissions (pp.99–115). Goals and targets are pursued by working with customers, rebalancing toward less emissions-intensive customers and, in some sectors, reducing exposure. Actions (p.101) include energy-efficient and electric vehicle lending, more renewables lending, ceasing thermal coal lending by 2030 and running off international shipping exposures. The Bank has no intention of reducing housing or commercial property lending to meet goals (pp.103, 105) and may miss goals, including housing, commercial property and aluminium, if the grid does not decarbonize as expected (p.99).

Operations (p.116). Scope 1 and 2 emissions are down 96% since 2014 (FY14 location-based vs FY26 market-based); 527 electric vehicles are 24% of the Australia and New Zealand fleet.

Current effects (p.123). Climate-related risks did not have a material effect on financial performance, position or cash flows this year. Note 9.2 Credit risk (p.278, cross-referenced on pp.97 and 123) states no additional overlays for climate-related risks were required to impairment provisions at 30 June 2026.

Anticipated effects (pp.123–127). Quantification is limited to modeled credit risk impacts, citing data and modeling availability; other effects are described qualitatively.

• Physical risk: five-year loss rate could rise by less than 0.2% above historical levels in the short-to-medium term and less than 0.4% in the long term; elevated losses are possible in any given year, potentially requiring provision adjustments (p.124).
• Transition risk: less than 0.4% above the historical five-year loss rate in the medium term (p.125).
• Severe cyclone scenario: total credit losses of $1.5 billion over five years, not assessed as financially material (p.127).
• Qualitative: reduced lending volumes in affected regions, business disruption, and higher operating expenses (customer support, legal, compliance, remediation).

Overall (p.127). Across the scenarios, financial performance is expected to hold, with stable operating margins and limited increases in average loan impairment expenses. Financials were modeled assuming no change in current market dynamics (p.374); results are potential outcomes, not forecasts (p.123).

Scenarios (p.126; Appendix pp.373–375). Three long-term Network for Greening the Financial System (NGFS) scenarios are used over about 3, 10 and 30 years across all retail and non-retail portfolios including ASB: Net zero 2050 (~1.5°C, described as consistent with the goal of the Paris Agreement), Delayed transition (~1.7°C) and Current policies (~3°C). An acute scenario assumes two Category 4 cyclones over South-East Queensland in consecutive years; a 10-year drought scenario for agriculture is also described (p.375). Assumptions cover policy, technology, macroeconomic trends, unemployment, cash rate, GDP and house prices (pp.373–374). Scenarios were run in the 2025 reporting period; this year no material changes requiring updates were identified, to be reassessed annually.

Outcome (p.127): increase to the 5-year historical loss rate (0.4% over 2020–2024).

The cyclone scenario gives total credit losses of $1.5 billion over five years, mostly in the first two, not assessed as financially material (p.127). The strategy, business model and value chain are concluded to remain resilient under the scenarios and horizons assessed, with no material changes expected. Scenario analysis is not a forecast (p.381).