Downer EDI Limited

Downer prioritized five climate-related risks and opportunities (p. 59) and reassessed them as still valid in FY26 (p. 60). Identification drew on Downer's risk registers, strategy documents and prior climate risk assessments; workshops rated likelihood and consequence over three time horizons; results were prioritized at Group level (p. 59).

Both short terms inform near-term capital allocation decisions, and the physical short term aligns with the business planning cycle. Transition horizons are checkpoints on the decarbonization pathway, with 2050 aligned to the Paris Agreement objective and the Net Zero target. The physical long term aligns with asset lives and long-term maintenance contracts.

Value chain (p. 59). Risks and opportunities were identified with reference to key stages and relationships across the value chain: suppliers and materials, subcontractors, own operations, customers, end markets and operating geographies.

Where concentrated (pp. 61–64). Printed against each item: energy price volatility, Transport and Energy & Utilities; lower emissions technology investment risk, Transport (asphalt and fleet); extreme weather, Transport; increased customer spending on infrastructure, Transport. No concentration is printed for supporting customer decarbonisation and energy transition efforts, where the highest growth is anticipated in the facilities sector (p. 65). Unless noted, items apply across all sectors and geographies (p. 60).

Effects (pp. 61–68). Energy price volatility may increase operating costs and affect margins where costs cannot be fully recovered through contracts, including potential carbon price pass-through from suppliers (p. 61). Extreme weather may disrupt operations, delay project delivery and increase repair and remediation costs; FY26 revenue was lost mainly through lower asphalt production and road surfacing (p. 63). Downer's view is that its strategy and business model are resilient and not expected to change materially across the scenarios, with opportunities expected to provide growth primarily within Energy & Utilities (p. 68).

Transition plan (pp. 69–71). Business Unit plans inform a Group pathway to 2050: Scope 1 and 2 reductions of 50% by 2032 and net zero by 2050 against an FY20 baseline of 346,684 tCO2-e; FY26 emissions were 28% below it. The 2032 target is expected to come from five levers: grid decarbonization, light and heavy vehicle fleet transition, plant electrification and asphalt efficiencies. Beyond 2032 the pathway relies on technologies expected to mature, including hydrogen or ambient-temperature asphalt production and battery-electric heavy vehicles at scale. The residual 10% is to be covered by offsets that may be procured in the 2040s, subject to the 90% reduction.

Assumptions and dependencies (p. 71). Pace of technology and alternative fuel adoption; supply chain availability and feasibility of alternative fuel fleets and charging infrastructure; demand for Downer's services; customer co-investment; and the Australian Government achieving 82% renewable electricity generation by 2030.

Efforts and resourcing (pp. 59, 69, 71, 76). FY26 initiatives abated 902 tCO2e (renewable energy consumption), 3,953 (fleet removal and conversion), 532 (production processes) and 561 (fixed assets). Indirect efforts include supplier engagement, the CDP Supply Chain Program and lower-emissions products Reconophalt and BioBind. Resources: the Group Sustainability and Environment team, IBM Envizi, external advisors and an Investment Committee applying funding thresholds.

Current effects (pp. 61–65). No specifically or separately identifiable material FY26 effect on Group carrying amounts, cash flows or financial performance for energy price volatility, technology investment risk or increased customer spending on infrastructure. Prolonged exposure to rain and severe weather events lost FY26 revenue (no amount). Customer renewable infrastructure, electrification and decarbonization projects resulted in approximately $270 million in revenues.

Anticipated effects (pp. 61–65). Energy price volatility: no material impact currently expected (2030, 2040, 2050). Technology investment risk: none expected at 2030; at 2040 and 2050 assessed qualitatively because data was not sufficiently complete, consistent or reliable, with a material increase expected in plant and equipment and inventory costs and cost of goods sold. Extreme weather: rainfall and flooding impacts quantified (no figure printed), described as not material under all scenarios; severe weather events assessed qualitatively. Both opportunities: no impacts disclosed due to measurement uncertainty.

Other (pp. 60, 65). None of the risks and opportunities poses a significant risk of a material adjustment in FY27 to carrying amounts in the FY26 financial statements. Combined financial effects are not quantified because combining across horizons and scenarios would not produce useful information. Capital deployment and funding integration is cross-referred to pages 39 and 74.

How the analysis was done (pp. 66–67). Scenario analysis was run on a standalone basis in FY25 across all Downer Group operations and reassessed in FY26, using NGFS Climate Scenarios and the IPCC Sixth Assessment Report. Selection considered data specific to Australia and New Zealand, alignment with the temperature pathways required by AASB S2 and relevance to operations; assumptions cover policy and carbon pricing, macroeconomics, regional factors, energy mix and technology.

Resilience assessment (p. 68). Downer concludes its strategy and business model are resilient and not expected to change materially across the scenarios. Capacity to adapt is described for the short term (operational controls, asset management, business continuity), medium term (capital investment, decarbonization initiatives) and long term (aligning services with customer demand). Stranded asset risk is considered limited, and operating cash generation, balance sheet capacity and access to financing are considered sufficient. Listed uncertainties include hazard projections, policy, technology, customer demand and the extent of effects on revenue, costs, asset values and capital expenditure.