Fortescue Ltd
GovernanceGovernance
Governance body oversight and management's role
Board and committees (p. 72). The Board has ultimate responsibility for climate oversight, including approving the climate strategy, targets, transition plan and climate disclosures, and reviews significant capital investments above delegated authority thresholds, including climate-related trade-offs. The Safety and Sustainability Committee is the primary committee for climate-related risks and opportunities, target setting and progress monitoring. The Audit, Finance and Risk Management Committee supports oversight of risk management, internal controls, financing and assurance for climate disclosures. The People, Remuneration and Nomination Committee oversees remuneration structures, including climate-related performance metrics. Board and committees receive quarterly updates, plus briefings as required. Skills (Corporate Governance Statement sections 2.4, 2.6) and remuneration (Remuneration Report) are cross-referenced.
Management (p. 72). Responsibility is not delegated to a single position or committee but shared across executive and functional roles, including the CEOs, CFO, Director Global Sustainability and External Affairs and Director of Decarbonisation and Green Product Delivery. Management uses existing risk management and financial planning controls and procedures, integrated with Finance, Risk and Sustainability. The Decarbonisation Steering Committee reviews Pilbara Decarbonisation Program decisions and capital proposals before escalation.
StrategyStrategy
Climate-related risks and opportunities
Identified items (pp. 73 to 80). The report identifies climate-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance or cost of capital over the short, medium or long term, organized as physical risks, transition risks and transition opportunities (p. 73).
| Item | Type | Horizons marked |
|---|---|---|
| Operational disruptions due to climate-related events (p. 76) | Physical risk | Long (text: all horizons) |
| Policy and regulatory uncertainty (p. 77) | Transition risk | Medium, long |
| Market exposure (p. 78) | Transition risk and opportunity | Medium, long |
| Industrial decarbonisation and electrification (p. 79) | Transition opportunity | Short, medium, long |
| Diversify into minerals needed for the energy transition (p. 80) | Transition opportunity | Short, medium, long |
Time horizons (p. 73). Short term is 0 to 2 years, aligned with the two-year budget cycle. Medium term is 3 to 10 years, aligned with the 10-year budgeting and forecasting cycle. Long term is 11 to 30+ years, informed by the 20-year long-term forecasting and strategic outlook.
Basis (pp. 73 to 74). The analysis reflects current assessment based on available data, scenario analysis and management judgment. Items were assessed by reference to financial materiality, considering quantitative and qualitative factors such as nature, magnitude, timing and uncertainty.
Business model and value chain
Business model (p. 85). The business model comprises two interconnected businesses: the production and sale of iron ore and future-facing minerals, and the development of energy and industrial decarbonization solutions, both supported by integrated infrastructure, technology, supply chain and customer capabilities.
Where risks are concentrated (pp. 74 to 78). Physical risks are most relevant to the Pilbara iron ore operations and export value chain, where the majority of assets and operational activities are located; the risk is operational disruption, with potential impacts on mining, processing, rail and port operations (p. 74). Transition risks are most relevant to the cost, competitiveness and market positioning of the same operations (p. 75). Substantially all revenue comes from selling and shipping iron ore through that value chain: US$16.7bn of operating sales revenue (98%) (pp. 76, 78).
Current and anticipated effects (pp. 76 to 80). Events that affect the ability to ship iron ore are expected to have the most significant financial impact, through reduced sales volumes and revenue (p. 76). Market exposure may affect price realization, margins, market access and competitiveness (p. 78). Industrial decarbonization technologies and expertise may generate new revenue streams (p. 79). Critical minerals opportunities could diversify the business model, broaden the value chain and add operating sales revenue streams (p. 80).
Strategy and decision-making
Transition plan (p. 81). The transition plan has two interrelated objectives: reducing emissions rapidly and profitably, and developing solutions to drive decarbonization globally. The operational pathway has three workstreams (power supply, mobility and system optimization) that support the Real Zero Target.
Workstreams (p. 82). Power supply: build and operate an off-grid renewable system of 1.5 GW of solar, 900 MW of wind, 4-5 GWh of battery storage and 660 km of transmission lines. Mobility: deploy electric heavy mining equipment and charging infrastructure with original equipment manufacturers. System optimization: an AI-enabled integrated mining and power optimization model. Each gives FY26 progress, FY27 plans and key dependencies, such as approvals and technology readiness.
Other solutions (p. 83). Green Metal, critical minerals (including the Alta Copper acquisition) and a US$680 million Board-approved investment to expand renewable power capacity in the Pilbara.
Resourcing (p. 84). 2026 capital expenditure: Pilbara Decarbonisation Program US$848m, Energy Segment US$88m, Green Metal US$122m, Critical Minerals US$120m. In the short to medium term, capital deployment is expected to remain broadly consistent with existing guidance, including the previously announced US$6.2 billion Pilbara Decarbonisation Program investment. A long-term carbon price of A$97.92 per tCO2-e is applied to Australian operations and investments.
Financial position, financial performance and cash flows
Current effects, FY26 (pp. 76 to 84). The three risk items report no material impact in FY26; carbon compliance costs were US$9 million (p. 77). The opportunity items report expenditure (pp. 79, 80), tabulated on p. 84.
| Category | 2026 capital expenditure | 2026 operating expenditure |
|---|---|---|
| Pilbara Decarbonisation Program | US$848m | US$52m |
| Energy Segment | US$88m | US$577m |
| Green Metal | US$122m | US$58m |
| Critical Minerals | US$120m | US$12m |
Anticipated effects (pp. 76 to 80). Each item names the financial statement areas affected and shows an impact band where one is given. Physical risk: low (US$100m to US$500m), indicative, from about seven more days of average annual downtime by 2050 in a high emissions scenario, absent mitigation and adaptation (p. 76). Policy and regulatory uncertainty: assessed as low although modeled exposures are US$53 million and US$142 million per annum (Safeguard Mechanism), about US$249 million per annum (Diesel Fuel Tax Credit removal) and US$300-400 million per annum by 2035 (IMO pricing) (p. 77). Market exposure: not disclosed because of uncertainty in long-term price projections; a US$5/dmt change in realized price is about US$917 million of annual revenue (p. 78). Industrial decarbonization and electrification: indicative moderate, about US$500 million to US$1 billion per annum; revenue not quantified (p. 79). Critical minerals: not disclosed (p. 80).
Climate resilience and scenario analysis
Assessment (p. 85). As at 30 June 2026, the resilience assessment indicates the strategy and business model have capacity to adapt under the scenarios assessed, and no fundamental change to strategy was identified. The scope is the Pilbara iron ore value chain. Scenarios are not forecasts and carry no probabilities. They include a 1.5°C scenario aligned with the latest international agreement and a higher warming scenario that "well exceeds" 2°C.
Transition (pp. 86 to 87). Externally sourced low-warming scenarios (1.5-1.8°C) and a high-warming base case (>2.5°C), driven by iron ore pricing and discount rates, over short (0-2 years), medium (3-10) and long (11-20) horizons. Iron ore price inputs were US$85-$96 (short), US$65-$85 (medium) and US$58-$111 (long), within historically experienced ranges. Target financial metrics were maintained, with capital management levers where deviations arose.
Physical (pp. 88 to 89). SSP1-1.9 (assessed qualitatively), SSP1-2.6, SSP2-4.5 and SSP3-7.0, for tropical cyclone, sea level rise and storm surge, extreme rainfall, extreme temperatures and bushfire, with medium and long term assessed for 2030 and 2050. Short- and medium-term impacts are expected to remain largely within current mine planning assumptions. In the long term under the high-emissions scenario, without mitigation and adaptation, average annual effective downtime could rise by about seven days, an indicative US$100-500 million per annum.
Risk ManagementRisk Management
Processes for identifying, assessing and managing climate-related risks
Framework (p. 90). Climate risks are managed under the Fortescue Risk Management Framework (FRMF), whose Risk Management Standard sets criteria and thresholds to assess, prioritize, escalate and manage them. Risk owners identify, assess and monitor exposures through business and operational risk registers; material and cross-cutting exposures are aggregated through the Group Risk Profile, and climate-related risks and opportunities are also consolidated in the Group climate and sustainability risk category.
Identification and assessment (pp. 90 to 91). Internal factors (assets, operational processes, strategic priorities, decarbonization) and external factors (economic and geopolitical developments, climate science, scenario analysis, investor and community expectations, peer benchmarking, regulatory change) are considered; scenario analysis informs identification and assessment of transition and physical risks. Nature, likelihood and magnitude are assessed under the FRMF, including the enterprise risk matrix; climate risks are prioritized alongside other enterprise risks.
Monitoring and opportunities (p. 91). The Audit, Finance and Risk Management Committee supports Board oversight through regular reporting; the Safety and Sustainability Committee also has oversight. Risks are reviewed at least annually. Opportunities are identified, assessed and progressed through business planning and investment evaluation, with Board endorsement where required.
Metrics & TargetsMetrics and Targets
Climate-related metrics
Greenhouse gas emissions, 2026 (p. 92)
| Group emissions | MtCO2-e |
|---|---|
| Scope 1 | 2.75 |
| Scope 1 - Consolidated accounting group | 2.69 |
| Scope 1 - Other investees | 0.05 |
| Scope 2 - location-based | 0.39 |
| Scope 2 location-based - Consolidated accounting group | 0.38 |
| Scope 2 location-based - Other investees | 0.01 |
| Scope 3 emissions | 275.64 |
| Category 10: Processing of sold products | 268.64 |
Metrics are rounded. Scope 1 and 2 follow NGER requirements on an operational control basis; other Scope 3 categories and methods are in Note 5 (pp. 99 to 102). No comparatives are given, under the transition relief, and Scope 3 is given voluntarily (pp. 98, 99). No quantitative figure is reported for Scope 1 biogenic emissions (p. 99).
Other metrics. Vulnerability: US$16.7bn of operating sales revenue (98%) for physical risk and market exposure (pp. 76, 78); US$610m of cost of sales, administration and research expenditure attributable to fossil fuels (5%) for policy and regulatory uncertainty (p. 77). Alignment: US$1,945m of property, plant and equipment and intangible assets (9%) (p. 79) and US$360m of non-current assets (2%) (p. 80). Capital deployment: p. 84. Internal carbon price: A$97.92 per tCO2-e (p. 84). Remuneration: cross-referenced (p. 72).
Climate-related targets
Targets (pp. 93 to 96). Each table gives the metric, objective, part of the business, period and absolute or intensity basis. All four cover CO2, CH4, N2O, SF6, HFC and PFC, cite the Paris Agreement to limit global warming to 1.5°C, were not derived using a sectoral decarbonization approach and have no third-party validation.
| Target | Applies to | Period | Type | Gross or net |
|---|---|---|---|---|
| Real Zero Target | Scope 1 and 2, Australian terrestrial iron ore operations, equity share | 2030 | Absolute | Gross |
| Steelmaking Target: 7.5% lower intensity from FY21 | Scope 3 processing of sold iron ore | 2030 | Intensity | Gross |
| Shipping Target: 50% lower intensity from FY21 | Scope 1 and 3 shipping | 2030 | Intensity | Gross |
| Scope 3 Target: net zero | All relevant and calculated Scope 3 categories | 2040 | Absolute | Net |
Progress, 2026 (pp. 93 to 95). Real Zero Target: Scope 1 and 2 emissions covered were 2.72 MtCO2-e (Scope 1 2.35, Scope 2 0.37). In MtCO2-e per Mt of ore shipped, steelmaking intensity was 1.33 against 1.35 in 2021 (baseline not directly comparable) and shipping intensity 0.019 against 0.022, 15% lower.
Required by regulation (pp. 96 to 97). Safeguard Mechanism baselines set by the Clean Energy Regulator cover seven facilities. The FY26 compliance requirement was approximately 0.3 MtCO2-e ACCUs/SMCs, which are not used for the Real Zero Target.