Harvey Norman Holdings Limited
GovernanceGovernance
Governance body oversight and management's role
Oversight and skills (p. 60). The Board has overall responsibility for oversight of strategy, risk management framework and corporate reporting, including climate-related risks and opportunities. Its Executive Sustainability Committee, governed by its Charter, formally met three times in FY26; minutes went to the Audit and Risk Committee three times and relevant information to the Board once. The Board delegated skills and competencies assessment to the Executive Management Committee. The Executive Sustainability Committee undertook climate governance training; further assessment of the Board's climate skills and competencies "will be evaluated in future periods".
Management (pp. 60–61). The Mandatory Sustainability Related Reporting Working Group is the primary management-level body for identifying, reviewing and assessing climate-related risks and opportunities. Controls include periodic reviews and escalation to the Executive Sustainability Committee.
Strategy, transactions and targets (p. 61). Climate is considered in major property acquisitions, developments and significant redevelopments where they may reasonably be expected to affect site suitability, asset performance or long-term viability, but has not been "a primary driver of broader strategic decision-making" and trade-offs "are not formally documented or considered". No climate targets were adopted in FY26, and no climate-related performance metrics are included in the remuneration of any employee.
StrategyStrategy
Climate-related risks and opportunities
Seven climate-related risks and opportunities are described on pp. 63–68, each with a stated time horizon.
- Physical risks (both short, medium and long-term): Extreme weather damaging property assets; Extreme weather impacting supply chain and logistics
- Transition risks (all medium to long-term): Increasing carbon and energy costs impacting operating costs; Increasing decarbonisation and technology transition requirements increasing costs and operational challenges; Increasing building standards and efficiency requirements impacting costs and asset value
- Opportunities: Sales growth from increasing demand for energy-efficient and lower-emissions products (medium-term); Enhanced asset value and operating performance through energy-efficient and low-emissions properties (medium to long-term)
Time horizons (p. 62): short-term is present to 2030 (current planning cycles and retail operations), medium-term 2030 to 2040 (planning and lifecycle considerations for property assets) and long-term 2040 to 2050 (the Paris Agreement, long-term transition considerations and asset lifetimes for properties). The longer-term horizon "extends beyond current formal planning and budgeting processes". An initial long-list of 30 risks and opportunities, drawn from desktop research, industry analysis and operating context, was refined through engagement across the business, including interviews (p. 71), and validated with senior and executive leaders (p. 63).
Business model and value chain
Business model (pp. 61–62). Three operating segments: Property (ownership, development and management of large-format retail complexes), Company-Operated Retail (company-operated retail trading in seven (7) overseas markets under the Harvey Norman® brand name, and other non-franchised retail in Australia) and Franchising Operations. Independent franchisees form part of the value chain but not of the consolidated entity for financial reporting purposes.
Value chain (pp. 61–62). Company-operated retail: supplier selection and purchase orders, transport, warehousing and distribution, store and distribution center operations, fulfillment through physical and digital channels, marketing, customer engagement and aftersales services. A property lifecycle (planning, development, leasing, facilities management, redevelopment) runs alongside.
Where effects arise (pp. 63–67). Each risk and opportunity names its operating segments and value chain stage. Property exposure to extreme weather is "greatest across Australian operations" and in parts of Malaysia; Singapore, New Zealand and the UK/EU are assessed as lower. Current impacts are "localised and immaterial at a group level". Anticipated effects include lost retail and rental income, repair and insurance costs, freight and sourcing costs, energy and carbon costs (carbon taxes apply directly in Ireland and Slovenia) and building upgrade costs. The greatest uptake of energy-efficient products is in Singapore.
Strategy and decision-making
Integration (pp. 61, 68). Climate-related considerations "are in the early stages of being integrated" into planning and investment decision-making and have "not to date been a primary driver of broader strategic decision-making". The actions taken "are at an early stage of development".
Initiatives (pp. 68–69, Table 3). Energy audits; an HVAC upgrades program completed across Australian stores; LED lighting rollout underway in Australia and the UK/EU; fit-for-purpose store design, for example elevated floor levels in flood-prone areas; rooftop solar (Australian sites, selected stores in Singapore, all stores in Slovenia); EV charging at selected Australian sites; Australian corporate fleet transitioning to plug-in hybrid vehicles; renewable energy procurement arrangements in Ireland and Northern Ireland; review of procurement and supplier practices for upstream emissions exposure.
Transition plan (pp. 69, 74). The report says "a formal transition plan has not yet been established". A gap analysis against the Transition Plan Taskforce (TPT) framework has been undertaken and the entity intends to use it to develop a formal plan. It will review its carbon pricing position "as it formalises a Transition Plan in FY27".
Resourcing (pp. 64, 70). In FY26 capital continued to go to solar installations, lighting upgrades and site-specific infrastructure improvements; planned investments focus on energy efficiency, renewable energy and fleet transition.
Financial position, financial performance and cash flows
Quantification (pp. 63, 71–72). The report "has not disclosed a quantified financial amount because the anticipated financial effects are subject to significant measurement uncertainty and cannot currently be estimated with a level of reliability that would provide decision-useful information". It attributes this to the forward-looking nature of scenario analysis, sensitivity to key assumptions, the timing and extent of future physical and transition impacts, evolving policy and market conditions, and limits on granular operational, asset-level, supplier and consumer behavior data. It gives qualitative disclosure of the nature of the effects, time horizons and parts of the business model and value chain affected, and "continues to enhance its data collection, financial modelling, methodology documentation and internal review processes".
Current and next-year effects (pp. 64–68, 72). For each of the seven risks and opportunities: "There was no material impact on the consolidated entity's financial position, financial performance or cash flows in FY26. There is no anticipated material adjustment to the FY27 financial results". Section 4.2.3 (p. 72): no identified risk or opportunity is currently expected to have a material effect on financial performance for the year ending 30 June 2027.
Anticipated effects (pp. 63–68). Described qualitatively by horizon, for example extreme weather: short-term business interruption and lost retail and rental income.
Climate resilience and scenario analysis
Scenarios (p. 62, Table 2). Scenario analysis was undertaken in FY26 using two scenarios. Orderly Transition: SSP1-2.6 (IPCC), Well Below 2ºC (NGFS), 1.3-2.4°C (Median 1.8°C) by 2100, broadly aligned with the Paris Agreement objective, with physical risks relatively low and transition risks higher. Disorderly Transition: SSP2-4.5 (IPCC), Delayed Transition (NGFS), 2.1-3.5°C (Median 2.8°C) by 2100, with emissions rising until around 2030, higher transition risks from 2030 and increased physical risks. A reason for selection is given for each.
Assessment (p. 69). "Based on this assessment and the known facts and circumstances as at the date of this report, the business is resilient and is expected to remain resilient under the scenarios considered".
Capacity to adjust (pp. 69–70). Orderly: the entity "believes it is well positioned to adapt", citing strong financial capacity, a geographically diverse footprint and existing resilience measures expected to be broadly sufficient. Disorderly: "a more challenging operating environment"; Australian operations would be a higher priority for incorporating climate considerations into asset management, given the larger property footprint; the current financial position provides "a degree of resilience", but sustained disruption "could place increasing pressure on financial performance, capital expenditure requirements and cash flows over the medium to long-term".
Risk ManagementRisk Management
Processes for identifying, assessing and managing climate-related risks
Framework (p. 71). The Board has overall responsibility for oversight of the risk management framework. Management of each controlled entity implements it, supported by the chief risk officer. The framework applies to all material risks, including climate-related physical and transition risks, is "aligned with ISO 31000:2018" and is integrated into strategic planning, operational activities and decision-making. Climate-related risks and opportunities were assessed using methodologies consistent with ISO 14091.
Process (pp. 71–72, Figure 1). Four steps: identification, assessment, financial impact modeling and monitoring. Identification used desktop research, industry analysis and operating context, in alignment with guidance issued by the IFRS Foundation and ISSB. Assessment uses defined likelihood and consequence criteria to give inherent and residual ratings (for opportunities, size and ability to execute), drawing on internal data, external scenarios and data (including NGFS, IEA and IPCC) and regional validation workshops. Risks are prioritized on residual ratings against the Board's risk appetite, "consistent with the method of prioritising other risks"; "Further action would be taken to prioritise climate-related risks against other enterprise risks".
Monitoring (p. 72). All risks are reviewed annually by the risk owner and the Risk Management Team; climate-related risks each have an owner.
Metrics & TargetsMetrics and Targets
Climate-related metrics
Greenhouse gas emissions (pp. 72–73). Scope 1 and 2 emissions were calculated in accordance with the Greenhouse Gas (GHG) Protocol: Corporate Standard Reporting Standard (2004), using the operational control approach. Table 4, TOTAL EMISSIONS TCO2E FY26:
| Total Scope 1 emissions | Total Scope 2 emissions (location-based approach) | Total Scope 1 + 2 emissions |
|---|---|---|
| 5,496 | 22,031 | 27,527 |
Emissions from franchisee businesses in Australia are excluded and "form part of the Scope 3 emissions". Part of the electricity consumption in the Republic of Ireland and Northern Ireland is sourced from renewable energy products under a supplier-specific renewable electricity contract; its effect is not reflected in the location-based Scope 2 figure. 88% of refrigerant consumption (11.6% of Scope 1 emissions) and <0.1% of purchased electricity were estimated (Table 5).
Scope 3 (p. 73). Not disclosed. The entity applied the transitional relief in AASB S2 paragraph C4(b).
Other categories (pp. 64–68, 73–74). The amount and percentage of assets or business activities exposed to risks or aligned with opportunities is stated as not currently available or not yet separately identifiable for six of the seven items. Capital deployed towards climate-related initiatives includes solar photovoltaic systems and lighting upgrades. No internal carbon price is applied. "Climate-related performance metrics are not incorporated into executive remuneration frameworks".
Climate-related targets
No targets (pp. 61, 74). "The consolidated entity has not adopted any targets related to climate-related risks and opportunities in FY26" and "will review this position annually" (p. 61). It "does not have formal climate-related targets, including emissions reduction targets" (p. 74).
Tracking and review (p. 74). The entity has "established processes for tracking emissions performance". Given that FY26 is the baseline year, the Working Group will from FY27 report on emissions performance and key climate-related initiatives four times per annum to the Executive Sustainability Committee, twice per annum to the Audit and Risk Committee and annually to the Board. The entity is "reviewing its position on the establishment of formal decarbonisation targets on an annual basis". It says this "remains an area of active consideration" and expects its position to evolve "as its emissions baseline, abatement pathway analysis, and transition planning mature". Progress against targets will be reported publicly through the annual sustainability report once formal targets have been established. Emissions reduction measures underway are detailed in section 3.2.2.