NEXTDC Limited
GovernanceGovernance
Governance body oversight and management's role
Board and committees (pp. 69–70). The Board has ultimate oversight of climate-related risks and opportunities (CRROs) and the climate-related financial disclosures, including how climate matters are integrated into strategy, major transactions, risk management and target setting. The Audit and Risk Committee (ARC) assesses the effectiveness of the Enterprise-Wide Risk Management Framework, monitors the targets set by the Board and material CRROs. The Board and ARC are informed through ESG update papers and briefings: in FY26, each of the ARC's seven scheduled meetings received progress on mandatory climate reporting, with substantive updates at three. The Board considered trade-offs, including energy-intensive capacity growth and resilience-related design investments relative to development cost and scheduling.
Management (p. 70). The Chief Executive Officer and Executive Leadership Team are accountable for managing CRROs. The Chief Risk Officer chairs the ESG Council and escalates significant matters to the ARC and Board. A cross-functional Climate Reporting Working Group, a sub-group of the ESG Council, coordinates assessment, data and disclosure controls.
Skills and remuneration (p. 70). The Board uses a Board Skills Matrix, capability assessments and external advisers, and completed a climate reporting readiness assessment in FY26. In FY26, 0% of executive remuneration was specifically linked to net zero or greenhouse gas emissions reduction targets.
StrategyStrategy
Climate-related risks and opportunities
Risks and opportunities (p. 72). Five climate-related risks and opportunities (CRROs) are disclosed, each with a driver, description and type. They were consolidated from an initial long list and are presented as residual, after existing controls.
| # | Driver | Category | Type |
|---|---|---|---|
| CRR1 | Acute climate hazards | Risk – Physical | Acute |
| CRR2 | Water stress and drought | Risk – Physical | Chronic |
| CRR3 | Increasing input and supply costs | Risk – Transition | Market |
| CRR4 | Evolving stakeholder and climate policy expectations | Risk – Transition | Policy and Legal, Reputation |
| CRO1 | Market differentiation through resource-efficient and climate-resilient buildings | Opportunity – Transition | Technology, Energy Source |
Time horizons (p. 74). Short term is to 2030, aligned with the five-year strategic planning horizon adopted in 2025. Medium term is 2031–2050, aligned with the Net Zero target and the primary transition and physical scenario horizons. Long term is 2051–2070, extending to capture physical risks to existing and planned data centers over their operating lives. Anticipated effects of each CRRO are described for the short, medium and long term (pp. 77–81).
Business model and value chain
Business model (p. 73). NEXTDC is a leading Asia Pacific data center operator, designing, building, owning and operating mission-critical digital infrastructure across Australia and Malaysia, with new developments underway in New Zealand and Japan.
Where CRROs are concentrated (p. 73). A value chain map tags each step with the CRROs concentrated there.
- Upstream: capital equipment and technology (CRR3); electricity generation and transmission (CRR3, CRR4); land, planning and construction (CRR1, CRR3, CRO1); water supply (CRR2, CRR3); fuel and logistics (CRR1, CRR3); specialist suppliers and contractors (CRR3, CRR4).
- Operations: energy use (CRR3, CRR4, CRO1); resilience and physical security (CRR1, CRO1); refrigerants and cooling (CRR2, CRR3, CRO1); water use (CRR2, CRO1); diesel backup generation (CRR1, CRR3); waste and resource management, operational control and emissions management (CRR4, CRO1).
- Downstream: customer IT equipment and digital services enabled (CRR4); colocation and data hall services (CRR4, CRO1); connectivity and interconnection, and critical services and communities (CRR1, CRR4).
Geography and effects (pp. 76–78). Under higher-emissions conditions, Darwin (D1) and Newman (NE1) show comparatively higher inherent exposure to acute hazards, and Port Hedland (PH1) to water stress. The FY26 assessment found the overarching business model remains resilient (p. 76); effects of each CRRO are on pp. 77–81.
Strategy and decision-making
Integration into strategy (p. 76). Climate analysis informs five areas: site selection and design (site-specific flood, heat, water, access and utility due diligence); capital allocation and development (climate factors in funding requests and business cases; grid, water and planning constraints inform sequencing and project scope); operations and resource efficiency (PUE, WUE, metering, advanced cooling); energy, customers and transition (residual energy exposure, grid connections, renewable procurement, the FY27 Climate Transition Plan); and risk, governance and monitoring (annual CRRO and resilience review).
Measures by CRRO (pp. 77–81). Examples include flood-resilient design, waterproofing and bunding (CRR1); minimizing water-dependent cooling in suitable new developments (CRR2); evaluating renewable electricity procurement and power purchase arrangements (CRR3); and giving customers energy, emissions, water and sustainability information (CRO1). FY26 capital expenditure across the development program was approximately $3.2 billion (p. 77).
Transition plan (p. 82). Development of a Climate Transition Plan began in FY26 with an external adviser and covers the target and boundary, emissions trajectories, interim targets, priority decarbonization levers with associated capital and operating expenditure, and the potential role of carbon credits. As at 30 June 2026 it was not finalized or adopted; finalization is expected during FY27.
Financial position, financial performance and cash flows
Approach (pp. 67, 76). Quantitative information is given where it can be separately identified or reasonably estimated without undue cost or effort; otherwise qualitative information is given, naming the financial statement items affected. Management identified no significant risk of a material adjustment to carrying amounts of assets or liabilities in the next annual reporting period. Pro forma available liquidity was approximately $8.7 billion at 30 June 2026 (p. 76).
| CRRO (pp. 77–81) | FY26 effect | Anticipated effects |
|---|---|---|
| CRR1 | None material identified | Short: none material. Medium: higher resilience capital expenditure, cooling and insurance costs and lower asset carrying values possible, not reliably quantifiable. Long: cannot be reliably estimated |
| CRR2 | None separately identifiable | Short: none separately identifiable. Medium: higher water-related operating and capital costs. Long: cannot be reliably estimated |
| CRR3 | None material identified | Not expected to be material at any horizon |
| CRR4 | None material identified | Short: none material. Medium and long: cannot be reliably estimated |
| CRO1 | None separately identified | Short: none material. Medium and long: benefits not yet quantified |
The only financial amounts in these tables are totals with no climate-related component separated: approximately $3.2 billion capital expenditure and $2.7 million insurance expense (CRR1), and over $90 million gross electricity costs (CRR3).
Climate resilience and scenario analysis
Scenarios and sources (pp. 74–75). Resilience was assessed on an expected path, stress-tested against lower and higher emissions pathways, with physical and transition scenarios assessed separately.
| Expected path | Lower emissions | Higher emissions | |
|---|---|---|---|
| Physical | IPCC SSP2-4.5 | IPCC SSP1-2.6 | IPCC SSP5-8.5 |
| Transition | NGFS Delayed Transition | NGFS Net Zero 2050 | NGFS Current Policies |
Scenario data came from the IEA World Energy Outlook 2025, AEMO Integrated System Plan 2024 and IEA Critical Minerals Outlook 2025. SSP1-1.9 was also considered and judged not to change the resilience assessment materially (note 7). Horizons: to 2030, 2031–2050 and 2051–2070. The transition table sets out assumptions on policies, macroeconomic trends, regional variables, energy mix and technology (p. 75). Site-level physical modeling focused on operational assets with sufficient asset and hazard information (p. 66).
Conclusion (pp. 74, 76–81). NEXTDC considers its strategy and business model resilient across the scenarios, though over the longer term increasing physical impacts, particularly water stress in certain locations, may present greater challenges. Each of the four risks is assessed as resilient. Capacity to respond is supported by pro forma liquidity of approximately $8.7 billion and modular designs that can be adapted, upgraded or retrofitted (p. 76). Stated uncertainty centers on the long-term nature of climate change (p. 67).
Risk ManagementRisk Management
Processes for identifying, assessing and managing climate-related risks
Process (pp. 71–72). CRROs are identified and assessed through a structured process aligned with the Risk Management Framework (RMF), which provides a consistent basis for assessing consequence, likelihood, risk appetite and control effectiveness; the lifecycle is adapted from ISO 31000:2018 (p. 71). Inputs include physical climate hazard and transition pathway data, asset-level operational information, industry and peer benchmarking, investor and lender information needs, external climate expertise, the 2025 Double Materiality Assessment, prior TCFD-aligned disclosures and management input. An initial long list was assessed across the value chain, then consolidated or removed (p. 72).
Assessment and prioritization (p. 72). Each CRRO was assessed and prioritized across defined time horizons and climate scenarios using NEXTDC's ERM criteria, covering the nature of potential effects, their likelihood and magnitude, quantitative indicators and whether the matter could reasonably be expected to affect prospects, resilience or enterprise value. Inherent and residual ratings were considered.
Monitoring and integration (p. 72). The Climate Reporting Working Group and ESG Council review outputs and monitor CRROs. The assessment is reviewed at least annually and on material changes. NEXTDC is progressively embedding CRROs into enterprise, environmental, functional and facility-level risk management, including risk ownership, controls and monitoring.
Metrics & TargetsMetrics and Targets
Climate-related metrics
Greenhouse gas emissions, FY26 (p. 82)
| Metric | FY26 |
|---|---|
| Scope 1 GHG emissions | 5,844 tCO2-e |
| Scope 2 GHG emissions (location-based) | 162,163 tCO2-e |
Emissions are measured under the GHG Protocol Corporate Standard with an operational-control approach and relate to the consolidated accounting group (pp. 66–67). Scope 1 arises principally from diesel combustion for backup power, corporate fleet fuel and refrigerant losses. Scope 2 includes electricity used by cooling, ventilation and other shared facility infrastructure; electricity attributable to customer IT equipment is treated as supplied to end users and excluded. No contractual instruments were used, so no market-based adjustment was applied (p. 82). Figures may differ from those reported under the NGER framework (p. 67).
Other cross-industry metrics (pp. 70, 83). 18 of 18 operating data center sites (100%) are within the scope of CRR3 and CRR4. 11 of 18 sites (61%) have medium or high modeled baseline exposure to water stress and eight of 18 (44%) to river flooding. 18 of 18 sites (100%) are aligned with CRO1. Capital deployed towards climate-related risks and opportunities is not separately tracked. No internal carbon price is applied. In FY26, 0% of executive remuneration was specifically linked to net zero or greenhouse gas emissions reduction targets (p. 70).
Climate-related targets
Target (p. 82). In FY26 the Board approved a target to achieve net zero Scope 1 and Scope 2 greenhouse gas emissions by 2050.
| Element | Disclosed |
|---|---|
| Emissions covered | Scope 1 and Scope 2 within the reporting boundary |
| Type | Net target; Scope 2 defined and measured on a location-based basis |
| Excluded | Scope 3 emissions and electricity attributable to customer-controlled IT equipment |
| Target year | 2050 |
| International agreement | The 2050 timeframe was informed by the long-term temperature goals of the Paris Agreement |
| Third-party validation | Not independently validated |
| Sectoral decarbonization approach | Not used |
Interim targets and carbon credits (pp. 82–83). The Climate Transition Plan, under development and expected to be finalized during FY27, includes development of interim targets and consideration of the potential role of carbon credits in addressing residual emissions. Separately, NEXTDC has participated in the Climate Active program, under which carbon neutrality is assessed including through eligible carbon offsets for residual emissions; this is separate from the target and is not used as a measure of progress against it (p. 83).
Oversight (p. 70). The ARC monitors and reviews the targets set by the Board. Progress will be monitored through ongoing ESG updates to the ARC and the development of the Climate Transition Plan.