Phoenix Energy Responsible Business Report

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Responsible Business Report — 2022

Responsible Business Report 2023

Climate Related Risks and Opportunities Risks are categorised into two categories as outlined by the TCFD: Climate Related Risks and Opportunities Risks are categorised into two categories as outlined by the TCFD: 1. Transition risks – created by the world’s transition to a low-carbon economy as a result of carbon policy changes; and 2. Physical risks – created from a changing climate. As part of our risk management activities, we have assessed our risks to identify those most adversely impacted by climate change. While the most significant are all transition risks, physical risks are also managed through our risk management framework. Phoenix’s key climate related opportunities arise from continuing to transition oil customers to gas and from the transition to a low carbon economy. 1. Transition risks – created by the world’s transition to a low-carbon economy as a result of carbon policy changes; and 2. Physical risks – created from a changing climate. As part of our risk management activities, we have assessed our risks to identify those most adversely impacted by Climate Change. While the most significant are all transition risks, physical risks are also managed through our risk management framework. Phoenix Energy’s key climate-related opportunities arise from continuing to transition oil customers to gas from the transition to a low carbon economy.

Time Horizons The following time horizons are utilised by Phoenix to consider and assess identified climate change risks and opportunities: • Short-Term (up to 2030); • Medium Term (from 2030 to 2040): and • Long term (beyond 2040). When developing appropriate time horizons for assessing Climate Change risk and opportunities, consideration was given to: • The useful life of Phoenix’s assets and infrastructure – some of which are depreciated over 40 years; • The length of Phoenix’s gas distribution licence (currently runs until 2046); and • The fact that climate related issues often manifest themselves over considerable time periods (for example energy transition of the gas network is likely to take decades rather than years). Potential financial impact Identified risks and opportunities were then assessed in terms of potential financial impact, including consideration of the potential impact on the Phoenix’s. • Products and services; • Supply chain; • Adaptation and mitigation; • Investments and research and development; • Operations; • Finance; and • Carbon footprint and energy use. In line with Phoenix’s existing risk and internal control framework, risk and opportunities rating matrices provide the framework to rank each risk and opportunity by likelihood of impact and significance of potential financial impact. This helps to identify the importance and materiality of each material risk or opportunity to the business. Time Horizons The following time horizons are utilised by Phoenix Energy to consider and assess identified Climate Change risks and opportunities: • Short-Term (up to 2030); • Medium Term (from 2030 to 2040): and • Long term (beyond 2040). When developing appropriate time horizons for assessing Climate Change risk and opportunities, consideration was given to: • The useful life of Phoenix Energy’s assets and infrastructure – some of which are depreciated over 40 years; • The length of Phoenix Energy gas distribution licence (currently runs until 2046); and • The fact that climate related issues often manifest themselves over considerable time periods (for example energy transition of the gas network is likely to take decades rather than years). Potential financial impact Identified risks and opportunities were then assessed in terms of potential financial impact, including consideration of the potential impact on Phoenix Energy. • Products and services; • Supply chain; • Adaptation and mitigation; • Investments and research and development; • Operations; • Finance; and • Carbon footprint and energy use. In line with Phoenix Energy’s existing risk and internal control framework, risk and opportunities rating matrices provide the framework to rank each risk and opportunity by likelihood of impact and significance of potential financial impact. This helps to identify the importance and materiality of each material risk or opportunity to the business.

Opportunity Matrix

Risk Matrix

High (3)

High (3)

Medium (1)

Medium (1)

IMPACT

IMPACT

Low (1)

Low (1)

Remote (1) (<10%)

Remote (1) (<10%)

Possible (2) (10%-50%)

Possible (2) (10%-50%)

Likely (3) (>50%)

Likely (3) (>50%)

PROBABILITY

PROBABILITY

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