Progress towards reporting against TCFD
The Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board (FSB), was set up to define how reporting could take account of climate-related issues. The Group will incorporate the TCFD recommendations fully into reporting next year. The table below gives an overview of where we stand today.
Disclose the organisation’s governance around climate-related risks and opportunities.
Climate-related risks and opportunities are managed as an integral component of strategy and performance at every level in the business. As a leading provider of public transport we have a fundamental Belief that driving modal shift from cars to high quality mass transit is fundamental to a safe, green and prosperous future. Our Purpose and strategy are rooted in this Belief. Oversight of climate-related issues is provided by the Safety & Environment sub-committee of the Board, details of which are on pages 90 to 94 of the Annual Report. Progress in 2020 has been slower than planned as we have diverted resources to dealing with the pandemic and reduced all nonmandatory expenditure. In 2021, to drive alignment through the organisation we have created an executive ESG committee to coordinate and review Group-wide activities and we will be appointing a Group Head of Environment to ensure that momentum is rebuilt.
Disclose the actual and potential impacts of climate-related risks and on the Group’s businesses strategy and financial planning, where such information is material.
The increased political and social focus on climate change presents a significant opportunity for the Group as modal shift to public transport is an imperative. The Group has made material investments to this end such as the significant ongoing investment in the corporate shuttle market in North America to continue to drive commuters out of cars.
Whilst modal shift is, in and of itself, beneficial to the environment, our Community and Environment Value sets out our ambition to be “the world’s greenest mass transit operator; a trusted partner to the communities we serve” and the Group is making significant investments into further reducing emissions across the fleet. Last year we committed to never buy another diesel bus in the UK and during 2020 our UK business took delivery of its first 29 double-deck electric buses and placed an order for an initial 20 new hydrogen fuel cell electric vehicles (FCEV). With Coventry winning government funding as one the two first all-electric bus cities in the UK, we expect to shortly be able to place orders for over 100 buses to enter service in the first half of 2022.
Outside of the UK, pilot schemes are in place in North America with our White Plains depot running a small fleet of electric school buses to test performance and other sites are considering pilots; whilst in ALSA we have deployed hybrid and lower emission vehicles (including six electric vehicles) in 2020. Zero Emission Vehicles are currently more expensive to purchase than diesel buses although we believe the total lifetime cost of ownership to be similar. We are working on innovative funding schemes with a number of organisations across the Group on options to increase the pace of change.
During 2021, we will further develop our Group environment strategy and from this work commit to targets across the rest of the Group to supplement those made last year for the UK business.
Disclose how the organisation identifies, assesses and manages climate-related risks.
Climate-related risk management is part of the integrated risk management process. The Group prioritised climate risk and opportunity assessment within the existing ‘emerging risk’ processes and has engaged with Sustainalytics to understand how stakeholders perceive the Group’s exposure to climate-related risk.
During 2021, we intend to develop specific climate change scenarios for input into existing risk and viability models.
Metrics and targets
The metrics and targets used to assess and manage relevant climate related risks and opportunities where such information is material.
In 2019, the Group adopted an SDA (Sectoral Decarbonsiation Approach) methodology. This methodology is the only approach with transport sector-specific metrics, using climate science to set targets relevant to our industry. With an initial seven-year reporting period (from a 2018 baseline) our new targets met the 2018 Intergovernmental Panel on Climate Change (IPCC) goal of controlling the increase in global warming to below 2° Celsius (2DS). Three-year milestones along this path were agreed and committed to as an LTIP input.
The intention of this approach is that the absolute targets are reviewed regularly as technology and forecasting methods improve, and may need to change to stay in line with the 2DS, or if that 2DS level itself needs to change.