PRINCIPLE 3 Risk and opportunity Guiding questions for board reflection Question 1: How do we identify and prioritize the climate and nature risks most likely to affect our business, including longer-term and less predictable impacts? Question 2: How do we assess which opportunities from climate action and natural capital management can deliver the greatest strategic and financial value? Question 3: How effectively are we testing our ability to adapt and respond under different climate and nature scenarios, and how does this inform our risk appetite? Question 4: How do we balance protecting the organization from climate and nature risks while investing in the opportunities they create for growth and resilience? Question 5: How does the board gain confidence that management is effectively monitoring emerging climate and nature risks and escalating material issues for oversight? Guiding questions for boards to ask of management Does management’s response include the following? Question 1: What are our most material climate- and nature- related risks and opportunities, how are these built into our risk framework and how are they tracked over different time horizons? –Clear articulation of material risks and opportunities –Time-bound analysis (short, medium, long term) –Defined owners and management plans for key issues –Regular review and refresh of materiality assessments Question 2: How are we measuring, assessing and managing climate- and nature-related risks and opportunities across our full value chain, including suppliers and customers? –Value chain mapping and hotspot identification –Supplier/customer engagement strategies –Consideration of Scope 3 emissions and dependencies –Plans to manage downstream and upstream risks –Insurance assessments and premium history and projections Question 3: What opportunities have been identified that could deliver business value, and how are we positioned to capture them? –Defined pipeline of climate- or nature-linked opportunities –Link to growth, innovation or efficiency goals –Investment or capability plans to capture value –Integration into business development or research and development Question 4: How are climate- and nature-related risks and opportunities prioritized, what drives those decisions, and how are the most material issues addressed to inform strategy? –Transparent criteria for prioritization (e.g. impact, urgency, likelihood) –Risk and opportunity heatmaps or scoring –Action plans linked to top-priority issues –Alignment with strategic, financial and stakeholder goals Question 5: What are the financial and resource implications of the identified climate- and nature-related risks and opportunities? –Forecast of financial impacts and investment needs –Resource plans for delivery (people, systems, funding) –Integration into capital planning and budgeting cycles, including the use of tools such as shadow carbon pricing to guide capex and opex decisions –Scenario analysis or stress-testing for major risks

Board Reflection and Management Oversight Questions