Climate resilience
In 2018, Lendlease committed to producing annual disclosures that respond to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). We undertook a phased approach to integrate the recommendations of TCFD over time and have since been reporting under the TCFD framework on an annual basis.
Lendlease's TCFD work has been featured by the TCFD Secretariat in both the 2021 Status Report and the Scenario Analysis Technical Guidance.
Framework Evolution
In 2021, The Trustees of the IFRS Foundation announced the formation of the International Sustainability Standards Board (ISSB). Their remit was to prepare a high quality, comprehensive, global baseline of sustainability disclosures.
In June 2023, ISSB published the first two voluntary sustainability standards, based on the framework developed by TCFD. This was later endorsed by the International Organization of Securities Commissions (IOSCO). As a result, TCFD considered its remit fulfilled and officially disbanded in October 2023.
The Australian government has since mandated the incoming Australian Sustainability Reporting Standards, which are based on the ISSB and TCFD frameworks.
Lendlease is the process of transitioning to report under these incoming standards. The complete evolution of our climate-related financial disclosures is under the TCFD tab in our ESG Databook.
Our 2050 Future Scenarios
Lendlease has adopted scenario planning as a means of holistically testing strategic resilience across environmental and social sustainability outcomes, in line with our Sustainability Framework. We developed four different 2050 climate related scenarios under different global warming temperature outcomes. To test the resilience of our business, we have created our 2050 Future Scenarios using a range of environmental, social, technological, economic and policy indicators.
Our scenarios are based on peer reviewed scientific and academic research, tested with a broad range of stakeholders and designed to be plausible but challenging.
Resignation (more than 4 Degrees) scenario represents the worse of climate change of the four scenarios and will be used to test the physical risks across our operations and supply chain.
Our greater than 4ºC Resignation Scenario, represents a Representative Concentration Pathway RCP8.5, which we use for worst case physical risk assessments. We have refined and piloted our physical risk impact assessment process on assets and development projects across the world.
Polarisation (3-4 Degrees) scenario represents a constant but incremental approach to climate change mitigation and will be used to test the longer term societal risks of climate change impacts.
Our business has many attributes for strategic resilience in a Polarisation Scenario. Existing public sector partnerships position us well for likely increased climate adaptation work for the public sector. Our sustainability leadership positions us well, where decarbonisation and climate resilience and adaptation are valued, such as at Barangaroo.
The most frequently identified risks across the business, for this scenario, came from the impact of climate change on the way we work and on our assets, particularly for our Investments business. Conversely, the impact of climate change on cities has a high frequency of opportunities related to adaptation.
Paris Alignment (2-3 Degrees) scenario considers delayed action on climate change, resulting in a late uncontrolled rapid decarbonisation pathway and will be used to test transitional risks of uncontrolled decarbonisation.
Our sustainability leadership creates strategic resilience in a Paris Aligned Scenario. We are well positioned to build on our global track record of delivering commercially successful green and carbon neutral solutions needed for a decarbonised world.
The most frequently identified risks came from the increased demand and need for decarbonisation of construction supply chains, creating a potential increase in the cost of materials, as well as likely scarcity of products and materials. Conversely, opportunities were identified if we aligned early or even exceeded regulation. An increase in carbon cost was identified as both a risk and opportunity, particularly for Development.
Transformation (well below 2 Degrees) scenario represents a societal driven controlled and early rapid decarbonisation pathway where global emissions peak in 2020 and are close to zero in 2040.
Our track record in social sustainability leadership, combined with our leadership in green real estate, would help position us well for societally driven decarbonisation. Our integrated business model, with a focus on digital, will allow us to respond quickly to the speed of change in this future scenario.
It was anticipated that a shift in social licence to operate would occur in a societally driven decarbonisation scenario and that this shift would present risks across all aspects of business. The speed of decarbonisation in our Transformation Scenarios was highlighted as presenting both transitional opportunities and risks.