66 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 67 S CLIMATE RELATED FINANCIAL DISCLOSURES CONTINUED T R A T E G I Task Force on Climate-related Financial Relevant Companies (Strategic Report) (Climate-related Relevant Given the evolving nature of climate change and the future policy changes governments globally are considering, there remains a number of C R Disclosures (TCFD) Recommendation Section Financial Disclosure (CFD)) Regulations Section uncertainties in our modelling. We will continue to review our risks and opportunities in this light and intend to continue building on this analysis E P by modelling further risks and opportunities, as they are identified. As the risks and opportunities have remained consistent with previous O Metrics and Target R years, the methodology used for modelling has remained consistent. T A. Disclose the metrics used by the Metrics & Targets (page 71) H. Describe the key performance Metrics & Targets (page 71) organisation to assess climate-related indicators used to assess progress The RAG rating indicates ITV’s exposure to the key climate related risk areas based on the two opposing scenarios of ‘action’ and ‘no action’ risks and opportunities in line with its against targets used to manage in response to climate change, using an amalgamation of financial impacts and benefits. strategy and risk management climate-related risks and realise process. climate-related opportunities and a Detailed Risks description of the calculations on RAG Key which those key performance Time Horizon Key indicators are based. Risks Opportunities Impact From To B. Disclose Scope 1, Scope 2 and, if Metrics & Targets (pages 36 N/A Minimal increase in expenditure Significant time horizon (years) (years) Aligned to appropriate, Scope 3 greenhouse gas and 71) (GHG) emissions and the related risks. and / or reduction in revenue benefit Short-term 01ITV Annual reporting period Moderate increase in Moderate Medium-term 13ITV Long term viability assessment C. Describe the targets used by the Strategy (page 66) G. Describe the targets used by the Metrics & Targets (page 71) organisation to manage climate- Company to manage climate-related expenditure and / or reduction in benefit period and strategic planning cycle related risks and opportunities and risks and to realise climate-related revenue performance against targets opportunities and of performance Long-term 3 10+ ITV science-based and Net Zero Significant increase in Minimal targets* against those targets. expenditure and / or reduction in benefit revenue *This has been extended to align with our additional 2050 emissions commitments Risk management Governance Strategy 1. CHANGES IN THE ADVERTISING SECTOR Our approach to identifying, Our governance structures support the PLC To date, ITV has not experienced a material assessing, managing and Board, committees and senior management impact or cost from climate risks and Context Current policies Revenue loss – minimal to ensure that climate change is integrated opportunities. We continue to track these The advertising market continues to shift to the promotion of (3°C+) Advertising regulators continue to look unfavourably at monitoring climate-related risks into our strategy, business process and impacts (such as costs from extreme low-carbon products and sustainable communications with (High carbon greenwashing and companies with a high carbon footprint. and opportunities decision making. For more information on weather events), to monitor if and when this increased pressure from governments, regulators, as well as scenario impact) We will need to consider the reputational impacts of the ITV’s risk management framework provides climate governance, see the Risk and does become the case. from agencies and brands from within the industry. Including: adverts we broadcast and advertisers we work with. the guardrails for risk management activities Uncertainties section. • Stricter advertising regulations or outright bans for carbon and the risk management process supports Our Methodology and insensitive brands and products. SDS (2°C+) Revenue loss – minimal central functions and divisions to identify, Assessing and Managing climate- Assumptions • Major brands shrink or fail to survive. (Low carbon Advertisers considered as carbon-insensitive or assess, manage, monitor and report on risks, related risks and opportunities • Increased use of carbon calculators in planning and buying scenario impact) environmentally damaging and therefore subject to bans on including climate-related risks. We review the Climate Scenario Analysis media (e.g. capping frequency of ad campaigns to reduce Each business area is supported by Green (CSA) on a three year cycle and update the advertising of their products or services are limited. This carbon emissions). impact will be replaced by clients advertising low carbon Climate change is not currently categorised Leads and Green Teams that follow the risk scenarios using the latest science. The alternative products. by the Board as a Group ‘Principal Risk’ as it is management process to identify, assess and assumptions on which our CSA is built have Time horizon manage climate-related risks and not changed since our last assessment. Our NZE by 2050 Revenue loss – moderate unlikely to have a substantial financial impact Medium – Long-term (1.5°C+) in the next three years. It has however been opportunities on a day-to-day basis. They key risk areas remain: Governments introduce strict policies to influence work closely with the Sustainability team Impact Area (Very low carbon consumption behaviours and a higher proportion of our high identified as a key ‘Emerging Risk’ to ITV 1. Changes in the advertising sector scenario impact) emitting advertising clients are subject to bans. However, we with the potential to impact the way we which plays a key role in reviewing these risks Revenue Loss and opportunities. 2. Increased costs in the transition to a low are able to replace a portion of this revenue through clients do business in the medium to long term. carbon world advertising low carbon alternative products. We continue to assess climate risks with management and the Board every The CADG is a sub-committee of the 3. Resilience of productions to extreme How we are building our resilience to a 2 oC or less scenario six months. Management Board that meets quarterly weather events There remains uncertainty around the timing and impact of advertising restrictions. In order to prepare for the potential changes, we are: and receives updates from the Green Leads. It provides oversight and direction over ITV’s For each of the key risk areas, we conducted • Monitoring the regulatory landscape and engaging with parliamentarians and the UK government to make the case for evidence-based regulation of We focus on the day-to-day management advertising to limit the impact of advertising restrictions on ITV. of climate risks. Ownership is assigned to all climate action agenda, implementation of quantitative modelling and qualitative strategies, environmental targets and assessment of the potential impact both • Continuing to work with advertisers to seek out alternative options to replace potential lost revenue. risks with mitigations and progress against • Monitoring the share of our advertising revenue that is aligned with our climate targets and the Net Zero transition action plans reviewed and challenged by the climate related risks and opportunities. physical and transitional risks may have on Outcomes of these meetings are reported to our business in a 1.5°C, 2°C and 3+°C • Trialling incentives with one major agency customer to provide additional media for sustainable brands in their client base Climate Action Delivery Group (CADG). Risk • Working with advertisers to improve the effectiveness of climate-related advertising owners have responsibility for monitoring the the Management Board and Divisional warming scenario, as at 2030, assuming our risks and opportunities, including Boards quarterly to inform decision making. business model and activities remain the • Working closely with collaborative project Ad Net Zero and the advertising sector to support the development of industry wide approaches to the Net Zero same as today. transition implementing appropriate management • Scaling our existing sustainable partnerships (e.g. eBay / Love Island and Big Brother / Vinted) strategies with support provided by the Remuneration Incentives Risk and Social Purpose teams. The Management Board members have Our overall assessment of the risks, indicates • Developed digital targeting opportunities to enable advertisers to reach ‘climate conscious’ consumers. emission reduction targets included in their that as a business ITV is not significantly Based on our understanding of the context around this risk and all actions in place to prepare, we are confident that we are building resilience against the We assess climate related risks and bonuses and all senior management have exposed to physical or transition climate potential implications of this risk on ITV opportunities at Group, Divisional (Studios Environmental, Social and Corporate risks in our operations and our Group business strategy remains relevant even in Metrics Targets and M&E) and entity level. ITV’s principal Governance (ESG) objectives. These risks with the potential to be most impacted measures encourage leadership to actively light of evolving climate risks. The risks Percentage of revenue aligned to our climate action objectives: We do not currently have any specific targets in respect of this by climate change are Commercial, Content (individually or collectively) do not represent • Percentage of i) top 100 advertisers and ii) major media agencies scoring good or excellent risk, and will reassess the need for specific action once we contribute to reducing ITVs carbon footprint. a threat to our long-term viability, liquidity or against climate action goals (based on a methodology created by ITV to allow us to start have a better understanding of the relevant indicators. Market and Content Pipeline. We are taking All colleagues consider their contributions to tracking how our revenue aligns to our net zero transition) action through our Social Purpose goals to ITV’s Climate Action and ESG targets in their ability to operate and no risks were identified mitigate and manage their impacts both Talking Performance reviews and through a which suggested we need to impair balance • Percentage of Commercial colleagues completing climate awareness training today and in the future, ensuring we continue yearly mandatory training module. sheet assets. The Detailed Risks section that Upcoming metrics: Carbon footprint of adverts running on ITV platforms to build resilience to climate-related physical follows, describes the risks we have considered to arrive at this conclusion. Link to existing principal risk and transition risks. Commercial