IGO accepts the position expressed by the Intergovernmental Panel on Climate Change, in its Fifth Assessment Report (Cambridge University Press 2014) that continued emission of greenhouse gases will cause further global warming and that warming above 2°C, relative to the pre- industrial period, could lead to catastrophic economic and social consequences. The large- scale and long-term nature of the risk makes it uniquely challenging, especially in the context of economic decision–making. Moreover, the current understanding of the potential financial risks posed by climate change – to companies, investors and the financial system as a whole – is still poorly understood. In response to this challenge, the Task Force on Climate-related Financial Disclosure (TCFD) was established to develop voluntary, consistent climate-related financial risk disclosures to enable companies to provide information to investors, lenders, insurers and other stakeholders. In June 2017, the task force released a report on the recommendations pertaining to climate-related financial disclosures (refer to https://www.fsb -tcfd. org/wp-content/uploads/2017/06/FINAL-TCFD- Report-062817.pdf). Like numerous other large businesses, IGO explicitly supports the task force’s recommendations. Given this, IGO has committed to the completion of a work program, as summarised in Figure 40, that will result in IGO quantifying climate related financial risk for use in public reporting. Further, in FY18, IGO’s Sustainability and Risk Committee (SusCom) and IGO’s Executive Committee (ExCo), specifically considered climate change risk as part of IGO’s quarterly review of business-critical risk. Three general categories of risk were considered: • Physical risks (arising from the increased frequency and severity of climate and weather- related events that damage property and disrupt trade). • Liability risks (stemming from parties who have suffered loss from the effects of climate change seeking compensation from those they hold responsible). • Transition risks (risks arising from the sudden and or disorderly adjustment to a low carbon economy). SusCom and ExCo jointly concluded that the first two categories of risk are unlikely to pose a material threat to IGO’s business in the short to medium term (one to ten years). However, IGO is currently exposed to transitional risks, as are all Australian businesses and the broader community. This is particularly relevant given the ongoing uncertainty regarding the Government’s policy to give effect to its stated Paris Agreement commitments on greenhouse gas emission reduction targets. Importantly, although it is IGO’s assessment that the transition risks are real, they are unlikely to be material. (For information on how IGO’s assesses the materiality of risk, refer to Information Box: Risk Management at IGO on page 32). TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES Climate action 94 — IGO SUSTAINABILITY REPORT 2018