- nuclear costs and cost trends (new nuclear projects, Grand carénage, etc.) and the Group’s ability to finance them could force the Group to reconsider the pace at which it deploys its strategy;
- even with a transformation that is well under way and adequate contractual arrangements, the Group cannot ensure that its various low-carbon solutions projects can be implemented according to the planned schedules and under satisfactory economic, financial, regulatory, partnership or legal conditions. It cannot ensure that they will meet the needs expressed by our customers and stakeholders over time with the profitability expected at the outset. All of this could have a negative impact on the Group’s financial position, its commitment to combating climate change, and its reputation;
- there is a risk that staff will not be sufficiently mobilised individually and collectively due to a deteriorating labour-relations climate, as a result of the changes associated with the adaptations or transformations under way, be they internal or external.
c) Control actions
The following actions are in line with the Group’s raison d’être and its CSR commitments, responding to the needs of its customers and stakeholders:
- continued development and deployment of low-carbon solutions: supply and services, particularly for energy efficiency and decarbonisation of uses, low- carbon electricity generation, storage solutions, low-carbon hydrogen projects, flexibility solutions, with a view to sustainable development and proximity to customers and regions. This development concerns France, the “core” countries in Europe (United Kingdom, Italy, Belgium) and the other countries where the Group is present, in accordance with the CAP 2030 strategy. This strategy combines the search for growth drivers with the promotion of existing assets. The strategy and drivers of the Group’s transformation are described in section 1.3 “Group strategy and objectives”;
- in particular, the Solar Plan, the Electric Storage Plan, the Electric Mobility Plan and the Excell plan are major levers for developing and expanding the range of low-carbon energy solutions offered by the Group in addition to the generation plants already widely available within the Group, particularly wind, solar, hydro and nuclear power (see section 1.4.1.1.1 “The excell plan”);
- implementation of development, adaptation and transformation programmes and performance plans. These programmes may be complemented by a strategic analysis of assets which may itself lead to a requirement for additional financial agility, giving rise to disposals or acquisitions (see section 1.2.3 “Significant events of the year”);
- actions to mobilise work groups through transformation projects, including in particular the “work differently, manage differently” project within EDF.
3B – Adaptation to climate change: physical and transition risks
Summary: The Group is exposed to physical effects of climate change that could have consequences on its own industrial and tertiary facilities and more generally on the Group’s financial position. The societal, technological and economic context may not be favourable to the Group’s low-carbon solutions.
Criticality: ●● Intermediate
According to the breakdown proposed by the TCFD (Task Force for Climate-Related Financial Disclosures), with which EDF complies (see section 3.1.3.2.1 “The EDF group and the TCFD”), climate change risks are structured into two parts: risks of not adapting to the physical effects of climate change (termed “physical risks”), and risks induced by the transition to a low-carbon economy (termed “transition risks”).
a) Main physical risks
The EDF group’s facilities are closely tied to water, wind and solar resources. The overall reliability of the electricity system depends on the resilience of the generation facilities and network infrastructure to climate change, whether it be chronic effects or an increase in the frequency and intensity of extreme weather events.
Extreme risks can potentially affect the safety and security of facilities and network infrastructure or generation. Chronic risks can potentially have consequences on power generation, the environment, and network capacities. These consequences can also lead to risks related to water resources (resource conflicts).
Due to this climate sensitivity and taking into account the many uncertainties associated with the effects of climate change, despite the control actions undertaken, climate change could have an adverse impact on the Group’s business continuity, operating performance, and balance sheet and financial results.
b) Control actions for physical risks
- Periodic reviews are carried out on nuclear and hydraulic facilities, incorporating both feedback and climate change projections; this is a key cornerstone of the robustness of the facilities.
- As per the Group CSR policy, to address these risks, the operating entities shall regularly update their climate change adaptation plans, based whenever possible on IPCC scenarios, in order to review the measures taken and to be taken. To this end, a guide to implementing adaptation plans is available to the Group’s entities. These adaptation plans are particularly strong for nuclear entities in France and the United Kingdom and hydraulic and island entities.
- Since the 1990s, the EDF group has been building up specific R&D expertise on climate change issues, which it has invested in collaborative academic research projects to support these actions.
- The Group carries out numerous monitoring and anticipation actions on extreme and chronic effects, so as to update its adaptation plans as much as necessary, both for production facilities and infrastructures, as well as to anticipate the consequences on the supply-demand balance.
- The Group coordinates internally and with external stakeholders on water uses.
- In connection with climate change and its potential consequences in terms of external threats (temperature, flooding, storms, etc.), a programme called ADAPT has been set up in France for the Group’s nuclear and thermal generation facilities in order to sustainably ensure the resilience of these industrial tools.
- The Group regularly renews or takes out specific insurance covers, even if this could prove increasingly difficult or expensive due to the impact, frequency and magnitude of natural disasters experienced in recent years.
c) Main transition risks
The Group’s long-term strategic directions are in line with the transition to a low- carbon economy. The EDF group’s raison d’être, adopted in May 2020, centres on the objective of “building a CO2 -neutral energy future”. The majority of the Group’s investments are directed towards this low-carbon climate strategy (see section 3.1.1.4 “Roadmap for increasing the Group’s decarbonised production”).
