Risks flowing from sustainability are managed in the same way as other business risks. Our company wide risk management model provides a robust foundation for identifying risks and establishing a clear management response. As the impacts of climate change have become increasingly tangible we have increased our focus on understanding the resilience of our portfolio to both transitional and physical climate risks.
We follow a four-step process for managing risk:
In 2018 we carried out a review of our material sustainability issues. For this process we spoke to shareholders, joint venture partners, non-executive directors and our retailers. We explored what was changing in their sustainability priorities and concerns and the implications they felt this had for our sector and particularly for the business.
Each factor was scored on the basis of its current importance for the shareholders and how they expected it to change over the next five years. These scores were combined with the views of the other stakeholders and an internal score reflecting the significance of the issue to company strategy and the ability of the business to influence of control the issue. This analysis produced our priority order of material issues.
We review our material issues every four years so will update this work in 2022.
In 2020 we mapped risk overtime, looking at how our key sustainability risks would evolve over the short, medium and long term. The below Risk Heat Map shows the eight sustainability risks we consider to be most significant for the business. The map is based on the probability of the identified risk occurring and the severity of the impact if it does occur. The analysis demonstrates that the eight key sustainability risks are contained within the medium risk area of the map. We consider each of the risk areas as being effectively managed but the business is alert to their importance.
Responses to key sustainability risks are developed by the Sustainability team working with the relevant business and asset teams.
Responding to the Task Force for Climate related Financial Disclosures
We have been reporting against the TCFD recommendations since 2019. Our latest report is available here: Hammerson TCFD disclosures March 2021
Sustainability risks are actively managed by the business and form part of our wider corporate risk framework as detailed in our Annual Report and Accounts. More detail on our approach to managing our identified sustainability risks is contained within our Sustainability Risk Framework 2020 and our Corporate Responsibility Governance structure.
Our exposure to and management of climate-related risks are communicated to the Group Executive Committee and Plc Board through regular updates by the Group Head of Sustainability.
