Risk Management 25-26

Climate risk management processes

How we respond to climate change risk

QBE understands and monitors this risk through scenario analysis, development of a Climate Transition Plan, and uplifted sustainability governance to support mandatory reporting. The actions we are taking are outlined in QBE's Sustainability Report.

Underwriting and reinsurance strategies

Climate-related physical risks are continually assessed through catastrophe modelling and underwriting analysis, which inform the Group's underwriting and reinsurance strategy, as well as the calibration of the catastrophe allowance within the business plan.

Portfolio management

Following the exit of underperforming property portfolios and recalibration of retained property lines, QBE has experienced catastrophe losses at or below its established allowances in recent years. Consideration of the consequential impacts of these risks on reinsurance costs and premium pricing is disclosed in the 'Climate resilience' section on page 34.

Strategic planning integration

In the short term, the potential impacts of physical risks are incorporated into the Group's business planning process.

Group Top Risk Profile management

The Group Top Risk Profile underpins key risk management activities, including stress and scenario analysis. Management actions are tracked and reported, with oversight from dedicated risk committees and forums. This structured approach ensures that QBE remains resilient and responsive to both current and emerging risks, supporting sustainable growth and the achievement of strategic objectives.

Processes for Managing Climate-Related Risks

Climate Risk Management Approach:

Physical Risk Management: Physical climate-related risks are actively managed by our regional business units through existing controls and adaption measures across the short to medium term. We maintain supply chain continuity plans to identify, prepare for and mitigate risks, including weather events, designed to enable uninterrupted flow of materials and services to operations.

2025 Physical Risk Response: In 2025, Santos' operations in and around Moomba experienced flood impacts with water levels not seen since 1974. Despite this significant flood event, the Cooper Basin delivered resilient operational performance with temporary shut-ins and access constraints managed effectively.

Transition Risk Management:

• Emissions Reduction: Active management through CTAP implementation and monitoring
• Technology Development: Investment in CCS technology and low carbon fuels development
• Market Adaptation: Portfolio optimisation and flexible contracting approaches

Monitoring and Mitigation Controls:

• Santos Management System: Comprehensive policies and operating standards for climate-related activities
• Regular Reporting: Executive Leadership Team meetings to track delivery against climate plans and goals
• Performance Monitoring: Regular assessment of control effectiveness for climate-related processes

Adaptive Management:

• CTAP Evolution: Climate Transition Action Plan continues to evolve with changing conditions
• Strategy Refresh: 2025 strategy refresh embedded decarbonisation across business operations
• Continuous Improvement: Regular review and enhancement of climate risk management processes

Current and direct risk mitigation efforts

For Regulatory/Policy Risk: We currently engage in the surrendering of Australia Carbon Credit Units (ACCUs) to meet our obligations under the SGM. While this mitigation approach provides some abatement of our emissions at the Geelong Refinery, we recognise that additional mitigation pathways will be required to strengthen our decarbonisation strategy.

In 2025, we invested $20 million in a series of capital projects at the Geelong Refinery aimed at reducing emissions where commercially viable. These projects are expected to deliver an estimated annual reduction of 29 kt Scope 1 emissions. The performance and impact of these initiatives will continue to be monitored in 2026 and beyond to confirm that the anticipated emissions reduction benefits are realised. We are actively seeking Government grants to maximise our capital investment for energy transition projects.

We undertake regular monitoring, stakeholder engagement and policy advocacy in relation to potential future climate related policy and regulation.

Future and indirect risk mitigation efforts: We are implementing various measures to reduce our operating emissions at the Geelong Refinery, including establishing electrification projects and improving the energy efficiency of our existing equipment and processes. We review and prioritise these decarbonisation initiatives based on their technical and financial viability.

For Demand Transition Risk: The Group continues to monitor LCLF and EV uptake, policy developments, and technology cost curves to better assess its impact, and inform our strategic response to this risk.

Our New Energies and Future Fuels teams assess emerging technologies and alternative fuel options to continue to develop our product portfolio beyond traditional fuels and position the Group to participate in new markets, including the manufacture and supply of LCLFs, and advancing our electrification solutions.

Our Commercial Team continue to work closely with our key customers to understand their energy transition needs so we can support and respond to changes.

In 2025, we established new supply chains for LCLFs across Australia utilising our existing infrastructure and piloted LCLF manufacture at the Geelong Refinery. These initiatives demonstrated our ability to pivot our existing infrastructure to respond to future demand for drop in fuel replacements.

We also opened Australia's first renewable hydrogen refuelling station, which also includes fast-charging for commercial EVs. These initiatives bring various technologies together to help reduce the carbon footprint of medium and heavy vehicle transport in Australia and prove potential new energies and income streams for the Group.

We continue to advance and learn from our EV charging offering across our retail network while diversifying our retail model towards convenience to materially grow this segment and mitigate reliance on gasoline sales.

We actively monitor climate policy developments and participate in consultation processes to understand potential impacts and opportunities and work closely with our commercial customers to understand their strategic and operational plans, helping us validate fuel‑demand forecasts and develop solutions that meet their needs.