Climate Change & Nature Risk Management
Kedge Construction views climate risks as a critical driver for sustainable transformation, striving to turn challenges into business opportunities. In 2023, we published our inaugural TCFD (Task Force on Climate-related Financial Disclosures) report, which rigorously identified major climate risks and opportunities, implemented phased response plans, and established a dynamic assessment mechanism to align with international standards and disclosure requirements. Building on this foundation in 2025, we re-evaluated shifting policies, regulations, technologies, and market dynamics to update our climate risks and opportunities. Concurrently, we adopted the TNFD (Taskforce on Nature-related Financial Disclosures) framework, culminating in the publication of our first integrated TCFD and TNFD report.
Climate Change & Nature Governance
To demonstrate our shared global responsibility for mitigating climate change and preserving biodiversity, Kedge Construction has designated the Board of Directors as the highest governing body for climate change and nature-related risk management. These issues are integrated into the agenda of the “Green & Low Carbon” subcommittee under the ESG Committee to assist in developing and executing energy-saving and carbon-reduction initiatives. The ESG Committee under the Board of Directors routinely oversees the management of climate- and nature-related risks and opportunities. The committee chairperson reports progress and response measures to the Board on a regular basis, ensuring that all identified risks and opportunities are managed and monitored effectively.
Kedge Construction’s Climate Change and Nature-Related Governance Organizational Chart
Climate Change & Nature-Related Risks and Opportunities
Assessment Process for Climate Change & Nature-Related Risks and Opportunities
To effectively manage climate and nature-related issues, Kedge Construction extensively gathers domestic and global climate and environmental data.
Tailored to the characteristics of the construction industry, this information is categorized into tour key stages: upstream material procurement, design phase, construction phase, and downstream market. Our comprehensive value chain analysis classifies transitional risk drivers- such as policy and legal, technology, market, and reputational risks-alongside acute and chronic physical risks. Simultaneously, we evaluate opportunities in resource efficiency, products and services, market development, and ecosystem protection, restoration, and regeneration. The specific measures for each step in the process are detailed in the workflow below:
Scenario Analysis
To accurately evaluate how climate change and nature-related issues impact our strategy and business objectives, Kedge Construction conducts quantitative scenario analyses and discussions across the construction value chain. Through these scenario exercises, we formulate robust strategies to counter extreme risks while capitalizing on major opportunities and commercial potential.
In alignment with the final recommendations of the TNFD, Kedge Construction has constructed a four-quadrant scenario matrix using physical risks (ecosystem services) and transition risks (market drivers) as core variables. Under this framework, Scenario I is defined as “Nature-Positive” and Scenario Ill is designated as “Blocked Transition.” Furthermore, we have integrated climate change and socioeconomic projections within these two baseline scenarios, utilizing exploratory scenario analysis to evaluate how risk and opportunity profiles evolve over medium- and long-term horizons.
For physical risk scenarios, we referenced the IPCC’s (Intergovernmental Panel on Climate Change) SSP3-7.0 and SSP5-8.5 pathways to assess climate impacts under varying socio-economic and greenhouse gas emission assumptions. For transition risk scenarios, we benchmarked our targets against global climate and nature projections, including the lEA’s (International Energy Agency) Net Zero Emissions by 2050 Scenario (NZE 2050), the lIASA’s (International Institute for Applied Systems Analysis) SSP1 pathway, and the UN PRI’s (Principles for Responsible Investment) FPS+ Nature, which serve as strategic blueprints for Kedge Construction’s net-zero and nature positive trajectory.
Climate Change & Nature Risk and Opportunity Matrix
In alignment with the TCFD and TNFD scenario analysis frameworks, Kedge Construction has identified 9 transition risks, 4 physical risks, and 6 climate- and nature-related opportunities. Each risk-evaluating department assessed these issues based on their timeframe, likelihood, and impact severity to map Kedge’s climate risk and opportunity matrix, enabling targeted management of material issues. The assessment timeframes are defined as follows:
Material Climate Change & Nature-Related Risks and Opportunities
Through the established risk and opportunity assessment process and cross-departmental deliberations on climate and nature risk evaluations, Kedge Construction has identified material risk and opportunity issues that exceed our threshold of significance, alongside their associated financial impacts. Kedge remains committed to implementing diverse initiatives that strengthen risk management and operational resilience, accelerating our transition toward climate-resilient and nature-positive strategies, and capitalizing on emerging climate and green business opportunities.
Material Climate Change & Nature-Related Risks
Material Climate Change & Nature Opportunities
Greenhouse Gas Inventory
Kedge Construction regards greenhouse gas mitigation as a core sustainability strategy. From headquarters administration to front-line construction site operations, we comprehensively adhere to the ISO 14064-1:2018 standard to conduct greenhouse gas inventories. This covers Category 1 through 6 emission sources, encompassing seven major greenhouse gases: CO2, CHA NO, HFCs, PFCs, SFg and NFg. Using 2022 as our baseline year for carbon reduction, we perform annual inventories and obtain third-party verification to ensure the transparency and credibility of our emissions data. Beginning in 2025, Kedge Construction expanded its inventory scope to cover our corporate headquarters and all active construction sites, while integrating subsidiary emissions into the calculations. The Scope 1 and Scope 2 greenhouse gas emissions for the corporate headquarters were 49.83 and 87.37 CO,e, respectively, while the total Scope 1 and Scope 2 emissions across all construction sites nationwide reached 783.31 and 3,150.02 tCOre, respectively.
Greenhouse Gas Inventory and Reduction Implementation Progress
Carbon Reduction Initiatives Implemented
Emission Trend Analysis
Evaluating Kedge Construction’s performance against its 2025 carbon reduction targets. Driven by a significant surge in project volume and the subsequent expansion of business operations in 2025, revenue grew by over 50% compared to 2024. Consequently, absolute greenhouse gas emissions across Scope 1, Scope 2, and Scope 3 increased relative to the 2022 baseline year. Nevertheless, when measured by emission intensity per unit of revenue, emissions demonstrated a clear downward trend, showing that Kedge continues to decouple business growth from environmental impact and progress steadily toward its carbon reduction targets. In 2025, the Scope 1 and Scope 2 emission intensity for construction sites was 0.183 tCO2e/million revenue, representing a 19.2% decrease from 0.226 in the 2022 baseline year; Scope 3 emission intensity for construction sites also declined by 11.4% compared to the baseline.
Moving forward, Kedge Construction will maintain carbon reduction objective and pathway evaluation. Starting in 2025, beyond comprehensive limestone cement low-carbon concrete implementation for new building projects, we continue expanding low-carbon construction method applications including precast construction techniques and aluminum formwork replacement of traditional systems.
Internal Carbon Pricing
To accelerate our progress toward the 2050 net-zero target, Kedge Construction has taken proactive steps by announcing an internal carbon fee system in 2025 and officially initiating collections in
2026. This initiative establishes a dedicated Carbon Fee Fund, successfully putting a price on carbon to drive organizational accountability. This fund is designed specifically to subsidize project-level energy-saving and carbon-reduction initiatives, accelerating our transition toward green operations and long-term sustainability. Key implementation highlights include:
Concrete Emission Trend Analysis
To achieve our low-carbon construction and sustainable development goals, Kedge is dedicated to reducing the embodied carbon of concrete, which accounts for nearly 50% of our total emissions. Since 2024, we have progressively introduced limestone cement concrete. By blending optimal proportions of limestone powder into the cementing materials, alongside recycled by-products like fly ash and slag, we have successfully minimized cement consumption and achieved significant carbon reduction benefits while fully maintaining concrete strength, durability, and workability. A comparative analysis of unit carbon emissions across various material types (standard concrete, Low-Cement-Content Concrete, and limestone cement concrete) from 2022 to 2025 indicates that our adoption rate of low-carbon and limestone cement concrete has risen steadily. Consequently, the average carbon emissions per unit of concrete have decreased year by year, demonstrating the tangible success of our low-carbon building materials strategy.
