ClimatePolicy

ESG:

The purpose of this policy

Is to set out rationale and objectives for how we will achieve our vision to become a successful, sustainable and resilient business using our control and influence, and working together with our customers and suppliers to support the energy transition towards a net zero rail sector across Europe.

Why climate matters to us

There is overwhelming consensus that human activities have warmed the atmosphere, land and oceans. The primary driver of climate change is fossil fuel combustion, with global consumption increasing around 8-fold since 1950 and roughly doubling since 1980. The most recent Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (AR6)¹ released in August 2021 provides a clear and up-to-date view of the current state of scientific knowledge relevant to Earth’s climate – emphasising that climate change is and will continue to cause greater widespread harmful effects to people and the environment than previously appreciated.

Environmental health matters. Poor environmental health is a significant threat to human health. Air, soil and water pollution, inadequate waste management and ecosystem degradation all adversely impact human health. The World Health Organisation (WHO) outline that climate change is both directly and indirectly impacting health by increasing the frequency and severity of extreme weather events such as droughts and flooding, aggravating existing food insecurity, changing infectious disease patterns, and increasing respiratory diseases from poor air quality.

Climate change risks are projected to negatively impact economies. The risks of extreme weather events and temperatures, biodiversity loss and failures of climate change adaptation and mitigation could result in significant disruption to supply chains and critical infrastructure. By mid-century, the world stands to lose around 10% of total economic value from climate change if temperature increases stay on the current trajectory.² The World Economic Forum’s Top Global Risks³ outlines the potential financial impacts of these risks on the global economy which stands as an impetus for businesses to take action to enhance the resilience of their business.

All businesses have an important role to play in responding to climate change. We have a moral obligation to help abate the climate crisis and environmental degradation by implementing voluntary reductions of greenhouse gases (GHG) within our control and engaging in mitigation and adaptation activities outside our direct control where we have influence. We recognise global climate targets set in the 2015 Paris Agreement and specific targets for the transport and rail sector in the European Union and the United Kingdom. Companies should continue to strive towards improving the sustainability and efficiency of their operations, services and products and realise the moral imperative, economic benefits and social value of such a transition for both current and future generations.

1. IPCC (2021) Climate Change 2021: The Physical Science Basis Climate Change 2021: The Physical Science Basis (ipcc.ch)
2. Swiss Re Institute (2021) The economics of climate change https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe- risk/expertise-publication-economics-of-climate-change.html
3. World Economic Forum (2023) The Global Risks Report 2023 18th Edition https://www3.weforum.org/docs/WEF_Global_Risks_Report_2023.pdf

Our Commitments:

As part of our commitment to climate action and working towards Net Zero, Beacon Rail resolves to undertake the following actions:

• Reviewing Assets (upstream). We will continue to monitor our asset base to ensure it reflects the emerging regulatory trends, policy changes and initiatives across our countries of operation. In this way, we can ensure a robust response to sector-specific transitional risks. We will continue to research the potential for adapting our existing fleet with low-carbon alternatives and maintain engagement with manufacturers and customers to help develop a route to market for low emissions innovations.
• Getting to carbon neutral (direct operations) and net zero. In terms of the direct control over Beacon’s emissions, the objective is to achieve carbon neutrality in the short to medium term and then net zero in the longer term in our direct operations while supporting the energy transition and promoting a safe and reliable industry. We will continue to monitor and reduce our Scope 1, 2 and those Scope 3 categories under our direct control as much as possible. Furthermore, as well as reducing our emissions, we are developing a goal to offset certain of our direct emissions via investment in high-quality carbon removal projects.
• Extending Scope 3 metrics/analysis (downstream). We are working with a carbon inventory specialist to undertake a full analysis of our leased assets and scope 3 emissions. Working with our customers, we are looking to bridge the current data gap to provide a credible measure of our assets in operation. Once the baseline is developed, we can support our customers in defining their emission reduction pathways.
• Review climate-related risks. Review business risks and opportunities associated with physical and transitional climate change and integrate and mitigate them through our risk management process.
• Ensure compliance with all applicable regulatory and legislative requirements. Collaborate with our stakeholders to work towards achieving a low-carbon rail sector and abate climate and human health risks.

Our Governance

This Policy has been reviewed by senior management and is to be shared publicly with all stakeholders.

In order to assure adherence to this Policy, Beacon will implement appropriate management systems and processes as defined within the Climate Strategy.

In addition, the Audit and Risk Committee and Health, Safety, Quality, and Environment Committee of Beacon Rail regularly review the Company’s policies, practices and programmes on environment, climate, health & safety and other environmental, social and governance (ESG) priorities.

Following regular review this Policy will be updated as necessary.

Last updated: April 2023