Freightways Group Ltd

Governance Body Oversight

Freightways' Board of Directors are responsible for overseeing the management of risk, including those related to climate change.

The Board is also responsible for approving the development of Freightways' GHG emission reduction target and strategic climate initiatives. The Board receives monthly updates on progress against climate-related metrics and reviews strategic objectives and climate targets annually. Freightways performs annual measurement and receives third-party assurance of our GHG emissions, which allows us to understand changes in our GHG emissions and our carbon price exposure year on year. The Board is also responsible for approving management remuneration, which is not currently linked to climate-related metrics.

The Audit and Risk Committee is responsible for the management, monitoring, and reporting of risks, as well as the review of risk management policy. Climate risks fit within Freightways' definition of risk and are assessed according to their likelihood and potential impact. Each Freightways-owned business is responsible for identifying their own risks and opportunities (including those relating to climate) and developing future strategies. These are then consolidated at corporate level and taken to the Board for review. The Audit and Risk Committee conducts an annual review of those risks and mitigating actions[4].

4https://www.freightways.co.nz/about/corporate-governance/

Our Directors have experience in climate change and sustainability matters and this is supplemented by specialist external third party when required. Third-party support has included advice related to our climate-related reporting.

Management's Role

Freightways' Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have delegated authority from the Board to take responsibility for assessing and managing consolidated risks and opportunities related to all controlled businesses. As part of this role, the CEO and CFO are engaged in structuring Freightways' strategic and risk management approach to these climate-related risks and opportunities. General Managers and executive teams at each of Freightways' controlled businesses are responsible for identifying and assessing risks at an operational level, including climate-related risks and opportunities, and providing those to Freightways' executive leadership team. This process occurs annually.

At the corporate level, the daily management of Freightways' sustainability metrics and strategy (including climate) is delegated to the General Manager ("GM") of Safety and Sustainability. The GM of Safety and Sustainability prepares monthly reports on progress against targets and relevant metrics, which is shared with the executive leadership and the Board.

AUDIT AND RISK COMMITTEE

Freightways' ARC is responsible for the management, monitoring, and reporting of risks, including those that are climate-related. The Charter of the ARC requires that the ARC conduct an annual review of management's prioritisation of Freightways' business risks and mitigating actions as consolidated across the Group, and recommend to the Board for approval key risks for which risk management plans will be developed and implemented. Freightways' risk register is updated annually and taken to the ARC for the purposes of this review. During the Reporting Period, a climate risk register was created and shared with the ARC.

The ARC's climate-related responsibilities were updated in February 2024. Prior to February 2024, the ARC was responsible for climate-related risks as part of its general responsibilities regarding Freightways' risks. The ARC has further climate-related responsibilities that include the definition of scenarios and the measurement of financial impact[5].

BOARD OF DIRECTORS

Freightways' Board of Directors is responsible for the long-term resilience and stewardship of the Group to ensure the proper direction and control of Freightways' activities. The Board's climate-related responsibilities were updated in the Board Charter in February 2024[4]. The Board has the responsibility for establishing corporate objectives and strategies, which includes managing risks and opportunities associated with climate change. Since February 2024, climate-related risks and opportunities have been formalised as a standard Board agenda item. Prior to February 2024, climate was regularly discussed by the Board at meetings, including as part of considering the monthly Health, Safety and Environment (HSE) update from the General Manager of Safety and Sustainability (GM S&S). The HSE update includes updates on topics relevant to Freightways' climate-related risks and opportunities, such as availability and progress in low-emissions vehicle technology.

The Board was updated on Freightways' contractors' emissions reduction plan in July 2023 and August 2024 and has had access to significant climate risk assessment work that was shared with the Audit and Risk Committee (ARC) and is described in the Risk Management section.

The Board is also responsible for approving a set of metrics and targets for managing Freightways' climate related risks and opportunities, as well as monitoring progress against those and approving reporting. The Board decided in August 2024 that targets initially set in 2021 are no longer appropriate and will approve future targets during FY25, with the benefit of further data. The Board will consider recommendations received from ARC, the CEO and GM S&S in relation to targets and will establish a cadence for monitoring targets after these are reset in FY25.

The ARC has responsibility for recommending the inclusion of climate-related risks and opportunities in Freightways' long-term strategy; metrics and targets for managing those risks; and also for undertaking a detailed review of Freightways' climate reporting. During this Reporting Period, the ARC was updated in relation to scenarios and scenario analysis, the Controlled Business Risk Assessments as well as the overall Freightways Climate-related Risk Assessment. The ARC will oversee significant work areas to come to meet NZCS requirements in FY25 and a regular cadence of climate-related reporting to ARC will be established, that includes progress in both measurement and reduction of GHG emissions.