Risk Management

We manage climate-related risks through a robust and well structured ERM framework, designed to address sustainability challenges in an integrated and consistent manner across the organisation.

• The framework ensures systematic identification, evaluation and monitoring of climate risks, guided by a combination of top down strategic oversight and bottom up functional risk inputs. This approach helps minimise blind spots, and enables comprehensive coverage of both operational and strategic vulnerabilities
• Climate-related early warning indicators, mitigation measures, and emerging risk signals are periodically reviewed by the Board’s Risk Management Committee (RMC), which oversees risk governance in alignment with our ESG priorities

Our risk management approach is aligned with international climate risk disclosure frameworks. We have progressively strengthened our climate risk assessment capabilities by integrating TCFD aligned principles – covering governance, strategy, risk management, and metrics & targets – into our business processes. This includes assessment of physical climate risks, such as extreme weather events, coastal vulnerabilities, flooding, and temperature impacts on port infrastructure, as well as transition risks arising from evolving climate policy, carbon markets, stakeholder expectations, and emerging low carbon technologies.

Our climate risk assessment framework demonstrates a high degree of methodological rigour and strategic integration. It employs a comprehensive, multi-dimensional approach to identifying and evaluating both:

These risks are assessed across short, medium, and long-term time horizons, ensuring that both immediate operational vulnerabilities and longer-term strategic challenges associated with climate change are systematically captured and addressed.

Integrated Approach to Risk Management

Climate-related risks and opportunities are fully integrated into the company’s centralised ERM framework, ensuring alignment with broader organisational risk governance processes. Importantly, this assessment extends across our full business value chain, covering our own operations, upstream activities (including key suppliers and raw material dependencies), and downstream activities (including product use, distribution, and end-of-life considerations). This approach enables a holistic understanding of climate impacts and resilience requirements.

The various well-defined risk management systems at APSEZ have cumulatively enabled us to adopt a structured, forward-looking, and globally-benchmarked approach to climate risk management across our ports, logistics assets, and industrial clusters. This ensures operational resilience while supporting our long-term Net Zero 2040 ambition.

We have strategically embedded key indicators such as climatic hazards, water and energy use, emissions, and potential regulatory costs within our ERM system, enabling targeted mitigation measures and informed decision-making. To support implementation, we have introduced a Board-approved dedicated climate budget and refined financial cost estimates, translating risk insights into a focussed investment roadmap for low carbon technologies, renewable energy, and green port development. Climate risk mitigation actions are monitored annually and updated based on changes in hazard data, regulatory outlook, and operational experience.

Physical Climate Risks to Assets and Infrastructure

We have conducted a comprehensive physical climate risk assessment across our entire portfolio of operational ports and terminals. Within India, this includes four ports in Gujarat; three ports/terminals in Tamil Nadu; two each in Andhra Pradesh and Odisha; and one each in Goa, Kerala, and Maharashtra. Internationally, the assessment covers three ports located in Haifa (Israel), Dar es Salaam (Tanzania), and Colombo in Sri Lanka’s Western Province. To evaluate both acute and chronic physical climate risks across this geographically diverse portfolio, we applied a scenario-based approach aligned with the Coupled Model Intercomparison Project Phase 6 (CMIP6).

Climate impacts were analysed across three temporal horizons – 2030 (near term), 2050 (mid term), and 2100 (long term), consistent with IPCC guidance. This has aided the company in the identification of location-specific vulnerabilities and resilience requirements.

Port-specific Climatic Risk Adaptation Strategy

Notwithstanding the critical role played by them in global trade and economic development, ports are increasingly vulnerable to the impacts of climate change. Rising sea levels, extreme weather events, prolonged heatwaves, and water scarcity pose significant risks to port infrastructure, operations, and surrounding communities. This makes it imperative to adopt a defined climate risk adaptation strategy for ports to ensure long-term resilience and continuity.

At an introductory level, such a strategy involves identifying key climate-related threats, assessing their potential impact, and implementing measures to reduce vulnerability. This may include strengthening physical infrastructure, improving water and energy efficiency, enhancing emergency preparedness, and integrating climate considerations into future planning and investment decisions. By adopting a proactive and flexible approach, ports can better manage climate risks, protect asset value, and maintain their vital role in the global supply chain.

The port-specific detailed economic impact and corresponding adaptation strategy based on the most severe climatic hazards has been shown below:

Transition Risk Assessment

In alignment with the TCFD and IFRS S2 recommendations, we have undertaken a forward-looking transition risk analysis. This assessment identifies and evaluates the financial and strategic implications of potential regulatory, market and technological shifts associated with the global transition to a low-carbon economy.

The assessment is based on two globally recognised climate scenarios developed by the International Energy Agency (IEA):

• Base Case / Business-as-Usual (BAU): Stated Policies Scenario (STEPS) – reflects the current policy trajectory without additional decarbonisation commitments beyond those already implemented
• Low Carbon Scenario: Net Zero Emissions by 2050 (NZE) – assumes aggressive global climate action to limit warming to 1.5°C, with widespread adoption of low-carbon technologies, shifting market preferences, and stricter climate regulations

Further, in accordance with TCFD recommendations, risks and opportunities have been evaluated over three timeframes: short-term (2030), medium-term (2040), and long-term (2050). This enables us to integrate climate considerations into strategic decision-making and long-term investment planning, particularly in the context of India’s net-zero commitment by 2070.

Carbon Pricing Mechanism – Transitional Risk

With the gradual expansion of carbon pricing mechanisms in India, supported by evolving regulatory frameworks and global climate commitments, APSEZ may face increasing cost pressures through direct and indirect channels, including fuel costs, logistics expenses, and pass-through charges from shipping customers. Even under a scenario where Scope 2 emissions are neutralised operationally by 2030, exposure to downstream carbon costs and market-linked pricing mechanisms may continue to have financial implications.

Based on current Scope 1 emissions of 1,58,998 tCO₂e and an assumed carbon price of ₹455 per tCO₂e, the estimated annual carbon cost is approximately ₹7.3 crore (1,58,998 × ₹455), which could lead to a corresponding impact on EBITDA.

To mitigate this risk, APSEZ is proactively transitioning towards a low-carbon operational model through electrification, renewable energy adoption, and efficiency improvements. The estimated one-time investment of ~₹34 crore required for these mitigation carbon capture initiatives enables reduction in long-term exposure to carbon pricing volatility, enhances regulatory preparedness, and supports alignment with evolving climate policies.

Transition Risks and Mitigation Strategy

Climate-related Metrics and Targets

Given the growing global concern surrounding greenhouse gas (GHG) emissions and their contribution to climate change, businesses worldwide are facing heightened scrutiny and stronger expectations to act decisively. At APSEZ, we recognise that transitioning to a low carbon future is both an environmental imperative and a strategic opportunity. We use defined metrics to monitor performance in relation to key climate and nature-related risks and opportunities. For material issues, we also establish specific targets to track our actions, aiming to mitigate risks and capitalise on emerging opportunities.

FY 2025-26 Targets

GHG Emissions: Scope 1, 2 and 3

We have successfully achieved emissions levels well below those of the previous year for FY 2025-26. We have reduced Scope 2 emissions by over 12% and achieved an overall reduction of more than 6% in combined Scope 1 and Scope 2 emissions compared to FY 2024-25. APSEZ adheres to the Greenhouse Gas Protocol – A Corporate Accounting and Reporting Standard (Revised Edition) for quantifying GHG emissions across our operations. The GHG emissions disclosed below are reported using the operational control approach, with Scope 2 emissions calculated using the market-based methodology.

Scope-wise Greenhouse Gas Emissions

Scope 3 Emissions Category-Wise

Not Applicable Categories for APSEZ – Category 8, 10, 11, 12 & 14

Emission Intensity Trends (tCO₂e/Crore)