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This inaugural climate-related financial risk report is prepared for NWN in accordance with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD, 2017) in response to the requirements under Section 38533 of the California Health and Safety Code, known as the “Climate-Related Financial Risk Act” or “California SB 261” (California State Legislature, 2023). A Climate Risk Assessment and Scenario Analysis were conducted to evaluate climate-related risks. The assessment addresses both physical and transition risks using reputable data sources, including FEMA, Climate Central, Climate Impact Lab, and the World Resources Institute. Physical risks are assessed across multiple timeframes and climate scenarios (RCP 4.5 and RCP 8.5), while transition risks are informed by SASB industry risk categories.
This Climate-Related Financial Risk Report is prepared in conformance with the Final Report of Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD, 2017), one of the approved frameworks under HSC § 38533. The TCFD framework was selected because it is globally recognized, directly referenced by CARB’s draft checklist, and provides a clear structure aligned with the required disclosure pillars: Governance, Strategy, Risk Management, and Metrics & Targets.
NWNʼs Board of Directors provides independent oversight of management’s execution of business strategy, including the assessment and monitoring of climate-related risks and opportunities. The Board is responsible for evaluating overall risks to the company and overseeing sustainability matters, ensuring that corporate governance practices align with stakeholders’ long-term interests.
Specific oversight of climate-related issues is carried out primarily through the Sustainability Committee, which monitors risk assessment and management processes related to environmental, social, and governance ESG matters. This includes reviewing climate-related risks and opportunities, ensuring the integrity of related reporting, and overseeing compliance with applicable laws and regulations.
Management executes the Board’s strategic oversight through the Sustainability Committee, which was formally established in FY 2024. The Committee includes representatives from HR, finance, legal, facilities, and marketing, and it rotates leadership to address climate-related impacts, regulatory developments, and mitigation strategies. The Committee is responsible for assessing and managing climate-related risks and opportunities, integrating sustainability practices into operations, and developing the company’s sustainability strategy. Its work includes compliance with regulatory requirements such as California’s Climate Accountability package (SB 253/SB 261), preparing the company’s greenhouse gas (GHG) inventory, and sourcing third-party verification of emissions data.
Matters that require further oversight are escalated to the Board.
NWN recognizes that climate change presents both risks and opportunities that have the potential to impact business operations, revenue, and costs. Its strategy includes evaluating the implications of two climate scenarios, including a 2-degree Celsius scenario, to ensure resilience and adaptability in its long-term business model. Its strategic planning incorporates diverse potential impacts of climate scenarios, assessing physical risks like extreme weather events, as well as transition risks linked with policy changes, market shifts, and technology advancements. Innovative solutions and partnerships are fostered to harness climate resilience and drive sustainable growth.
NWN manages climate-related risks by integrating the findings of this report into its existing risk management framework. The company conducts bi-annual scenario analyses to evaluate potential impacts on operations, supply chains, and clients, and integrates these findings into strategic planning and investment decisions. Risks are prioritized based on likelihood and potential business impact, with oversight provided by the executive leadership team and regular updates delivered by the Sustainability Committee.
Climate-related risks are embedded into NWNʼs broader risk management processes to ensure they are assessed alongside operational, financial, and compliance risks. The risk management function leverages cross-functional input—from IT operations, procurement, and legal teams—to identify emerging climate exposures and ensure coordinated responses. This diverse perspective ensures that climate-related risks are not managed in isolation but are considered within the context of overall business continuity, client service delivery, and long-term strategic resilience.
NWN engaged external consultants to evaluate the company’s climate-related risks and opportunities across three time horizons: present day, 2030, and 2050.
Risks
Opportunities
NWN has identified a range of climate-related risks and opportunities across the short, medium, and long term. In the short term, the company faces increasing regulatory and customer pressures to disclose emissions and demonstrate ESG leadership. These requirements create operational challenges but also open opportunities to strengthen governance, enhance reporting capabilities, and build customer trust. Over the medium term, climate impacts such as supply chain volatility, higher energy costs, and resilience challenges among technology and staffing partners could influence service delivery and costs. At the same time, demand for cloud-based resilience solutions and continuity services is expected to grow. In the long term, escalating physical risks from extreme weather and chronic water or energy stress may disrupt both supply chains and customer sectors, but these pressures also create opportunities to embed climate resilience into NWNĘĽs operations.
These risks and opportunities are shaping NWNĘĽs strategy and financial planning. Compliance obligations are driving investments in emissions tracking and assurance, while customer procurement trends are influencing the evolution of a sustainable cloud communications portfolio. NWNĘĽs approach positions climate resilience not only as a compliance issue but also as a driver of long-term competitiveness and growth.
NWN primarily assessed its climate-related risks and opportunities based on the severity of potential impacts. Offices and operations in the upper three quintiles of exposure to physical risks, along with transition risks with materially significant impacts or high severity, were used to identify the most critical risks. This approach informed the company’s understanding of its exposure in the transition to a low-carbon economy and the potential impacts of forecasted severe weather events.
NWN measures its Scope 1, Scope 2, and Scope 3 emissions annually. Risks associated with emissions include potential regulatory costs, reputational pressures, and changes in client or supplier expectations as carbon reporting becomes increasingly standardized. Below is a summary of the CY 2024 carbon footprint with market-based emissions reported in mT CO2e. These numbers have not gone through any assurance processes; however, as part of SB 253, NWN plans on achieving limited assurance over its Scope 1 and 2 footprint metrics.
NWN has not set a target for GHG emissions reductions at this time.
NWN is committed to ensuring that all risks assessed as very high will be addressed through at least one targeted mitigation strategy, reinforcing a proactive approach to managing the company’s most significant climate exposures. NWN seeks to not only strengthen its climate risk management and regulatory compliance but also to demonstrate leadership in sustainability, enhance resilience across operations, and build long-term stakeholder confidence in its environmental performance.
This SB 261 Report includes forward-looking statements. Forward-looking statements include statements about our business and future performance. These statements are not historical facts, but instead represent only beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the company’s control.
