Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 401 report information sustainability report Governance review review statements Annual Report 2022 KPMG LLP’s independent auditor’s report to the members of Barclays PLC (continued) Group scope Coverage of Group financial statements As part of our audit we performed a risk assessment of the impact of climate (Item 7 below) Group total income* change risk and the commitments made We have performed top down risk by the Group in respect of climate change assessment and planning to determine on the financial statements and our audit which of the Group’s components are likely approach. As a part of this we held to include risks of material misstatement discussions with our own climate change to the Group financial statements, the professionals to challenge our risk type of procedures to be performed at assessment. In doing this we performed these components and the extent of the following: involvement required from component • Understanding management’s auditors around the world for the purpose processes: we made enquiries to of our opinion on the consolidated financial understand management’s assessment statements. of the potential impact of climate We have also considered the extent to change risk on the Group’s Annual Group total assets* which the Group has established central Report and Accounts and the Group’s hubs in shared service centre structures in preparedness for this. As a part of this India. The outputs from these hubs are we made enquiries to understand included in the financial information of the management’s risk assessment process reporting components and so the India as it relates to possible effects of operations are not considered to be a climate change on the Annual Report separate component. and Accounts including the way in which We have performed certain audit the accounting policies of the Group procedures centrally across the Group, set (including those relating to products out in more detail in Section 7. In addition, with specific climate features) are we have performed Group level analysis on updated to reflect climate change risks. the remaining components to determine • Retail credit risk: we assessed how the whether further risks of material Note Group considers the impact of physical * Percentage of Group total income/assets over which we misstatement exist in those components. performed full scope audit or audit of account balances risks on the valuation of mortgage We consider the scope of our audit, as collateral. Specifically, we performed The impact of climate change on our audit communicated to the Board Audit data and analytic driven risk assessment Committee, to be an appropriate basis for In planning our audit, we have considered procedures to understand the potential our audit opinion. the potential impact of risks arising from impact of flooding and subsidence on climate change on the Group’s business The components within the scope of our the valuation of mortgage collateral and and its financial statements. The Group work accounted for the following made enquiries of management to has set out its ambition under the Paris percentages: understand how this is considered within Accord to be a net zero bank by 2050. their own collateral valuation process. Further information is provided in the • Corporate credit risk: we assessed how Group’s Environment, Social and the Group considers the impact of Governance report which has been climate risk on corporate counterparties incorporated into the 2022 Annual Report. through our individual loan assessments Climate change risks, opportunities and where, for performing counterparties, the Group’s own commitments and we assessed how climate change risk changing regulations could have a impacts certain counterparties within significant impact on the Group’s business the commercial bank, including the and operations. There is the possibility that impact on their credit rating as climate change risks, both physical and applicable. The focus of our procedures transitional, could affect financial was on certain counterparties who statement balances, through estimates operate in industries with greater such as credit risk and market risk. There is exposure to climate risk - the energy, enhanced narrative in the Annual Report transportation, materials and buildings, on climate matters. agriculture, food and forest product sectors. • Market risk: as part of our risk assessment, we incorporated a consideration of the climate change impact on unobservable inputs used in the valuation of certain financial instruments in elevated risk sectors including energy, metals and mining.