Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 299 report information sustainability report Governance review review statements Annual Report 2022 Risk performance - Climate risk (continued) Subsidence: Total Volume of stock (as % of total UK Mortgage Flood: Total Volume of stock (as % of total UK Mortgage book) book) per risk band per risk band Subsidence is driven by the interplay of precipitation, temperature Flooding in the UK is forecast to increase over time, with the and soil type factors, which result in volumetric changes to the potential for this increase to accelerate if greenhouse gas soil. Increased volatility in weather conditions, as a result of emissions are not reduced. The increased risk of flooding has the climate change, contributes to the acceleration of subsidence potential to impact the valuation of properties directly, as well as impacts. Some areas, particularly those with high concentrations indirectly where a particular area becomes high risk and property of clay soil (i.e. London), are more susceptible to subsidence. This demand falls. Remediation costs, high insurance premiums or shrink-swell impact can cause localised property level impacts, potential lack of insurance coverage have the potential to impact resulting in impacts to the valuation of a property, or impacts to affordability. affordability through remediation costs and high insurance In 2022, Barclays on-boarded a third party to support climate risk premiums. data enhancements within the UK Mortgages portfolio, this resulted in improvements in granularity, moving from postcode In 2022 Barclays on-boarded a third party to support climate risk level to property level flood data. Flood Risk bands are based on data enhancements within the UK Mortgages portfolio, which average annual loss, generated using flood hazard frequency and included the ability to map the UK Mortgage portfolio to flood depth from tidal, surface, pluvial and fluvial flooding and subsidence risk bands based on the near surface subsidence accounting for the mitigating impact of flood defences where hazard level. The scoring is based on soil properties, in particular these are present. Properties in the Moderate and High Risk bands the extent to which the soil will shrink under hot and dry weather are expected to face above average insurance costs given their conditions, as well as the predicted temperature and probability of elevated exposure to flood risk. Those within the Very High band extreme rainfall. These variables are combined with subsidence are considered likely to cede to Flood Re. claims per postcode to generate a pseudo-quantitative score, where a property in class 10 is around ten times as likely as a As at 30 September 2022 property in class 1 to make a subsidence claim. Risk Band Volume % Negligible 78.8% As at 30 September 2022 Very Low 8.0% Risk Band Volume % 1 9.5% Low 2.0% 2 35.3% Moderate 1.8% 3 23.0% High 2.8% 4 4.6% Very High 1.3% 5 4.6% Missing 5.4% 6 3.3% 7 2.4% 8 0.0% 9 0.2% 10 9.9% Missing 7.0%