INTRODUCTION
We are pleased to provide our initial report aligned with the recommendations of the Financial Stability Board’s (“FSB”) Task Force on Climate-Related Financial Disclosures (“TCFD”).
We have structured this report into four sections: (1) Governance, (2) Strategy, (3) Risk Management, and (4) Metrics & Targets.
SECTION 1 – GOVERNANCE
1.1: Board Oversight
Our Nominating and Governance Committee (NGC) oversees our programs, disclosures, and engagement related to environmental sustainability. At least annually, our Chief Legal Officer and Sustainability Team reviews our strategy with the
NGC along with key market and regulatory developments, stakeholder feedback, and our plans to address them.
Potential risks related to climate change are also incorporated into our annual Enterprise Risk Management process (ERM) which is maintained by our Internal Audit team. To date, no risks to our business related to climate change have
been identified as material through our ERM process. If an enterprise risk related to climate change were identified as material, the NGC would oversee steps taken to manage the risk with visibility for the Audit Committee.
1.2: Management Role
Our Chief Legal Officer (“CLO”) serves as the executive-level lead for environmental sustainability. He is responsible for guiding our strategy, disclosures, and global regulatory compliance efforts. He reports directly to our Chief
Executive Officer and serves as our Corporate Secretary to the Board of Directors. Our CLO is well-positioned for this role because of his governance and compliance ownership and expertise, C-Suite and Board-level access, and subject
matter knowledge. Our CLO, and the Sustainability Team that reports to him, collaborates with other Electronic Arts executives on an as-needed basis.
Day-to-day management of our enterprise sustainability efforts is led by our Sustainability Team. This teams’ responsibilities include:
- Maintaining processes to measure and calculate our emissions;
- Participating or leading processes designed to identify and understand key climate-related risks and opportunities;
- Designing a strategy to mitigate our emissions and identified climate risks;
- Monitoring and responding to global climate-related regulatory developments; and
- Developing and publishing voluntary and required climate-related corporate reports.
Our Sustainability Team reports to our CLO at least twice quarterly with respect to the above responsibilities.
We also maintain a cross-functional working group devoted to enterprise-wide sustainability efforts. This working group is led by our Sustainability Team and is comprised of well-positioned individuals that control key sources of our
emissions and are key partners for our corporate reporting. In addition to our Sustainability Team, current participants include leaders from our Workplaces, Technology, SEC Reporting, Strategic Sourcing, and Internal Audit teams.
SECTION 2 – STRATEGY
2.1: Identified climate-related risks and opportunities over the short, medium, and long term
Our business is based on the development and delivery of interactive entertainment games and services to a large, global audience. Our players increasingly engage with our games and services digitally. Together, this means that our
business relies on the reliable transmission of energy worldwide and is susceptible to weather-related events that could stress the power grid.
These acute natural disasters, including wildfires and hurricanes, could impact operations and the power grids at our physical locations. For example, our global headquarters are located in California, where we have seen the escalating
impacts of climate-related events. We also have identified chronic physical risks in the medium/long term, such as heatwaves, that have the potential to stress the power grid, disrupt operations and increase energy costs.
To manage physical risks, we are creating business continuity and disaster recovery plans that are designed to reduce and recover from disruptions to our operations. Our Global Security Team actively monitors weather-related
events at our offices and datacenters, and develops and implements emergency response plans and procedures in the event of a power shutdowns. Many of our games, services and critical infrastructure deploy redundancy strategies.
Key transition risks include the rising cost of energy, reputational risk, and the cost of compliance with evolving climate-related regulations. We have experienced increases in the price of energy necessary to maintain our
offices and run our datacenters, including from cloud computing providers. While not currently material to our financial statements, these price increases could escalate. As we consider climate-related commitments, we also
expect the cost of mechanisms available to meet those commitments to increase. To manage these risks, we maintain a healthy balance sheet. We have cash balances that provide significant headroom to absorb increases in the price of
energy alongside our material cash and operating requirements. We also have teams and programs to monitor and plan for these costs.
Our large institutional investors have become more prescriptive in their expectations of how we address climate change. We maintain various channels to understand the views of our stakeholders, address expectations, and proactively
communicate our commitments and progress. These include our direct investor engagement efforts, the publication of our annual Impact Report, our internal employee network, and management of our ESG ratings with select
organizations.
In the United States and Europe, we have seen an increase in climate-related policy. Similar to the expectations of our institutional investors, these policy changes focus on prescriptive transparency and reporting requirements.
We believe this policy trend will likely continue as climate change remains a focus for global governments. Our Sustainability Team partners with our Governmental Affairs team to monitor governmental proposals that may impact our
business. We socialize these changes with business owners and work with cross-functional teams to ensure we are prepared for any regulatory requirements.
We have also identified climate-related opportunities that may have a financial or strategic benefit. In the short-term, we can engage and educate our employees and key decision-makers. Many individuals throughout our enterprise are
passionate about sustainability and the impact of climate change on the world around us. Through internal initiatives, we can increasingly embed sustainability in EA’s culture and support ongoing talent acquisition and retention
efforts. Over the longer-term, we believe that we can take steps to increase the resilience of our infrastructure, such as by choosing partners with renewable energy strategies. This also helps lower our GHG footprint, manage
climate-related risks to the power grid, and may insulate us from future global policy shifts that require the use of renewable energy.
2.2: Impact of climate-related risks and opportunities on EA’s business, strategy and financial planning
As a digital interactive entertainment company, EA’s GHG emissions are relatively low as compared to many other industries. We have not identified a climate-related risk that we believe is likely to be material to our financial
statements in the short term. At the same time, we recognize that climate change is a global issue that requires action from every segment of society; that our stakeholders expect transparency and progress with respect to our
impact; and that climate change could pose a more pronounced risk in the future.
We are scaling our efforts to address stakeholder expectations and to create mechanisms that allow us to identify whether any risks and opportunities are accelerating. We have invested resources in our central sustainability program,
including hiring people and improving the tools and systems we use to measure our emissions. Going forward, we expect to establish FY23 as our baseline year for Scope 1 and Scope 2 emissions and make progress measuring our Scope 3
emissions. We are also evaluating strategies to reduce our Scope 1 and Scope 2 emissions, and do not expect these efforts, if implemented, to have a material financial impact in the short term.
SECTION 3 – RISK MANAGEMENT
3.1: EA’s processes for identifying and assessing climate-related risks
We leverage many of our existing risk management processes to identify and assess risks specific to climate change. For example, our Sustainability Team partners with our Governmental Affairs team, leveraging their standing
processes to monitor emerging regulations and consider how they may impact Electronic Arts. Our Sustainability Team is also positioned to monitor and respond to reputational risks and shifting stakeholder sentiment, including
through our global employee network and during investor engagement.
We also incorporate potential risks related to climate change and environmental sustainability into our annual ERM process. The process includes consultations with cross-functional internal stakeholders and follows a standardized
process to assess and rank risks. We also conduct a biennial materiality assessment across all our ESG areas which includes both internal and external perspectives.
To support these existing risk management processes, we recently completed a risk screening specifically related to climate change. This risk screening was led by our Sustainability Team and supported by independent third-party experts.
It included cross-functional conversations with Technology, Business Continuity, Finance, Legal, Investor Relations and Workplaces. The objective was to provide a focused environment to educate internal stakeholders about
climate-related risks so that they could consider and provide feedback about the impact of climate change to their teams.
3.2: EA’s processes for managing climate-related risks
Please see our response to Section 2.1 above.
3.3: How processes for identifying, assessing, and managing climate-related risks are integrated into EA’s overall risk management
Please see our response to Section 3.1 above.
SECTION 4 – METRICS & TARGETS
4.1: Metrics used by EA to assess climate-related risks and opportunities
The quantitative climate-related metrics we track and report can be found on Page 29 of our 2022 Impact Report (opens in new window). We also internally assess
qualitative factors, such as the extent to which we are addressing stakeholder expectations as a whole, and our progress towards understanding and adapting to the evolving global policy landscape.
4.2: Scope 1, Scope 2, and Scope 3 GHG emissions and related risks
|
FY22 GHG Emissions
|
|
Scope 1
|
1,900 metric tons CO2 eq
|
|
Scope 2
|
|
|
Market-Based
|
25,200 metric tons CO2 eq
|
|
Location-Based
|
30,000 metric tons CO2 eq
|
|
Scope 3 (Employee Commuting and Work from Home)
|
8,100 metric tons CO2 eq
|
4.3: Targets used by EA to manage climate-related risks and opportunities; performance against targets
We are scaling our central sustainability efforts and considering the results of our climate-related risks and opportunities screening, cost projections, and stakeholder expectations in evaluating potential targets.