TRANSFORMING TRANSFORMING TRANSFORMING SUSTAINABILITY REPORT FY 2023 COMMUNITIES THE PLANET THE WORKPLACE There are several Group-level Management Emerging Risks Committees (ManComs) in place to address specific areas of focus. They include the Emerging Risk Prolonged Global economic recession Resource Nationalism Commercial ManCom, HSES & ESG ManComs, due to climate change HR ManCom, Finance ManCom, and CSR ManCom. These committees are responsible for identifying risks in their respective domains Category Economic Geopolitical and implementing appropriate measures to mitigate them. Description Economies are very sensitive to prolonged shocks such as supply chain disruptions, war & The geographic distribution of numerous metals and minerals has conflict, and pandemics among other factors. Historically, these shocks have occurred in ensured a degree of mutual interdependence. For example, Brazil isolation. has scaled lithium, rare earth elements and nickel production, but The Management Assurance Services (MAS) has remained dependent on others for refining and on neighbours plays a crucial role in ensuring the As climate change becomes more pronounced and more frequent, we anticipate that climate for other resources such as copper and cobalt. change impacts combined with other shocks can significantly hamper global economic implementation of policies and processes conditions. Yet resource nationalism has also driven cracks with disputes aligned with management's performance goals arising first around the application of state aid to boost domestic and risk tolerances. They serve as a vital element For example, economic downturn in developed markets such as China have impacted global mining and processing industries. The expanding use of the demand for metals. Combined with the impacts of frequent extreme weather events such as national security exemption at the WTO has also increasingly of the internal control process, providing the flooding and drought, the damage to the economy is in billions of dollars, which may send the paralysed multilateral trade mechanisms, rendering them Board with necessary assurance. This involves global economy into a prolonged recession. ineffective in addressing geopolitical confrontation in a world systematic assessment of measures, tools, and where local resilience and security is prioritized over comparative The collective impact of these events can result in a decline in demand for our products & advantage and efficiency. processes used to identify, evaluate, control, impact the overall financial performance of the company. monitor, and report on risks. The Audit Export constraints on minerals have placed upwards pressure on broader international governance and enforcement mechanisms Committee regularly evaluates the scope, that oversee new exploration zones – including those relating to authority, and resources of the Management mining. Assurance Services (MAS). As a result, an internal audit plan is developed with a risk-based approach, considering the risk matrix, insights Impact A prolonged global recession due to climate change, combined with other macro-economic State intervention has become more common and stringent, with from senior management, business teams, and factors, will impact the demand of our products as well as the LME prices. This will significantly government planning directly and indirectly allocating available the Audit Committee. Past audit experience, impact the revenue as well as the cost of raw materials procured. resources for prioritized industries. Also, in many cases due to factual or perceived shortages, states quickly and regularly financial analysis, and the prevailing economic exercise control over key resources to protect their own and business environment are considered during population. the planning stage. For example, state intervention could impact aspects related to access to minerals, taxation rates, profit-sharing agreements, etc, with a resultant impact on the company's revenue sources. ESG Risks The Board, with support from the management, Mitigating Key mitigation measures include: Key interventions include: conducts periodic and robust assessments of actions a) Identifying alternative markets for our products. a) Diversification of businesses averse from resource principal risks and uncertainties through an b) Assessing supply chain impact and dependencies. nationalism impacts annual materiality assessment, which are then c) Establishing long-term agreements with our customers as well as suppliers. b) Public Advocacy with governments and industry associations. integrated into Vedanta’s enterprise risk d) Diversification of products and markets. c) Ensuring stakeholder engagement at every stage of the management framework. These risks can be project lifecycle economical, environmental, geopolitical, societal, d) Strict vigilance on compliance to national regulations or technological depending on their long-term impact on Vedanta’s business. 104