4.1.6 Climate risks
The services sector is relatively unexposed to climate risks. However, the shift toward a low-carbon economy could notably have an impact on some of the Group’s fleet and mobility solutions.
4.1.6.1 Transition risks related to climate change
Risk
The transition to a low-carbon economy, including the introduction of carbon tax policies to regulate emissions or incentives to use alternative energy sources, could have an impact on the market for some of the Group’s fleet and mobility solutions.
This is the case in the growing electric vehicle (EV) market, where there is a risk that new competitors specializing in EV charging may emerge.
In Europe, for example, electric vehicles accounted for more than 20% of all new car sales in the final months of 2021, and are expected to rise to more than 50% of new sales by 2030. This means that, in addition to traditional fuel cards, more comprehensive solutions including EV charging will have to be developed for our clients’ fleets.
Currently, less than 5% of all vehicles on Europe’s roads are electric. Over the next five years, light vehicle fleets (cars, vans) across the continent are set to add more and more electric vehicles to their ranks. Still, heavy vehicle segment is expected to remain broadly unaffected by this shift during that period. The light vehicle fleet segment represents less than 25% of the Group’s Fleet & Mobility Solutions business.
Measures to manage the risk
The transition to electric vehicles represents an opportunity for Edenred by increasing its addressable market. This is because operating an electric or mixed vehicle fleet requires a sophisticated approach to fuel management, creating an opportunity for the Group to offer a wider range of services and solutions.
These considerations are being factored into the Group’s ongoing Beyond Fuel strategy, which is aimed at offering additional services to clients by developing maintenance management, unified electronic toll and VAT recovery services for transportation companies.
The Group also supports the ecological transition through its business activity by developing green, sustainable mobility services and by bringing its customers environmentally friendly solutions.
4.2 Legal and arbitration proceedings
In the normal course of business, the Group may be involved or become involved in legal and arbitration proceedings and may be subject to tax or government audits.
Information about legal or arbitration proceedings in progress, pending or threatened that may have, or have had in the recent past, significant effects on the Group’s financial position, business or results of operations is provided in Note 10.3 “Claims, litigation and tax risk” to the consolidated financial statements, page 299.
To the best of the Company’s knowledge, no other governmental, legal or arbitration proceedings that may have a significant impact on the financial position of the Company and/or the Group have been initiated against the Company or any of its subsidiaries.
The method used to provide for or recognize liabilities complies with the applicable accounting standards (see Chapter 7, Note 10.2, page 299).
Provisions for litigation are recorded on receipt by the Group of a notice of claim or summons, based on an assessment of the related risk made by the Group and its advisors. They are presented in Note 10.2 “Provisions” to the consolidated financial statements, page 298.
Edenred has not entered into any material off-balance sheet commitments other than those disclosed in Note 11.5 “Off-balance sheet commitments” to the consolidated financial statements, page 303.
