Introduction & Governance
Introduction
Cotality recognizes the growing importance of climate-related factors for its market and clients and is integrating these considerations into strategic planning and risk management. This report discloses Cotality’s climate-related governance, strategy, risk management, and metrics and targets in alignment with the Task Force on Climate-related Financial Disclosures recommendations, and in accordance with California Senate Bill 261 (SB 261). The analysis presented in this report leverages third-party climate and catastrophe models and scenario analysis to assess physical and transition exposures and to inform Cotality’s products, internal business resiliency and strategic planning. Findings are based on the best available data and reflect current limitations and areas for further enhancement, including expanded coverage and refined methodological approaches.
Governance
Cotality’s oversight of climate-related risks and opportunities is embedded within its broader compliance and ESG governance structure. This structure is anchored by a committee, established in 2023 and composed of senior leaders (including the Chief Legal Officer, Chief Brand and Communications Officer, Chief Enterprise Operations Officer, Chief Information Security Officer, Chief Compliance Officer, and Chief Accounting Officer), which meets twice annually and provides corresponding ESG updates to the Executive Committee on a biannual basis. Climate topics are monitored through established reporting processes that track emissions performance, regulatory changes, and progress against internal ESG program actions. While Cotality maintains oversight of climate issues, biodiversity considerations have not yet been incorporated. Preparatory work is underway to support Scope 1 and Scope 2 attestation requirements and to enable public reporting of environmental performance within the next two years. The Board of Managers receives climate-related updates through the Legal & Compliance function, which provides ESG Program updates to the Board. These updates are communicated during formal Board meetings at least biannually . Although climate considerations are not a primary driver of strategic planning or capital allocation today, the Board would be apprised of and provide input where regulatory or market shifts may affect operations, including climate regulation changes impacting Cotality which would be presented in conjunction with management’s response actions. Management oversees climate related risks and opportunities through the ESG Committee, which manages climate policy, supervises emissions measurement, tracks regulatory requirements, and guides ESG reporting. The environmental lead provides structured data updates that support internal decision-making and feed into the company’s broader governance processes, including Board-level reporting. Management remains informed about climate-related issues through ongoing compliance monitoring and quarterly Enterprise Compliance Committee reviews. Regulatory developments in jurisdictions in which the company does business are monitored and change management processes are implemented, where applicable. To further support the evaluation of its practices including those relating to climate, Cotality undergoes annual ESG assessments, as required by its investors, to evaluate the strength of its ESG program. The most recent assessment rated the program as Strong, reinforcing the effectiveness of governance and oversight processes.
Strategy
Overview
Cotality’s climate strategy focuses on strengthening its ability to measure, manage, and reduce greenhouse gas emissions while preparing for a low-carbon transition. In 2024, Cotality completed its first comprehensive Scope 3 emissions inventory using a third-party provider for data aggregation and is continuing to enhance the accuracy and documentation of its Scope 1 and 2 emissions data, in alignment with California’s Climate Corporate Data requirements. In 2025, the company conducted its first climate scenario analysis engaging external climate consultants and using a third-party software platform to evaluate potential climate-related risks and opportunities. Looking forward, the company is developing a formal climate transition plan in the next two years and working with climate advisors to support bespoke scenario analysis and inform strategic decision-making. Near-term priorities for Cotality include improving energy efficiency, such as optimizing HVAC operations, and expanding the share of renewable electricity within its controlled facilities. Cotality’s longer-term strategy centers on shifting from spend-based to actuals-based emissions accounting, enhancing data accuracy to enable credible target-setting and decarbonization planning. Through these efforts, the Company aims to integrate climate considerations into business planning and investment decisions, positioning itself to align with future regulatory and market expectations for a resilient, low-carbon economy.
Climate Transition Risk & Opportunity Analysis
Cotality has identified relevant transition climate risks and opportunities that inform its short- and long-term climate strategy. These topics are defined and outlined below.
Climate Physical Risk Analysis
Cotality faces an overall low level of climate-related physical risk, with all assessed hazards—including flooding, temperature extremes, and storm events—posing minimal threat to operations, infrastructure, and supply chains. The company’s geographic footprint (28 locations across USA, AUS, GBR, CAN, DEU, NZL, IND) presents limited exposure to severe weather impacts, supporting stable business continuity. Findings are subject to modeling limitations, including hazard data quality and evolving climate projections. This analysis is qualitative and not a quantified loss estimates; detailed forward-looking scenario results are provided in the “Scenario Analysis” section.
Overview of Cotality’s Baseline Exposure to Climate Risk Physical Factors
Scenario Analysis
In 2025, Cotality completed its first climate scenario analysis using a third-party analytics platform and climate consultants to evaluate the potential impacts of market and physical climate factors on the business. These risk categories were prioritized as they offered the most quantifiable and data-driven outcomes for analysis. Findings from this assessment are informing the development of Cotality’s broader climate strategy, with detailed scenario results and key insights outlined below.
Transition - Market Factors
This scenario analysis considered the following factors:
- Revenue, or how climate factors may impact customer sectors – significant contraction or expansion in demand growth for customer sectors could result in increase or decrease in customer base, and relatedly revenue, for the Company.
- Costs, or how climate-sensitive costs (e.g., electricity, natural gas) may be impacted going forward and how this may affect the Company’s total costs.
The analysis leveraged three decarbonization pathways, Below 2°C, Delayed Transition, and Nationally Determined Contributions (NDCs), across a near-term (2035) and long-term (2050) time frame. All results from these scenarios are expressed relative to a “Current Policies” base case, which assumes no additional climate policies beyond those already enacted. Additional detail on scenarios used is provided below.
- Below 2°C Scenario: This assumes a gradual and orderly transition, where climate policies tighten steadily over time. It gives about a 67% chance of limiting global warming to below 2°C, leading to sustained shifts in demand, pricing, and investment patterns toward low-carbon products and services.
- NDCs (Nationally Determined Contributions) Scenario: This assumes countries implement only their current pledged climate targets, even if those policies are not yet fully effective. It results in moderate transition pressures and slower global decarbonization compared to the Below 2°C pathway.
- Delayed Transition Scenario: This assumes limited policy action until around 2030, followed by an abrupt tightening of climate regulations to meet temperature goals. The delay causes near-term volatility and disruption as markets adjust quickly to late but stringent carbon constraints.
To obtain insights for the Company, the analysis is tailored to insights based on industry impacts and the degree to which its balance sheet has climate-sensitive spend.
Overview of Cotality’s Baseline Exposure to Climate Risk Physical Factors
Under all three climate scenarios, Cotality’s operations and supply chain exhibits relatively low vulnerability to climate-related disruptions, reflecting the company’s limited reliance on emissions-intensive processes and its limited reliance on sourced goods. In the Below 2°C scenario, a gradual and orderly policy transition leads to a market in which there is a consistent demand for services driven by regulatory pressures and Cotality itself can adjust over time to relevant low-carbon requirements. Incremental costs may arise from resilience investments or energy-efficient solutions, but these are expected to be manageable.
In the NDCs scenario, moderate transition pressures and slower global decarbonization could expose Cotality to the largest manifestation of physical climate impacts to its own operations. This also will cause an increased level of disruption in climate events which could have implications for climate models leading to increased scrutiny on the accuracy of tools. These effects are likely manageable, supported by Cotality’s operational adaptability and existing methodological rigor.
The Delayed Transition scenario presents the highest near-term volatility. Limited policy action before 2030 may limit growth due to reduced regulatory burden , but abrupt regulatory tightening afterward spiking demand from those seeking services related to regulatory mandates and could coincide with severe weather events, potentially causing sudden disruptions to operations. While Cotality’s business is relatively agile it may see some effects in being able to provide services due to disruptions.
Physical – Acute and Chronic Factors
This scenario analysis leveraged SSP1-2.6, SSP2-4.5, and SSP5-8.5 scenarios across near and longer-term time frames, 2035 and 2050, to assess the Company’s exposure to acute and chronic physical climate risks. Additional detail on scenarios used is provided below.
- SSP1-2.6 represents a low-emissions, sustainable development pathway, in which strong global climate policies and technological innovation limit warming to around 1.8°C by 2100. Physical risks under this scenario are relatively moderate, reflecting effective climate mitigation and adaptation measures.
- SSP2-4.5 reflects a middle-of-the-road trajectory with limited additional climate policies beyond those currently implemented, leading to approximately 2.7°C of warming by 2100. Physical climate risks under this pathway increase in frequency and intensity but remain within a range that allows for some adaptation.
- SSP5-8.5 represents a high-emissions, fossil-fuel-intensive pathway, with limited mitigation and rapid economic growth driving up to 4.3°C of warming by 2100. Under this scenario, physical climate hazards become significantly more frequent and severe, driving the greatest potential business disruption and loss across assets.
Scenario analysis data was modeled for 28 of Cotality’s facilities where there was available location data to complete this exercise. Results are directional, based on hazard models and defined Low/Medium/High risk thresholds. Probabilities for each climate risk are based on the percentage of its facility locations with Low/Medium/High risk exposure to each hazard, under each SSP.
Vulnerability of Cotality’s Offices to Various Physical Risks Under 3 Climate Change Scenarios
*Any greyed-out cells represent scenarios and time frames for which there isn’t sufficient climate risk data from the climate models used.
Strategic Climate Resilience
Cotality’s business model, anchored in digital infrastructure, data analytics, and property intelligence, demonstrates strong resilience under the modeled climate scenarios. Across transition and physical pathways, financial impacts are limited and primarily indirect, reflecting the Company’s asset-light operations and adaptability. The ongoing integration of scenario analysis into strategic planning, product development, and data governance will further enhance Cotality’s ability to navigate climate uncertainty and capture emerging low-carbon opportunities.
Risk Management
Overview
Cotality manages climate-related risks through its enterprise risk management process, which gathers input from 60 to 80 senior leaders each year and evaluates risks for prioritization by the ERM Executive Committee. To date, climate topics have not emerged as top enterprise risks due to the company’s office-based footprint, minimal exposure to hazardous materials, and the ability for most employees to work remotely during localized disruptions. However, the company tracks localized physical risks across all offices, Business Continuity, HR, and Facilities teams monitor storms, flooding, and other weather-related hazards to ensure employee safety and operational readiness.
Cotality also strengthens its own climate-risk identification through its analytical capabilities, which include the Climate Risk Analytics and Hazard HQ platforms. These tools incorporate geospatial data, predictive modeling, and IPCC-aligned climate scenarios to assess hazards such as flooding, wildfires, storms, and water stress. While designed for clients, they support internal awareness of facility-level exposures and inform continuity planning. ESG, Legal, and Operations teams use insights from these tools, along with client disclosure trends, to anticipate emerging risks and refine enterprise oversight. These processes are increasingly integrated into organizational resilience planning, including predictive event alerts, redundant processing capacity in Rochester, and a structured notification system that activates ahead of forecastable events.
Transition Risk Management
Cotality’s exposure to transition risks is primarily indirect and arises from evolving client expectations, regulatory trends, and climate disclosure requirements across insurers, lenders, and real estate partners. ESG, Legal, and Compliance teams monitor these requests through a standardized regulatory monitoring program as well as via an ESG information-gathering tool containing approximately 70 questions, along with ongoing client dialogue that signals shifts in market priorities. These insights help the company assess whether emerging climate policies or reporting standards could affect client relationships, service delivery expectations, or competitive positioning.
Within the enterprise risk management framework, transition risks have not yet been elevated as material, and formalized transition-focused planning remains in development. However, management regularly tracks trends related to climate-related reporting, insurance requirements, and environmental performance expectations. These signals inform resource planning and service evolution, allowing the company to tailor offerings in response to shifts in the broader real estate and financial ecosystem. As Cotality advances its climate strategy, transition risk identification is expected to be more formally integrated into governance and scenario-informed decision-making.
Physical Risk Management
Cotality monitors physical climate risks through its enterprise risk process, its internal continuity framework, and analytic capabilities embedded within its product suite. Business Continuity, HR, and Facilities teams track localized hazards for all office locations and maintain communication protocols to support employees during weather events. The Dallas office represents the company’s most significant physical risk due to the manual and in-person nature of its property tax operations. Past disruptions, including the 2021 winter storm, prompted the company to develop hardened business continuity procedures, enhanced testing cycles, and hour-by-hour response plans for severe events. These measures are supported by redundant operational capacity in Rochester, which can absorb overflow work if capacity in the Dallas office is compromised.
Climate Risk Analytics and Hazard HQ provide additional visibility into property-level hazards such as hurricanes, floods, storms, and wildfires. These platforms use AI-based modeling and geospatial analysis to evaluate the severity of potential events and strengthen internal planning. Predictive alerts and established notification systems enable proactive preparation for forecastable events such as hurricanes or freezes. Through these combined tools and processes, Cotality aims to reduce operational downtime, protect employee safety, and ensure resilience across its office footprint. As the company continues to refine its climate strategy, it plans to more formally connect physical risk insights with enterprise governance and long-term scenario planning.
Metrics & Targets
Cotality’s climate-related metrics focus primarily on greenhouse gas emissions, which the company tracks across Scope 1, Scope 2 (location- and market-based), and, beginning in 2024, Scope 3 primarily for the purchased goods & services category. Management emphasized that current emissions estimates rely heavily on spend-based calculations, which limit interpretability and reduction levers. The company plans to transition towards activity-based emissions data over the upcoming reporting cycles to improve accuracy and better understand operational drivers. Beyond GHG accounting, Cotality does not track additional climate-related metrics such as energy, water, waste, or revenue from low-carbon products, which management noted is not broadly expected of the business today.
The company is in the early stages of developing climate-related targets. Cotality intends to establish formal GHG reduction goals within the next two years, with current progress centered on its UK and ANZ operations where SBTi-aligned commitments are driven by customer and regulatory obligations. The Company has not set enterprise-wide climate targets due to data maturity constraints and limited direct control over outcomes across business units. No additional climate-related targets or carbon pricing mechanisms are currently in place, though Cotality expects to expand Scope 3 tracking and integrate performance-based reporting into future disclosures as its data quality improves.
