Climate Change Risks and Opportunities

We are committed to fostering sustainable business practices across our businesses in order to reduce greenhouse gas emissions (GHG) and energy consumption. We believe that our focus on sustainability results in enhanced efficiency in our operations, which will reduce costs, improve margins, and help us achieve operational excellence. Further, given our role as a diversified global manufacturer and solutions provider, we are focused on innovating and developing products designed to help our customers improve the sustainability of their own products and services.

We recognize that climate change is a serious concern that warrants timely, meaningful action on a global basis. As part of our commitment to creating long-term economic value for shareholders through sustainable practices that protect the well-being of the environment and our company and developing products that help our customers meet their sustainability goals, we consider the potential risks and opportunities climate change presents for our businesses.

Identifying Potential Risks and Opportunities

We recognize the recommendations set forth by the Task Force on Climate-related Financial Disclosures (TCFD) are an important framework to consider climate risks and opportunities. In 2021 we conducted a detailed TCFD-aligned climate risk assessment process during which members of the Sustainability Steering Committee (SSC) analyzed a broad range of climate-related risks and opportunities to Dover Corporation and all our operating companies. The process included a workshop to provide background on climate risk and opportunity and a group session dedicated to assessing and prioritizing a broad universe of existing and emerging climate-related risks and opportunities based on criteria such as impact, likelihood, materiality to Dover, and level of stakeholder concern. From the initial list, eight top physical risks, transition risks and opportunities were prioritized. The three main categories of climate-related risks and opportunities evaluated are described below along with some of the mitigation and capitalization measures our businesses have in place.

As part of response planning for natural disasters and severe weather, we evaluate the physical risks posed by climate change for our facilities, operations, supply chain, and, most importantly, the health and safety of our employees. In order to address these risks, our businesses have business continuity plans in place to protect people, property, and assets from disruptions that may be posed by the physical impacts of climate change such as flooding from sea-level rise and increased incidence and strength of storms. These plans help us prepare in the event of a catastrophic event and will help ensure timely recovery of business operations.

We recognize the business risks that may present themselves as society considers shifting to a lower-carbon economy, as proposed by the ambitious EU Green Deal. We believe we address these transition risks such as carbon pricing, shifting market and consumer preferences, and reputation risk through our environmental initiatives, such as our science-based targets and energy and GHG reduction initiatives and use of renewable energy. In addition, we are expanding our presence in clean fuels and other attractive adjacencies.

Many of our operating companies are directly involved in industries that will likely be impacted by climate change policy and the associated potential for a transition to a low carbon economy, such as environmental and waste management, retail fueling, refrigeration and food equipment, packaging, and printing. A central part of our sustainability efforts is to enable our customers to reduce waste, energy, and to achieve their sustainability goals through our innovative and sustainable products. As demand is expected to grow for these products and services in the future, we anticipate significant opportunities to provide the solutions our customers depend on. For more information on how we enable sustainable solutions for our customers, please see our Innovation for sustainable products page.

Dover TCFD Index

For more details on how Dover addresses the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), see our TCFD Index which summarizes detailed information reported in our annual CDP Climate Change response.

Climate-Related Scenario Analysis

As part of assessing our climate risks and opportunities, in 2021 we completed an in-depth scenario analysis to assess the potential likelihood and impact of climate risks and opportunities to our business under two different potential future climate scenarios. We evaluated a number of commonly used climate scenarios and selected two – one business-as-usual 4°C “Red” scenario aligned with RCP 8.5¹ and one aggressive mitigation 2°C “Green” scenario aligned with RCP 2.6. During the climate scenario analysis workshop, the Dover Sustainability Steering committee evaluated each risk and opportunity for likelihood and impact to Dover’s business should the risk or opportunity occur. Where possible, we translated climate risks and opportunities into potential financial impact using a series of facts and assumptions based on scientific literature, Dover’s internal information and professional judgment. The top risks and opportunities, and the associated drivers, were then assessed under the two climate scenarios out to a 2050 time horizon.

We found typically low to moderate impact of climate risks, with higher transition risk under the 2°C scenario and higher physical risk under the 4°C scenario and similar levels of opportunity and risk under both scenarios. We believe our plan to achieve our new 2030 science-based targets helps us with resilience to climate risks under both scenarios and are evaluating the results of our scenario analysis to further improve climate risk management and capture opportunities presented by climate change. For further details on our climate-related risks and opportunities and climate scenario analysis, see our latest CDP Climate Change response.

¹ RCP = Representative Concentration Pathway (RCP), physical models from the IPCC, the Intergovernmental Panel on Climate Change, the U.N. body for assessing climate science

	Category	Climate-related risk and/or opportunity	Risk Exposure² Results from Scenario Analysis
	Category	Climate-related risk and/or opportunity	"Red" 4°C	"Green" 2°C
Transition	Policy and Legal	#1: Risk of increased operation costs due to carbon pricing/taxes/cap	Low-moderate	Moderate
	Technology	#2: Opportunity to improve energy efficiency and switch to renewable energy via on-site solar or wind generation or a virtual purchase power agreement (vPPA), reducing energy costs, emissions and exposure to carbon pricing	Low	Moderate-high
	Market	#3: Opportunity of research and development (R&D) advancements achieving goals for sustainable products and technologies and losing or gaining market share	Moderate	High
		#4: Risk of reduced demand for fossil fuels and Dover products serving energy and retail fueling industries impacting future revenues	Low-moderate	High
		#5: Risk of increasing logistics costs impacting materials costs	Low-moderate	Moderate
	Reputation	#6: Risk to sustain and enhance Dover's reputation as a strong climate action performer to stakeholders (e.g., employees, investors, customers, and the communities we operate in)	Low-moderate	Moderate
Physical	Acute	#7: Risk of increased frequency and severity of storms shutting down operations	Moderate	Low-moderate
Physical	Acute	#8: Risk of disruptions to critical suppliers due to hurricanes, flooding or other climate-related extreme weather events	Moderate	Low-moderate

² Risk exposure considers Impact and Likelihood of risks and opportunities through 2050. The risk exposure listed above was evaluated without taking into account the benefit of any risk mitigation measures. The climate risks identified should not be interpreted as a decision by Dover that such information is “material” as that term is used or understood in filings with the Securities and Exchange Commission.

Managing Risks and Opportunities Related to Climate Change

Our Board of Directors (the “Board”) provides oversight for the development and execution of our Environmental, Social, and Governance (“ESG”) strategy and the incorporation of sustainability-related risks and opportunities, including climate-related risks, into the Company’s strategy and operations. Dover’s CEO, who is a member of the Board, has management responsibility over ESG issues, including those related to climate change.

Our Board has established a comprehensive enterprise risk management process to identify and manage risks, including any risks related to environmental and social issues, and periodically reviews the processes established by management to identify and manage risks and communicates with management about these processes.

Our Board of Directors is also focused on our long-term business strategy and incorporates sustainability risks and opportunities into its overall strategic decision-making. Innovation is engrained in the Dover entrepreneurial spirit, and we believe that sustainability-driven innovation in response to customer demand will present a growth opportunity while contributing positively to enhanced resource efficiency and reduced waste. In that regard, our businesses have accelerated efforts and processes around innovation, including focusing on technologies that create tangible value for our customers and help them achieve their climate and sustainability objectives.

Dover’s senior management is fully involved and responsible for managing climate-related risks and opportunities. Our cross-functional Sustainability Steering Committee, comprised of senior Dover corporate and operating company leaders, oversees our ESG initiatives and sets our sustainability strategy and targets, including those related to energy and climate change.

On a day-to-day basis, our Senior Vice President, General Counsel & Secretary is responsible for managing overall sustainability and ESG reporting and strategy for Dover. Our Senior Vice President, Operations is responsible for managing our processes for internal reporting of energy consumption and GHG emissions and coordinates our action plan to achieve energy and greenhouse gas reductions across our facilities worldwide. For more information on our GHG emissions reporting, please visit our Energy and Emissions page.

For more information on our overall approach to risk management and oversight for sustainability matters, please see our Governance and Accountability page.