Energy Vault : Task Force on Climate-Related Financial Disclosures Report 2023

Energy Vault's

TCFD Report

Energy Vault	Energy Vault's TCFD Report

Overview

At Energy Vault, we exist to enable a sustainably energized world. We realize the urgency that is required to transition to a low-carbon economy1 to prevent the worst impacts of climate change. While our first energy storage solutions are only just going online, Energy Vault remains rooted in our sustainable values of creating a lasting positive impact on the environment and for future generations. As a next step in our journey, we have prepared this TCFD Report.

This report is intended to communicate our efforts and progress towards implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Over the last year, Energy Vault made a concerted effort to better understand the potential climate-related risks that could impact our organization and how those risks change in terms of likelihood and impact under different climate scenarios. Conducting a climate scenario analysis is a relatively new and rapidly expanding area for many organizations, including Energy Vault. As a result, while we feel confident in the outcomes of our climate analysis, we also expect data, methodology, and scenarios to continuously evolve.

As we continue to develop our sustainability strategy and business operations, we look for opportunities to further integrate sustainability into our day-to-daydecision-making. We understand that our energy storage solutions are our best opportunity to support the transition to a low-carbon economy and are committed to continuing product innovation and technology development to support this transition.

The Task Force on Climate-related Financial Disclosures (TCFD) Recommendations

The TCFD recommendations, published in 2017, are designed to help organizations publish consistent and comparable climate-related risks and opportunities for both internal and external stakeholders. The TCFD is made up of four pillars:

1. Governance

II. Strategy

1. Risk Management IV. Metrics and Targets

Each of these pillars contains its own set of recommendations to support effective and transparent disclosure. The TCFD framework, ultimately, looks to help businesses assess, manage, and improve the risks and opportunities related to climate change. This includes how organizations execute strategy, how their risk management process identifies potential challenges, and how organizations govern their operations to both mitigate and adapt to risks identified while using metrics and targets to track progress.

With the publication of the IFRS Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB), companies applying IFRS S1 and IFRS S2 will meet the TCFD recommendations and do not need to apply TCFD recommendations additionally. This change is meant to streamline

the numerous sustainability-related financial disclosure standards into a global disclosure. The IFRS Sustainability Disclosure Standards are separated into two parts. The IFRS S1 provides disclosure requirements meant to enable companies to communicate better with their investors about specific sustainability-related risks and opportunities over the company's defined short-,medium-, and long-terms. The IFRS S2 relays specific climate-related disclosures and is designed to be used in tandem with IFRS S1.

1 In this context, and throughout this report, low-carbon economy is an economy based on energy sources that produce low levels of greenhouse gas (GHG) emissions. Similarly, 'carbon' refers to carbon dioxide, a GHG, which is a major contributor to climate change.

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Energy Vault	Energy Vault's TCFD Report

Based on the guidance provided by IFRS, we plan to identify the gaps between the disclosure requirements of the TCFD recommendations and the two IFRS standards to determine whether additional disclosures are warranted.

We have provided information, to the best of our ability, on all four pillars of the TCFD based on our current efforts. As the landscape surrounding sustainability continues to evolve, Energy Vault will update our reports and processes annually.

Governance

Board Oversight

Both the Board and the Executive Leadership Team have their own roles and responsibilities in overseeing Energy Vault's sustainability efforts, which includes Energy Vault's climate strategy. The Board, which meets quarterly, takes responsibility for providing oversight on sustainability initiatives, including climate- related issues at least annually. The Board reviews sustainability initiatives, like the TCFD report and climate scenario analysis, and provides guidance to the Sustainability Team on how to best integrate these across the company's business strategy. The Board is advised by various committees, such as the Audit Committee and Compensation Committee. In 2023, overseeing the sustainability strategy was added to the Audit Committee's responsibilities. The committee is responsible for assessing risks across the organization, including sustainability and climate-related risks. The Audit Committee also supports the Sustainability Team in evaluating and fulfilling the sustainability-related targets that have been set for the organization.

Management Oversight

The Executive Leadership Team meets monthly to review initiatives related to Energy Vault's operations, which includes sustainability projects and climate-related initiatives. The Executive Leadership Team provides the Sustainability Team with feedback related to any new or ongoing projects on ways in which they may intersect with Energy Vault's business and operations. They also help to implement corporate and divisional key performance indicators (KPIs) that allow the implementation and success of a project to be tracked.

The Sustainability Team, sponsored by the Chief Marketing Officer, develops projects, co-creates KPI's to monitor and track, and provides functional oversight on sustainability projects and initiatives, including those related to climate, that they take both to the Executive Leadership Team and the Board for further review and approval. The Sustainability Team also works in tandem with the Product Development Team to foster strategic alignment with the goal of transitioning to a low-carbon economy.

A Sustainability Task Force was created to further enhance the sustainability-related responsibility of each department by evaluating company operations, monitoring operational, financial, and technical data, reporting progress, and embedding sustainability at the center of Energy Vault's culture. Each department has elected at least one representative for the task force that reports directly to an Executive Leadership Team member and is responsible for tracking specific KPIs related to sustainability for that department. The Executive Leadership Team then reports that information to the Board for their review. The individuals making up the task force are responsible for driving the progress of supporting goals within Energy Vault's sustainability plan, ensuring that goals and KPIs remain relevant, and collecting and monitoring data, metrics, and pertinent information related to strategic goals.

The Executive Leadership Team, Sustainability Team, and the Sustainability Task Force discuss any questions, concerns, or requests from their respective departments, and help to approve action items, deliverables, and related policies, before looking for guidance and/or approval from the Board.

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Energy Vault	Energy Vault's TCFD Report

Strategy

Energy Vault was founded to be the preeminent, purpose-driven energy storage company. Our core areas of impact - Purpose, Product, and Partnership - are directly linked to our clean energy transition goals. At Energy Vault, we use Purpose with the aim to embed sustainable business management strategies across departments of our organization. For Product, the Sustainability team implements an environment-first approach aiming to execute on opportunities to improve the environmental and social impacts, and circularity capabilities, of our products. Lastly, for Partnership, we understand the importance and value of global and inclusive partners to push the transition to clean energy in the right direction, prioritizing sustainable business plans and strategies that support responsible procurement.

As an outcome of our climate scenario analysis, we are striving to tie opportunities to both adapt and mitigate our climate risks to our core impact areas.

Climate Scenario Analysis

Climate scenarios, prepared by our consultant 3R Sustainability, allow us to explore different global warming futures, the assumptions those scenarios depend on, and the courses of action that could bring those scenarios to fruition. Climate scenarios are not predictions of what will happen, but rather projections of what can happen under various circumstances and allow us to view how different types of climate-related risks and opportunities can unfold and impact an organization.

Energy Vault's climate scenario analysis used two different sets of climate scenarios: the Shared-Socioeconomic Pathways (SSPs) and the Representative Concentration Pathways (RCPs). The RCPs were explicitly designed to explore the effects of different GHG concentration trajectories through the year 2100 and were published by the Intergovernmental Panel on Climate Change (IPCC) in the Fifth Assessment Report (AR). Energy Vault used the RCPs to analyze physical risks. The SSPs offer a way to explore possible socioeconomic futures to mitigate and adapt to climate change and were published by the IPCC in the Sixth Assessment Report. SSP scenarios include aspects like population, education, energy use, and technology. The SSPs were used to assess Energy Vault's transition risks.

For both transition and physical risks, Energy Vault used a well-below 2˚C scenario, a middle-of-the-road scenario that assumes some mitigation efforts, and a business-as-usual scenario that assumes no mitigation efforts2. The SSPs were used to assess Energy Vault's transition risks due to the close alignment between the inclusion of other influences on GHG emissions (e.g., population, technological advancements, etc.) and the transition risks published by the TCFD. The RCPs were used to assess Energy Vault's physical risks as a result of industry best practices.

As a first step in this climate scenario analysis, we determined timescales for short-,medium-, and long-term time horizons, that could be applied to both transition and physical risks. In the case of Energy Vault, the following thresholds were used:

• Short-term:0-5years
• Medium-term:5-10years
• Long-term:10+ years

By having a timescale that looks beyond a decade, Energy Vault can better account for chronic physical risks that might not show up in a short-term analysis, like sea level rise or changes in precipitation or temperature patterns.

To determine which risks Energy Vault should assess within the climate analysis, Energy Vault leveraged the TCFD framework. In addition to the TCFD, Energy Vault also referenced the CDP Climate Questionnaire of peers.

• For more information on the specific scenario projections used in Energy Vault's climate analysis refer to the Appendix.

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Energy Vault	Energy Vault's TCFD Report

Typically, a pattern or trend can be witnessed within the two types of risks, transition and physical, which were assessed within this climate analysis. Transition risks are expected to have a higher likelihood (probability of an event) and a higher impact under scenarios that look to curb warming to well below 2˚C and a lower likelihood and impact when compared to scenarios that maintain business-as-usual (i.e., higher warming scenarios) trajectories. Physical risks are expected to have a higher likelihood and a higher impact under scenarios that do not reduce emissions as quickly and maintain a business-as-usual trajectory.

The climate scenario analysis looked to identify:

• Energy Vault's key transition risks.
• Energy Vault's key facilities that are more likely to be notably impacted by physical risks.
• Energy Vault's opportunities to address identified climate-related risks spanning both transition and physical.

Transition Risks

The TCFD includes four categories within transition risks: Policy and Legal, Technology, Market, and Reputation. Within each of these categories, Energy Vault assessed specific risks to the organization and determined whether the risk was applicable based on the likelihood and impact. The following table includes Energy Vault's highest-ranked transition risks based on a well-below 2˚C scenario or SSP1-2.6, and how these same transition risks change under two higher warming scenarios34.

Risk	Climate Scenario Ranking	Impact to Energy Vault
SSP1-2.6SSP2-4.5SSP5-8.5
Policy and Legal

Increased pricing of GHG emissions Medium	Medium	Low
Enhanced emissions-reporting	Medium	Medium	Low
obligations
Mandates on and regulations of	High	High	Low
existing products and services

Several of the countries Energy Vault operates in have passed both carbon pricing mechanisms and reporting requirements, which will increasingly have an impact on Energy Vault

It is likely that as more climate-related policies are enacted to support a reduction in emissions and a shift towards a low-carbon economy, some of the materials that Energy Vault uses in products (e.g., cement and steel) could be limited due to their environmental impact and GHG contribution. However, Energy Vault has already begun working to find sustainable alternatives to these materials, so while the likelihood of this risk might be high, the impact could be lower given the R&D already taking place to mitigate these risks.

Technology

				The most likely risk facing Energy Vault identified
				in terms of technology is the cost of transitioning to
Unsuccessful investment in new	Medium	Medium	Low	a lower emissions technology. This will range from
technologies	Energy Vault's storage facilities and direct operations
				to sourcing materials. While the opportunities for these
				strategies are generally expected to reduce costs
				for Energy Vault over time, there will be an up-front
				financial investment that is needed. In order to maintain
Cost to transition to a lower				a lower warming scenario, Energy Vault will need
Medium	Medium	Low	to prioritize the projects that support this transition
emissions technology
			to more efficient processes, which could be risky,
				especially if the technology is newer and/or does not
				yet exist

1. These risks took the probability of the event and magnitude of impact under each of the SSP scenarios. Low, medium, and high was then assigned based on several factors including industry trends, raw material accessibility, and peer/supplier insights. The data supporting this table is from Energy Vault's climate analysis.
2. The complete list of transition risks and their associated likelihood and impact can be found in the appendix.

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Energy Vault				Energy Vault's TCFD Report
Risk	Climate Scenario Ranking	Impact to Energy Vault
SSP1-2.6	SSP2-4.5	SSP5-8.5
Market
				Energy markets are vulnerable to both the impacts
				of climate change and the strategies put in place to
				reduce GHG emissions. While a low-warming scenario
				will require more renewables or other alternative
				energy technologies to be brought online, it will also
				require infrastructure to be updated to support the
				use of such energy. As a result, shortages could be
Uncertainty in market signals	High	Medium	Low	faced and/or downtime could be experienced as
infrastructure is updated to support this increase. This
				could therefore increase the cost of energy, which
				would have a financial impact on Energy Vault. Under
				a higher warming scenario, infrastructure could max
				out on its ability to meet the energy demands from
				the increase in both population and energy-intensive
				lifestyles, also resulting in higher costs associated with
				consumption and unreliability.
				Due to limited raw materials, some of Energy Vault's
				products could start to become more expensive
				to manufacture as well as have longer lead times.
				Specifically, lithium, cobalt and copper, materials
				used in batteries and are increasing in demand from
Increased cost of raw materials	High	Medium	Low	the transition of renewables and electric vehicles, will
				likely become more expensive. Moreover, because the
				majority of the supply of these materials is located in
				China, any geo-political conflicts between the US and
				China could cause an increase in cost of these materials
				and could affect Energy Vault's business operations.

Physical Risks

TCFD includes two types of physical risks: acute and chronic. Acute risks are event-driven and generally independent of one another. In this climate analysis, the acute risks we assessed included drought, flood, freeze, severe storm, tropical cyclone (hurricane), wildfire, and winter storm. Chronic risks are the result of longer-term climatic shifts. In this climate analysis, the chronic risks we assessed included sea level rise, changing temperature, changing precipitation, water stress, and air quality. The following table5 shows Energy Vault's location with the highest likelihood and impact of acute physical risks as well as the most impactful chronic risks6. These values were ranked on a scale ranging from one to five and then averaged, where one is the least likely and least impactful and five is the most likely and most impactful.

Risk

Acute

Chronic

Location	Ranking
Texas, USA	3.48
Arbedo-Castione and Lugano, Switzerland	2.75
California, USA	2.48
Virginia, USA	2.45
Victoria, Australia	2.25
Texas, USA	2.95
Victoria, Australia	2.75
Arbedo-Castione and Lugano, Switzerland	2.3
Virginia, USA	1.55
California, USA	1.2

5 These risks took the average of the probability of the event and the magnitude of impact across all four RCP warming scenarios. These rankings are based on a scale of one through five and how each of these risks change under that specific warming scenario, one being the least likely and least impactful and five being the most likely and most impactful. The data supporting this table is from Energy Vault's climate analysis.

• The complete ranking of physical risks, both acute and chronic, for each location can be found in the appendix.

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Energy Vault	Energy Vault's TCFD Report

Both acute and chronic physical risks look to have the largest likelihood and impact at our Texas facility under the different warming scenarios. Several of these physical risks will likely build on one another. As a result, when looked at independently, these risks may not seem as critical. However, when compounded upon one another, Energy Vault could be at risk of facility shutdowns, a decrease in product output and revenue, and increased risk to employee safety.

Climate-related Opportunities

The opportunities identified in this climate analysis look to either mitigate identified risks or help Energy Vault adapt to these risks. For the identified risks, covering both transition and physical, a potential opportunity was created. Several of these opportunities have already been identified in our Sustainability Plan. Where opportunities were already agreed upon internally, a status was recorded in the climate analysis of where the project currently stands. For any new opportunities identified, a connection was made with an existing project within Energy Vault that could be further enhanced to address the identified risk.

Some of the opportunities will address multiple risks that we identified. This is due to the interrelatedness of climate change and the compounding effects climate change has across risks. A large focus area for Energy Vault is already reducing energy consumption, which in turn will help reduce any risks associated with financial carbon pricing mechanisms as well as reduce our risk associated with uncertainty in market signals, specifically for energy markets. The following table highlights the various opportunities that were identified as a mitigation or adaption strategy for the climate-related risk, the status of the opportunity, and the timescale for the opportunity.

Category	Potential Risk	Energy Vault's Opportunity for Mitigation/Adaption	Status
		Voluntarily purchase RECs and/or offsets or participate in an internal
		Not started
	Increased	carbon pricing program for Energy Vault.
	pricing of GHG	Implement projects and new technologies to reduce GHG emissions
	emissions	and reduce risk if additional pricing requirements are put into place or	Completed
		if RECs and carbon offset costs increase.
		Create a centralized data system that allows for continual monitoring
		of data throughout the year. This will allow Energy Vault to respond
		in a timely manner to any customer requests as well as identify any	Completed
	Enhanced	trends in data on a more regular basis to help Energy Vault identify
	further opportunities for improvement (e.g., energy efficiency).
	emissions-	Work with customers, suppliers, and investors to be able to
	reporting
	understand the data Energy Vault needs to track in order to improve
Policy and Legal	obligations
data availability and accuracy. Continue publishing an annual
		In progress
		sustainability report to showcase Energy Vault's sustainability
		progress. Continue to monitor reporting requirements and understand
		when and whether Energy Vault is required to report.
		Continue to track both climate-related risks and opportunities and
		report on emissions and metrics/targets regularly. Look at having	In progress
		any claims (e.g., carbon neutrality) verified by a third-party where
	Exposure to	possible.
	litigation	Conduct a deeper analysis on facilities with onsite hazardous
		materials and the physical risks that have been identified for that	In progress
		location to understand if Energy Vault has an increased chance of
		contamination or pollution (should a flood happen, for example).

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Energy Vault		Energy Vault's TCFD Report
Category	Potential Risk	Energy Vault's Opportunity for Mitigation/Adaption	Status
		Continue to look into innovative solutions to become a market	In progress
		accelerator for production and innovation of green steel and concrete.
	Substitution of
	Engage and form relationships with organizations from different
	existing products
	geographic regions and industries to advance technological	In progress
	and services with
	development through a variety of global partnerships.
	lower emissions
	Invest in materials or products that allow Energy Vault to use waste
	options
	as a byproduct for inputs for other products. Such as, utilizing scrap	In progress
Technology		metal to use in storage solutions.
	Implement more renewable energy on site to power existing facilities
		Not started
		and office spaces.
	Cost to transition	Research potential carbon capture mechanisms (for end-of-life and/
	to a lower	or fugitive emissions) that Energy Vault can either have onsite or offer	In progress
	emissions	to customers.
	technology	Localize sourcing of materials to reduce scope 3 emissions
		associated with both upstream and downstream transportation and	In progress
		distribution of materials and products.
		Continue to track and report GHG emissions in order to support
		Completed
	Changing	customer or other requests.
	customer	Continue to invest in new revenue streams and product offerings that
	behavior	support the transition to a low-carbon economy, like use battery solutions	In progress
		for energy storage systems with alternatives to lithium-ion batteries.
		Implement energy efficiency projects (including onsite solar) to
		reduce Energy Vault's GHG emissions, which will reduce the amount
		of electricity needed and any volatility in pricing, through energy	Not started
	Uncertainty in	audits to strategically prioritize areas within Energy Vault's operations
Market	market signals	that consume more energy.
		Continue to track and report GHG emissions and reduction measures
		to proactively prepare for any future ESG clauses within debt	In progress
		agreements and other financial mechanisms.
		Seek our third-party partners or solutions that can work with Energy	In progress
		Vault to reduce emissions.
	Increased cost of	Determine, through LCAs, and end-of-life emissions if there is an
	raw materials	opportunity to replace material inputs with other materials (e.g.,	In progress
		recycled materials) to move away from virgin materials and towards a
		circular economy.
		Continue to be a market leader in sustainability and innovative
		solutions to support any current and future shifts towards more
	Shift in consumer	sustainable options for customers to help them meet their own
	sustainability goals by conducting LCAs on major product lines to	In progress
	preferences
	identify opportunities for GHG emissions reductions and to be able
		to showcase those reductions to customers (e.g., offering supplier-
		specific emission factors).
		Diversify suppliers and seek out suppliers who have an association
		with reputable standards/frameworks, such as Responsible Minerals	In progress
		Initiative (RMI) and Responsible Cobalt Initiative (RCI).
	Stigmatization of	Continue to share Energy Vault's sustainability story and the efforts being
Reputation	sector	made through sustainability reports and other publications. Consider
	committing to third-party standards/frameworks that are supportive	In progress
		of a low-carbon economy to continue to showcase Energy Vault's
		commitment to reducing emissions.
		Integrate an annual climate risk analysis into Energy Vault's risk
	Increased	management process to proactively manage any potential risks.	In progress
	Continue to increase transparency through annual sustainability
	stakeholder
	report, CDP disclosure, and EcoVadis submission.
	concern or
	Given that most of Energy Vault's peers do not have GHG reduction
	negative
	targets, there is an opportunity to be a leader in the industry by
	stakeholder
	setting targets now (such as what Energy Vault has done with SBTi)	In progress
	feedback
	and working to achieve them while also sharing the impact they have
		on reducing their customers' GHG emissions.

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Energy Vault		Energy Vault's TCFD Report
Category	Potential Risk	Energy Vault's Opportunity for Mitigation/Adaption	Status
	Drought
	Flood
	Freeze	Integrate additional climate-related physical risks into ERM/risk
	Severe Storm
Acute physical	management processes, including facility risk assessments.	Not started
	Tropical Cyclone	Develop a business continuity plan that is implemented across
	(Hurricane)
	facilities in order to create resiliency in case of climate-related
	Wildfire	impacts.
	Winter Storm	Work with insurers to confirm that each facility is reasonably covered
	Heat Stress	in the case of natural disasters.
	Water Stress	Build climate risks into the due diligence process for any mergers and
	acquisitions.
	Temperature
	variability	Depending on the region-specific risks identified for each facility,
Chronic physical	Precipitation and/	consider implementing adaption projects to help alleviate the impact	Not started
	or hydrological	of identified natural disasters.
	variability
	Sea level rise
	Coastal erosion

Risk Management

Energy Vault understands that climate change is a global issue and presents numerous risks to our organization and, more broadly, to society. We continue to look for ways to improve our knowledge and analysis of climate-related risks, which includes working to integrate these risks into the broader risk management process. This will include establishing a more formalized process that engages several departments across the organization, as well as continuing to establish the role that both management and the Board maintain in reviewing identified climate-related risks and approving mitigation and adaption strategies.

To create this analysis and assess the impacts of climate change across the organization, Energy Vault leveraged several different resources and publicly available datasets to help analyze each climate-related risk that was identified.

Transition Risks

Energy Vault went through each transition risk category, as published in the TCFD framework (Policy and Legal, Technology, Market, and Reputation), and identified specific risks based on Energy Vault's business operations and our industry.

Our risks were mapped to the following:

• Increased pricing of GHG emissions
• Enhanced emissions-reporting obligations
• Mandates on and regulation of existing products and services
• Exposure to litigation
• Substitution of existing products and services with lower emission options
• Unsuccessful investment in new technologies
• Cost to transition to lower emissions technology

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Energy Vault	Energy Vault's TCFD Report

• Changing customer behavior
• Uncertainty in market signals
• Increased cost of raw materials
• Shift in consumer preferences
• Stigmatization of the sector
• Increased stakeholder concern or negative stakeholder feedback

Where available, Energy Vault reviewed public CDP submissions across our industry to identify additional risks for potential consideration. Once the feedback was integrated into each risk, we used the Shared Socio-economic Pathways (SSPs) to map the different transition risks against the probability of the event and the magnitude of impact. These rankings were based on the projected outcomes of each scenario and what would likely happen to support that future. For example, under a well-below 2˚C scenario (SSP1-2.6), climate policy and legislation would likely have a high probability of occurring, and the magnitude of impact would be higher to Energy Vault due to a potential financial mechanism (e.g., a carbon tax) being implemented

as part of that climate policy. Additionally, these rankings took into account market trends and raw material availability based on the different warming scenarios.

Physical Risks

Acute Risks

Energy Vault utilized the publicly available datasets (published by NOAA and GFDRR) for acute risks. We used available data from the past 42 years that documented different acute risks per state. From there, we determined the different mean annual temperatures over the same 42-year period to calculate how many acute weather events could happen within one year. Energy Vault used a regression analysis to determine how the probability of the event changed with each RCP scenario.

The magnitude of impact was determined using the financial impacts from those same acute events identified. NOAA classifies events that caused at least one billion dollars in damages to be impactful. Similar to determining the probability of the event, an average was calculated to determine the cost per individual acute event and then applied across the different RCPs. While this isn't a direct reflection of cost for Energy Vault, it is likely that as the damage cost per acute event increases, it will also increase the impact felt by the organization. The likelihood ratings, while based on historical data, are also typically at a state or regional level, which could differ from the specific area of Energy Vault's facilities. This combination of data inputs helped create a more accurate qualitative assessment.

The acute physical risks Energy Vault assessed within the climate analysis included:

• Drought
• Flood
• Freeze
• Severe storm
• Tropical cyclone (hurricane)
• Wildfire
• Winter storm

Chronic Risks

Chronic risks were determined based on different RCPs used in the IPCC Working Group (WGI) World Atlas and the operating locations of Energy Vault. Based on the available data from agencies such as the Environmental Protection Agency (EPA), NOAA, and several additional data sources, we determined the expected long-term impacts for each scenario. For each chronic risk, a relevant metric was utilized to determine the rate of change for each scenario.

These metrics included:

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