Climate Change
“The financial sector plays an important role in role in achieving global net zero targets through climate-related financing and investment.”
As a leader in the financial system and a mover in the low-carbon capital market, Fubon Financial Holdings has an obligation to fully understand climate-related risks and take appropriate management and mitigation measures. We hope that by setting strategic low-carbon goals and leveraging our financial influence, we can accelerate the sustainable transition of value chains, address the shared goal of mitigating global warming, and support the development of a sustainable economy. Beyond complying with international and regulatory authority norms, we have adopted the Task Force on Climate-related Financial Disclosures framework established by the Financial Stability Board.
TCFD Framework
Fubon Financial Holdings has been intent on bringing new momentum to efforts to create a global low-carbon economy, including adopting the TCFD (Task Force on Climate-Related Financial Disclosures) recommended framework issued by the Financial Stability Board. The TCFD framework helped the Company and its subsidiaries develop a climate risk and opportunity matrix and identify corresponding measures while also taking stock of high- and low-carbon businesses the Company is involved with. These initiatives have strengthened the integration of climate change considerations into product risk management systems and improved the Company’s resilience to climate risks.
Approaches Implementation Results
Board of
Director
oversight
  • The Corporate Governance and Sustainability Committee under the Board of Directors oversees the implementation of CSR and sustainability practices, and an “ESG Task Force” has been set up under the Committee to carry out action plans.
  • The Board of Directors monitors the effectiveness of risk management systems and mechanisms and reviews and approves risk management policies and guidelines.
  • ESG performance indicators are included in the performance evaluation policy covering the Company’s Board of Directors and functional committees, and the board’s self-evaluations also cover such factors as risk assessments of internal controls and engagement in sustainability initiatives.
  • The ESG Task Force reports its actions plans on climate change for the coming year at the beginning of each year and reports on the progress or result of each plan every six months. After being reviewed by the Committee, the reports are submitted to the Board of Directors.
  • Information on climate-related assessments is disclosed on a regular basis in risk management reports. If a major investment proposal under review by the board of directors involves a climate-related issue, it should also take into consideration those climate-related assessments.
  • Climate change indicators are included in ESG performance evaluations.
Management
level
operations
  • The Responsible Finance and Environmental Sustainability teams under the ESG Task Force are responsible for issues related to climate change.
  • The Responsible Finance Team plans the procedures for assessing subsidiaries’ climate-related risks and opportunities and handles the identification and reporting of those risks and opportunities.
  • The Risk Management Committee is led by a convener (president) appointed by the chairman of the board and also includes a chief secretary (chief risk officer) and members (subsidiaries’ most senior risk management officers). It is responsible for overseeing the risk management practices of the entire organization and reviews, coordinates and guides risk management efforts.
  • Responsible Finance and Environmental Sustainability teams report their action plans and progress made to the ESG Task Force every six months.
  • Initiatives, standards and indicators put forth by the United Nations and other related international organizations have been included as a reference in Fubon’s Guidelines on Climate Change Management, and climate change management procedures and mechanisms have been strengthened.
  • A risk management report (which covers climate change) is presented to the board of directors four times a year.
Approaches Implementation Results
Short-medium-
and long-term
risks and
opportunities
  • The sources and magnitude of short-, medium-, and long-term physical and transition risks are regularly identified.
  • Short-term risks/opportunities: extreme weather events (typhoons, heavy downpours)/post-disaster loss control services and new weather-related insurance products.
  • Medium-term risks/opportunities: costs of transitioning to a low-carbon economy resulting from more sustainability-related requirements and norms/green finance.
  • Long-term risks/opportunities: rising sea levels, uncertainty of market signals/circular economy, entry into new markets.
Risks and
opportunities
associated with
major impacts
  • Use qualitative and quantitative methods to assess risks and opportunities that could have a major impact on business, strategies and financial planning and their potential impact on the Company’s operations and finances, and devise responses.
  • Ongoing efforts are made to reduce or mitigate potential losses from risks with major impacts, including typhoons, heavy downpours, and technology transformation.
  • In terms of responsible finance, implemented green finance, continued to develop new climate insurance products and services as part of efforts to create innovative services.
Scenario
analysis
  • Transition: Impact assessments and analyses conducted based on 1.5℃-well-below 2℃ target and NDCs (nationally determined contributions).
  • Physical: RCP2.6, RCP4.5, RCP6.0 and RCP8.5 used to conduct temperature and rainfall forecasts.
  • Scope: Upstream suppliers, Fubon operating locations, downstream customers.
  • Transition: Assessed whether suppliers, the Company and customers are complying with regulations completed; in the future, financial inputs or operating expenses will be added to the assessments.
  • Physical: Analyzed the disaster risk of suppliers, Fubon service locations and investment/loan/P&C insurance clients, and estimated the potential impact of changes in rainfall and temperatures on them
Approaches Implementation Results
Identification
and assessment
procedures
  • Identify clients’ sensitivity to climate change based on a consistent assessment method focused on three main dimensions: hazard, exposure and vulnerability.
  • Each subsidiary now provides the degree of climate exposure of its clients, which has been added to the hazard and vulnerability variables used to rank the climate sensitivity of clients.
Management
procedures
  • Adopt an ERM risk management framework to guide risk identification, measurement, response, monitoring and reporting.
  • Develop responses to major risks to mitigate and divert their impact on the Company to control potential losses; find new business opportunities from the opportunities list and stay on top of possible developments related to the low-carbon economy.
Integrated
management
  • Incorporate climate change risk management in the Company’s overall risk management policy.
  • Climate finance promoted using the integrated risk management mechanism and incorporated into the Fubon ESG Visioning Strategy.
Approaches Implementation Results
Indicators
and
performance
  • Put responsible investment into practice, support green finance.
  • 2020 CSR Report 4.2 Responsible Finance Practices
  • Development of low-carbon products and services
  • Greenhouse gas inventory, energy and environmental management, green energy/purchasing/operations
  • 2020 CSR Report
    4.3 ESG-related Insurance Products and Services
    5.1 Innovative Services
  • 2020 CSR Report
    4.4 Green Operations
Fubon Climate Management Timeline
  • 2013
    Support the carbon disclosure project (CDP) and completed the CDP questionnaire
  • 2014
    Started complying with UN’s Principles for Responsible Investment in 2014
  • 2016
    The first financial institution to commit to science-based targets (SBT) in carbon reduction in 2016
  • 2017
    Stipulated Fubon Financial Holdings Responsible Investment Management Guidelines in 2017
  • 2018
    Adopted the Task Force on Climate-related Financial Disclosures (TCFD) climate risk management framework at the end of 2018
  • 2019
    Officially became a TCFD Supporter in September 2019
    Adjusted Fubon Financial Holdings Responsible Investment Management Guidelines to apply to Fubon Financial Holdings and subsidiaries in 2019 for unified compliance with Principles of Responsible Investment (PRI)
  • 2020
    Fubon Insurance adopted principles for sustainable insurance and published a PSI Report.
  • 2021
    Fubon will disclose ESG information related to investors in “Fubon Financial Holdings 2020 CSR Report” in accordance with the Sustainable Accounting Standards Board (SASB) standards for the insurance industry.
    Fubon Life and Fubon Insurance published the 2020 Sustainability Report in 2021, which integrated PSI principles.
    Published the first TCFD (Task Force on Climate-related Financial Disclosures) report in the financial industry
  • 2022
    Fubon Financial has won “Double A” honor of CDP climate change, supplier engagement rating for two consecutive years
    Fubon Financial Holdings officially became the member of PCAF and AIGCC.