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.
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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
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- 2020 CSR Report
4.3 ESG-related Insurance Products and Services
5.1 Innovative Services
-
2020 CSR Report
4.4 Green Operations
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Fubon Climate Management Timeline