Climate Change
“The Financial Sector Plays a Critical Role in Achieving Net-Zero Emissions”
As a leader in the financial system and a mover in the low-carbon capital market, Fubon Financial Holdings (also referred to below as “the Company”or “Fubon”) 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 sustainability 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.
Fubon 2022 TCFD Report
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.
Board of Director oversight
| Approaches |
Implementation Results |
- 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
| Approaches |
Implementation Results |
- 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.
- The Risk Management Committee regularly reviews information on climate-related risks and opportunities at the financial holding company level and for each subsidiary.
|
Short-medium and long-term risks and opportunities
| Approaches |
Implementation Results |
- The sources and magnitude of short-, medium-, and
long-term physical and transition risks are
regularly identified.
|
- Short-term risks/opportunities (within 2 years): Higher greenhouse gas emissions pricing/development of green energy and weather-related insurance products as extreme weather events (typhoons, flooding) grow more serious.
- Medium-term risks/opportunities (2-5 years): Stakeholder concerns and negative feedback on the rise/green finance opportunities.
- Long-term risks/opportunities (5 years and above): Extreme changes in rainfall (water) models and climate models/ circular economy, entry into new markets.
|
Risks and opportunities associated with major impacts
| Approaches |
Implementation Results |
- Qualitative and quantitative methods are used 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 responses are devised.
|
- 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
| Approaches |
Implementation Results |
- Used Bank of England (BOE) and Netherlands central bank (DNB) stress test scenarios and variables to conduct an impact assessment analysis of financial asset positions; also, conducted carbon pricing stress test of loan exposure to companies required to report their greenhouse gas emissions to the Taiwan GHG Emissions Registry
- 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 will have to increase their financial investment or operating expenses to comply with new regulations.
- Physical: Analyzed the disaster potential of suppliers, Fubon service locations and mortgage/P&C insurance clients, and estimated the potential impact of changes in rainfall and temperatures on them.
|
Identification and assessment procedures
| Approaches |
Implementation Results |
- A consistent assessment method focused on three major dimensions – hazard, exposure, and vulnerability – to gauge the disaster risk posed by businesses that could be affected by flooding.
|
- Subsidiaries provide their degree of climate exposure, which is added to the hazard and vulnerability variables used to identify climate-related risk.
|
Management proceduress
| Approaches |
Implementation Results |
- 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
| Approaches |
Implementation Results |
- Climate change risk management incorporated 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.
|
Indicators and performance
| Approaches |
Implementation Results |
- Put responsible investment into practice, support
green finance.
|
- 2022 ESG Report 3.1 Sustainable Finance and 3.2 Climate Change
|
- Development of low-carbon products and services
- Greenhouse gas inventory, energy and environmental
management, green energy/purchasing/operations
|
- 2022 ESG Report 3.1.3 Responsible Finance Performance
- 2022 ESG Report 3.3 Green Operations
|
