Climate Change | Fubon Financial

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.

Fubon 2021 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.

	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. The Risk Management Committee regularly reviews information on climate-related risks and opportunities at the financial holding company level and for each subsidiary.

	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 (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	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	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.

	Approaches	Implementation Results
Identification and assessment procedures	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 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	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.

	Approaches	Implementation Results
Indicators and performance	Put responsible investment into practice, support green finance.	2021 ESG Report 4.2 Responsible Finance Practices
Indicators and performance	Development of low-carbon products and services Greenhouse gas inventory, energy and environmental management, green energy/purchasing/operations	2021 ESG Report 4.3 ESG-related Insurance Products and Services 5.1 Innovative Services 2021 ESG Report 4.4 Green Operations

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