(C-FS2.2c) Describe how you assess your portfolio's exposure to climate-related risks and opportunities.
Question dependencies
This question only appears if you selected “Yes” to any of the activities listed in C-FS2.2b. A row will appear in this table for each portfolio for which you selected “Yes” in column 2 of question C-FS2.2b.
Change from last year
No change
Rationale
The TCFD recommendations highlight the importance of the
financial services sector considering the potential impacts of climate-related
risks and opportunities in the context of their financing activities. When
evaluating exposure to climate-related risks and opportunities, organizations
in the financial sector should primarily consider the potential impact on their
financial portfolios including lending, financial intermediary, investment
and/or insurance underwriting activities.
Connection to other frameworks
TCFD
Risk management recommended disclosure a) Describe your organization's processes for identifying and assessing climate-related risks.
NZAM (FS Only)
Commitment 3
Commitment 6
Response options
Please complete the following table.
(*column/row appearance is dependent on selections in this or other questions)
Portfolio* | Type of risk management process | Proportion of portfolio covered by risk management process | Type of assessment | Time horizon(s) covered | Tools and methods used | Provide the rationale for implementing this process to assess your portfolio's exposure to climate-related risks and opportunities |
---|---|---|---|---|---|---|
Banking (Bank) | Select from:
|
Percentage field [enter a percentage from 0-100] | Select from:
|
Select all that apply:
|
Select all that apply:
|
Text field [maximum 5,000 characters] |
Investing (Asset manager) | ||||||
Investing (Asset owner) | ||||||
Insurance underwriting (Insurance company) |
Requested content
General
- Consider how you assess your portfolio’s exposure to climate-related risks and opportunities in your lending, financial intermediary, investment and/or insurance underwriting activities.
Portfolio (column 1)
- The options which appear are driven by your selections in column 2 of C-FS2.2b
Type of risk management process (column 2)
- Select whether you assess your portfolio’s exposure to climate-related risks and opportunities as an integrated part of your company-wide risk management process or whether you have a specific climate-related risk management process.
Proportion of portfolio covered by risk management process (column 3)
- For each of your portfolios, disclose the proportion of the portfolio covered by a risk management process.
- Coverage by portfolio value can be based on either total or outstanding commitments, premiums, and/or committed capital.
Type of assessment (column 4)
- Disclose whether the assessment is qualitative, quantitative, or both.
- Qualitative assessment is descriptive and may include stakeholder involvement, meetings, interviews, and analysis of scenario impacts or descriptive risk matrices.
- Quantitative assessment is expressed in numbers and involves indicators, indices, variables and metrics such as probabilistic or stochastic risk modelling considering frequency and severity of events.
Tools and methods used (column 6)
- Select which tools and methodologies you use to assess your portfolio’s exposure to climate and/or forests-related risks:
- UNEP FI Portfolio Impact Analysis Tool for Banks: Helps banks analyze the impacts associated with their retail (consumer and business banking) and wholesale (corporate and investment banking) portfolios
- UNEP FI Corporate Impact Analysis Tool: Enables users to perform a holistic analysis of companies, based on the reality of those companies’ business activities and the needs of the countries in which they operate, whether for sourcing, production or sales
- 2DII Paris Agreement Capital Transition Assessment (PACTA) tool: Portfolio-level analysis for equities and fixed income climate transition risks in power and some industrial sectors (cement and steel)
- The Transition Pathway Initiative (TPI): Bottom-up assessment of how listed companies are preparing for the transition to a low-carbon economy
- 2 Degrees of Separation: In-depth sector and company-level analysis of oil and gas companies’ upstream exposure to climate transition risks
- Portfolio temperature alignment: Portfolio alignment tools are used to generate metrics to determine the overall level of alignment of a portfolio, by assessing the performance of its individual companies.
- Risk models: computerized systems, such as catastrophe models, used to assess and quantify the financial impact of a range of potential future disasters
- Scenario analysis: Considers how an organization is impacted by changes to policy/regulation, technology or market changes aimed at emissions reductions, energy efficiency, subsidies/taxes or other constraints or incentives implemented to facilitate a low carbon economy (for example, the ‘well below 2°C’ goal committed to by the Paris Agreement). Assesses the impact of acute or chronic physical change related to climate change such extreme weather, rising sea levels, water shortage, etc.
- Stress tests: Process of evaluating a number of statistically defined possibilities to determine the most damaging combination of events, and the loss they would produce. The likelihood of such an event is then assessed
- If you select “Other, please specify”, please describe the tools and methodologies you use to assess your portfolio’s exposure.
Provide the rationale for implementing this process to assess your portfolio's exposure to climate-related risks and opportunities (column 7)
- Provide reasons for why you implemented this specific process to assess your portfolio’s exposure to climate-related risks and opportunities.
- You may also describe the advantages and disadvantages of the process chosen.
- Explain how you defined and calculated the proportion of portfolio covered by your risk management process and if the assessment included systemic and sector risks.
Explanation of terms
- Portfolio: In the context of this questionnaire your portfolio is the entire collection of your core financing activities and insurance policies that you offer. For bank lending, this is the entire collection of products and loans held on your balance sheet for which you own the receivable stream. For asset managers, this is the entire collection of your products and investments that you hold and/or manage on behalf of your clients. For asset owners, this is the entire collection of products, funds and investments owned and controlled by your company. For investment portfolios, asset managers should consider discretionary investments, those where the company has discretion over investment decision. For insurance underwriting, this is the entire collection of products and insurance policies you provide to your clients.
C-FS2.2c - Scoring criteria
Disclosure scoring criteria
Points will be awarded per completed cell in proportion to the number of rows disclosed. Partially completed rows will not receive full points
A maximum of 6 points is available for this question
Awareness scoring criteria
Points will be awarded per completed row in proportion to the number of rows disclosed as follows: figure greater than 0 provided in column 'Proportion of portfolio covered by risk management process'
A maximum of 3 points is available for this question
Management scoring criteria
Full Awareness points must be awarded to be eligible for Management points
Points will be awarded per completed row in proportion to the number of rows displayed as follows:
i) 'Qualitative and quantitative' selected in column 'Type of assessment' - 1 point
ii) Figure greater than 75 provided in column 'Proportion of portfolio covered by risk management process' - 1 point
A maximum of 2 points is available for these criteria
iii) All of the following selected in column 'Time horizon(s) covered' in all rows - 1 point
- 'Short-term'
- 'Medium-term'
- 'Long-term'
Leadership scoring criteria
Full Management points must be awarded to be eligible for Leadership points
Any option selected excluding 'Other, please specify' in column 'Tools and methods used' AND
Figure of 100 provided in column 'Proportion of portfolio covered by risk management process' in all rows - 1 point
Point Allocation
Disclosure numerator |
Disclosure denominator |
Awareness numerator |
Awareness denominator |
Management numerator | Management denominator | Leadership numerator | Leadership denominator |
---|---|---|---|---|---|---|---|
6 | 6 | 3 | 3 | 3 | 3 | 1 | 1 |