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1、HOW CLIMATE RISKS ARE SHAPING THE LANDSCAPE FOR ASIA-PACIFIC FINANCIAL INSTITUTIONS1AcknowledgmentsBank of China(Hong Kong)(“BOCHK”)and S&P Global Sustainable1 would like to express their gratitude to the Hong Kong Monetary Authority,International Financial Corporation,and other organizations whose

2、reviewers provided valuable guidance.We would also like to thank the following people from S&P Global Sustainable1 for their contributions to this report:Jennifer Laidlaw,Matt MacFarland,Lindsey Hall,Koji Omachi,Rong Yu and Adrian Leung.2ContentsForeword-Bank of China(Hong Kong)3Foreword-S&P Global

3、Sustainable1 4About the Report 5 Overview 5 Explanation of Data 5Executive Summary 6 Key Findings 71.Introduction 82.Net-Zero Commitments&Scope 3 Emissions 92.1 Net-zero pledges are the first step for financial institutions in Asia-Pacific 92.2 Asia-Pacific financial institutions&financed emissions

4、113.Asia-Pacific Financial Institutions&Climate Risk 143.1 Climate strategy and materiality 143.2.Adaptation planning to meet physical climate risks 174.Asia-Pacific Financial Institutions&Scenario Analysis 194.1 Physical risk scenario analysis 194.2 Transition risk scenario analysis 215.Asia-Pacifi

5、c Financial Institutions&Biodiversity Loss 236.Case Study:Bank of China(Hong Kong)297.Conclusion 32Glossary 333Foreword-Bank of China(Hong Kong)In response to the accelerating impacts of climate change,financial institutions are positioned to address both the risks and opportunities it presents.By t

6、urning climate-related challenges into opportunities,banks and other financial institutions can play a pivotal role in mitigating climate risks and driving innovation and economic growth through financing the low-carbon transition and implementing sustainable practices.As one of the cornerstone memb

7、ers of The Alliance for Green Commercial Banks(“The Alliance”),Bank of China(Hong Kong)has collaborated with S&P Global Sustainable1,leveraging its forward-thinking perspectives on sustainability,risk,opportunity and impact to produce this report.This is our first thought leadership paper since we h

8、ave become the cornerstone member of The Alliance in 2022.This thought leadership report delves into how climate risks are shaping the landscape for financial institutions in the Asia-Pacific region.It emphasizes the urgency and importance for companies to understand,measure and manage the risks the

9、y face from climate change and biodiversity loss.Furthermore,the report highlights the pivotal role that financial institutions can play in financing the transition to a low-carbon economy and promoting sustainable practices.By embracing renewable energy initiatives and integrating biodiversity cons

10、iderations into their operations,financial institutions can contribute to mitigating climate risks and protecting vital ecosystems.The report not only presents data-driven findings but also offers valuable qualitative insights from BOCHKs extensive experience and long-term commitment to green financ

11、e.We hope this report will serve as a comprehensive guide for financial institutions in the Asia-Pacific region,providing valuable insights into the complex challenges of climate change and biodiversity loss.It underscores the critical importance of understanding the diverse impacts of climate chang

12、e across different economies in the region and the necessity for tailored approaches to address these challenges while seizing the opportunities for sustainable development.Together,let us embark on a journey towards a more resilient and sustainable future,where financial institutions lead the way i

13、n fostering environmental stewardship and driving positive change in the Asia-Pacific region and beyond.Xu HaifengDeputy Chief Executive and Chief Risk OfficerBank of China(Hong Kong)4Foreword-S&P Global Sustainable1The increasing physical and economic impacts of climate change and biodiversity loss

14、 present every company in the world with questions to answer and challenges to address.In this context,financial institutions are positioned to help answer some of these questions and facilitate solutions.They also can play a key role in financing the transition to a low-carbon economy and facilitat

15、ing the flow of trillions of dollars in capital needed to mitigate and adapt to climate change and to address biodiversity loss.To better understand these impacts,financial institutions and companies around the world will need more credible,comparable and transparent data,benchmarks,and analytics:to

16、 assess impact,to measure progress,and to understand business risks as well as opportunities.S&P Global Sustainable1 is positioned to provide that data and analysis,and we are proud to have collaborated with Bank of China(Hong Kong)in its capacity as a cornerstone member of The Alliance for Green Co

17、mmercial Banks in writing this data-based report.Our research demonstrates that more Asia-Pacific financial institutions are starting to have a firmer grasp on the risk of climate change and how it can impact their activities.Some already see climate change as a material business risk and are using

18、evolving tools to build adaptation plans,such as scenario analysis of physical risks or climate transition risks.Across the region,the understanding of the link between climate risk and biodiversity risk is also growing.However,the report also shows there is much room for progress,especially in defi

19、ning targets,and explores how some leading banks in the region tackle the complex challenges of climate change and biodiversity loss.We hope these insights and data will serve as inspiration for more financial institutions to understand the stewardship role they can play in bringing about change in

20、the Asia-Pacific region and beyond.Financial institutions capacity to take on that role in the coming years will be critical for the overall economy of the region.Chris HeuslerPresident,S&P Global Sustainable15About the ReportOverviewThis report is jointly prepared by:Bank of China(Hong Kong)(“BOCHK

21、”),a cornerstone member of the Alliance for Green Commercial Banks(the Alliance).1 BOCHK puts sustainable development at the heart of its strategy.Through continuous innovation and diversification of its green products and services,BOCHK is committed to working with its customers to achieve a low-ca

22、rbon transition,and promoting smart living and sustainable development with a view to creating value for its stakeholders and the community,and building a greener future together.For more information,please visit:https:/ Global Sustainable1,the central source for sustainability intelligence from S&P

23、 Global.Sustainable1 matches customers with the sustainability products,insights and solutions from across S&P Globals divisions to help meet their unique needs.Our comprehensive coverage across global markets combined with in-depth sustainability intelligence provides financial institutions,corpora

24、tions and governments with expansive insight on business risk,opportunity,and impact as we work towards a sustainable future.Our data and well-informed point of view on critical topics like energy transition,climate resilience,positive impact and sustainable finance allow us to go deep on the detail

25、s that define the big picture so customers can make decisions with conviction.To learn more,please visit: Alliance was launched in November 2020 by:the International Finance Corp.(IFC),a member of the World Bank Group and the largest global development institution focused on the private sector in em

26、erging markets.the Hong Kong Monetary Authority(HKMA),Hong Kongs central banking institution,which was also the first regional anchor for the Alliance in Asia.The Alliance is a global initiative that convenes financial institutions,research institutions,and innovative technology providers to develop

27、 a green community in emerging markets to collectively finance the infrastructure and business solutions needed to urgently address climate and environmental risks.Explanation of DataThis analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of Ea

28、st Asia and Pacific or South Asia and that are also present in the S&P Global Corporate Sustainability Assessment universe,which is the source of much of the data in this report.About the S&P Global Corporate Sustainability Assessment(CSA):Throughout this report,we will refer to different sample siz

29、es of companies assessed in the CSA.This is because different CSA questions have varying response rates.The S&P Global Corporate Sustainability Assessment(CSA)is an annual evaluation of companies sustainability practices.It covers over 10,000 companies from around the world.The CSA focuses on sustai

30、nability criteria that are both industry-specific and financially material and has been doing so since 1999.Read more about the CSA here.About the S&P Global Sustainable1 Nature&Biodiversity Risk dataset:This dataset assesses nature-related impacts and dependencies across a companys direct operation

31、s that can be applied at the asset,company,and portfolio level.The dataset applies the Nature Risk Profile,a methodology for analyzing companies impacts and dependencies on nature,launched by S&P Global Sustainable1 and the UN Environment Programme(UNEP)in January 2023.Further reading:nature-risk-pr

32、ofile-methodology.pdf()1 Hong Kong Monetary Authority.June 7,2022.Alliance for Green Commercial Banks announces onboarding of cornerstone members,global and knowledge partners,and launch of its first thought leadership paper and website.https:/www.hkma.gov.hk/eng/news-and-media/press-releases/2022/0

33、6/20220607-46Executive SummaryThe global climate crisis is accelerating,and countries in Asia-Pacific face severe impacts.Asia and the Pacific remained the region most impacted by natural disasters in 2023,according to the State of the Climate in Asia 2023 report published by the World Meteorologica

34、l Organization.2 Floods and storms cost lives and imposed economic damages and the region faced a rising number of increasingly severe heatwaves.Scientists are increasingly making the connection between extreme weather events and climate change.As the damage from extreme weather events becomes more

35、apparent,the urgency increases for companies to understand,measure and manage the risks they face from climate change and the interlinked crisis of biodiversity loss.For financial institutions like banks,the stakes are especially high.Their exposure to the wider economy through lending,investing or

36、underwriting across industries means that they could be more exposed to the economic impacts of climate change;they also can play a key role in financing the transition and facilitating the flow of the trillions of dollars in capital needed for the world to mitigate and adapt to climate change.Data

37、can help financial institutions make informed decisions about how to develop effective sustainability strategies to reduce their climate and environmental risks.In this report,we use data from S&P Global Sustainable1 to understand the physical risks of climate change and how these will impact financ

38、ial institutions in the Asia-Pacific region in the decades to come.The data also describes the growing risks posed by biodiversity loss and the dependencies that companies have on the ecosystem services that nature provides.Finally,we survey how companies across the Asia-Pacific region are approachi

39、ng sustainability in their businesses to better understand the current landscape,and thus better understand where to focus next.Asia-Pacific is not homogenous,and neither are the effects of climate change on the region.It is important to note that there is great diversity within Asian economies.Sout

40、h Asia is the most economically exposed region,facing three times more potential economic losses annually(about 12%of GDP)than the world average by 2050 under a slow transition scenario(SSP3-7.0),according to research from S&P Global Ratings.3 This is more pronounced than the GDP at risk in East Asi

41、a and Pacific or Central Asia.There is no one-size-fits-all approach that will work for financial institutions in the region,but we hope that the data presented in this report will provide a useful overview of the challenges and opportunities facing different markets.To supplement the data-driven fi

42、ndings in this report,S&P Global Sustainable1 conducted interviews with Bank of China(Hong Kong).The goal of this case study is to build on the quantitative data with qualitative information about banks in the region are approaching the topic of sustainability.2 World Meteorological Organization.Apr

43、il 23,2024.State of the Climate in Asia 2023.https:/wmo.int/publication-series/state-of-climate-asia-20233 S&P Global Ratings.Nov.27,2023.Lost GDP:Potential Impacts of Physical Climate Risks.https:/ SummaryKey Findings About 13%of assessed financial institutions in Asia-Pacific have net-zero targets

44、 for financed emissions.This suggests there is room for additional target-setting that covers these companies entire value chain.Financial institutions have relatively low Scope 1 direct emissions and Scope 2 indirect emissions,but they have much higher Scope 3 indirect emissions,which include the g

45、reenhouse gases(GHGs)emitted by businesses or projects they finance,invest in or underwrite.Among Asia-Pacific financial institutions,about 23%selected climate strategy as one of their three main material issues out of a total of 14 material topics;climate strategy ranks as a top material issue alon

46、g with risk and crisis management.Adaptation planning can help financial institutions prepare for the effects of extreme weather events on their business and the broader economy.About 19%of Asia-Pacific financial institutions have an adaptation plan,suggesting there is room for additional investment

47、 of time and resources into adaptation efforts in the region.Scenario analysis is another tool that can help financial institutions understand how their business will perform under different future climate change scenarios.Among the financial institutions in our study,35%conduct some form of physica

48、l risk scenario analysis.A similar picture emerges when analyzing climate transition risk scenario analysis,which takes a forward-looking approach to how future policy,regulatory and technological changes as well as legal,market and reputational risks could impact a business.Nearly 35%of Asia-Pacifi

49、c financial institutions in our study conduct transition risk scenario analysis.Investors and the financial community increasingly understand that climate and biodiversity risks need to be addressed in tandem.At present,roughly 6%of Asia-Pacific companies in our analysis have made biodiversity commi

50、tments.This figure is higher in some markets,such as India,where about 17%of companies assessed have made biodiversity-related commitments,reflecting the fact that the country has already implemented legislation to protect nature.81.IntroductionExtreme weather events such as heatwaves,wildfires and

51、floods continue to dominate global headlines in 2024.The world experienced the warmest January on record,with wetter-than-average conditions across much of the globe.The annual average global temperatures in May were above 1.5 degrees C above preindustrial levels,the global warming threshold scienti

52、sts say will lead to the worst impacts of climate change.4 The 2015 Paris Agreement aims to limit the long-term temperature increase to no more than 1.5 C above preindustrial levels.As temperatures warm,scientists are increasingly making the connection between climate change and more frequent and in

53、tense heatwaves and storms.Responding to the impacts of a warming planet is becoming more urgent.These trends have significant consequences for the global economy.Higher losses from physical risks are increasingly likely with time,particularly if climate mitigation and adaptation efforts are not inc

54、reased.Without adaptation,between 3.2%and 5.1%of world GDP could be lost due to climate hazards annually by 2050 under a range of climate scenarios,according to research by S&P Global Ratings.5Asia-Pacific is a key piece of the global decarbonization puzzle.The region is home to two of the worlds la

55、rgest emitters of GHGs China and India and produces about half of the worlds CO2.Under a slow transition scenario(SSP3-7.0),approximately 12%of South Asias GDP could be lost annually by 2050 without adaptation,according to the same S&P Global Ratings study.Against this backdrop,this report seeks to

56、understand how financial institutions in Asia-Pacific are responding to evolving climate risks.The analysis uses data from S&P Global Sustainable1 to explore what strategies financial institutions in the region are taking to manage climate-related risks,from adaptation planning to conducting scenari

57、o analysis to measuring financed emissions and assessing the impact of their business on nature.The report analyzes this information for financial institutions and for a range of sectors in Asia-Pacific that financial institutions are exposed to through their loans,investments and underwriting polic

58、ies.4 EUs Copernicus Climate Change Service.June 6,2024.Copernicus:May 2024,streak of global records for surface air and ocean temperatures continues.https:/climate.copernicus.eu/copernicus-may-2024-streak-global-records-surface-air-and-ocean-temperatures-continues5 S&P Global Ratings.Nov.27,2023.Lo

59、st GDP:Potential Impacts of Physical Climate Risks.https:/ Commitments&Scope 3 Emissions2.1 Net-zero pledges are the first step for financial institutions in Asia-PacificTo adapt to a changing climate,many financial institutions have set net-zero targets to cut their GHG emissions as close to zero a

60、s possible and offset the remainder,usually by mid-century.Committing to net-zero can position financial institutions on a pathway to reducing their exposure to climate-related risks,especially if they are lending to or investing in carbon-intensive sectors.Science-based net-zero targets can form th

61、e basis of a clearly defined plan for reducing emissions in line with the goals of the Paris Agreement.Financial institutions can also take steps to reduce emissions throughout their direct operations for example,by using renewable energy in their offices or ensuring their buildings are constructed

62、with sustainable materials.6 These pledges can help financial institutions set goals for managing and mitigating climate risk.They can provide a roadmap for banks to transform their lending,investing or underwriting debt deals to account for the impacts of climate change and collaborate with their c

63、lients accordingly.Working with clients can help them understand the extent of their financed emissions,which are key to achieving net-zero goals because they include the GHGs emitted by businesses or projects they finance,invest in or underwrite representing their most significant climate impact.Th

64、e establishment of organizations such as the Glasgow Financial Alliance for Net Zero,or GFANZ a global coalition of more than 675 financial institutions with more than US$150 trillion in managed or owned assets committed to net-zero by 2050 has highlighted the financial sectors commitment to net-zer

65、o.7Financial institutions can use alliances such as the United Nations-convened Net Zero Banking Alliance(NZBA),which operates under the GFANZ umbrella and accounts for 41%of global banking assets,to guide them in achieving net-zero targets.8 In March 2024,the NZBA published updated guidelines on cl

66、imate target setting for banks,providing support for meeting their net-zero goals.9Out of the NZBAs 144 members,about half(78)are headquartered in Europe.Among the other regions of the world,29 members are headquartered in Asia-Pacific,17 in North America,15 in Latin America&Caribbean,and five in Af

67、rica&Middle East,suggesting that net-zero target setting by financial institutions has yet to go global.10S&P Global Sustainable1 data based on responses from 6,416 companies in the CSA(see Figure 1)shows that 13.4%of financial firms in Asia-Pacific have net-zero targets.That compares with 43.5%in E

68、urope,15.3%in Latin America and 15.0%in North America.The CSAs net-zero question for financial institutions specifically addresses financed emissions,which will be examined in further detail in the next section.When comparing net-zero target setting among different sectors in Asia-Pacific,we find th

69、at financial institutions have the second-lowest percentage of net-zero goals after the healthcare sector.In comparison,high-emitting sectors such as utilities,materials and energy are ahead in setting net-zero targets,at 45.3%,40.4%and 31.8%,respectively,reflecting the fact that these sectors will

70、have to profoundly transform their businesses in a low-carbon economy.This disparity between sectors suggests an opportunity for financial institutions to play a central role in transforming key industries in the economy.Working on transition pathways with emission-heavy sectors to reach their net-z

71、ero goals could offer financial institutions a way to better manage their transition risks.Around the globe,many governments have adopted policies to make their economies more sustainable but need financing to fund the transition.According to GFANZ,US$125 trillion in investment by 2050 will be neede

72、d to meet net-zero goals.11 Of that total,US$32 trillion will be required in the next decade,with more than 40%to be allocated in Asia-Pacific.Financial institutions can play a major role in the transition by filling the financing gap,whether through specialized lending for transition projects,devel

73、oping sustainable finance products for their customers or by supporting their clients carbon-neutral transition.6 Bank of China(Hong Kong).March 2024.2023 Sustainability Report.https:/ Glasgow Financial Alliance for Net Zero.Dec.4,2023.GFANZ delivers on the year of the transition plan with continued

74、 growth and progress to close key gaps in the global financial system and accelerate climate investment.https:/ S&P Global Sustainable1 ESG Insider podcast.Feb.3,2023.How financial institutions are tackling Scope 3 financed emissions.https:/ UNEP FI.March 13,2024.Guidelines for Climate Target Settin

75、g for Banks.https:/www.unepfi.org/wordpress/wp-content/uploads/2024/03/Guidelines-for-Climate-Target-Setting-for-Banks-Version-2.pdf10 UNEP FI.June 2024.Our Members.Net-Zero Banking Alliance.Member list accessed June 6,2024 https:/www.unepfi.org/net-zero-banking/members/11 Glasgow Financial Alliance

76、 for Net Zero.2021.Race to Zero.Financing Roadmaps.https:/ Commitments&Scope 3 EmissionsFIGURE 1Financial institutionsNet-zero targets are still uncommon in most sectorsPercentage of companies by sector and region with net-zero targetsData as of August 2023.Results based on responses from 6,416 comp

77、anies assessed in the 2022 S&P Global Corporate Sustainability Assessment(CSA).*Assessments for companies in the Financials sector asked if they have set net-zero targets for their Scope 3 financed emissions.All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA cri

78、terion are included.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Su

79、stainable1.2024 S&P Global.0%10%20%30%40%50%60%70%80%UtilitiesReal estateMaterialsInformation technologyIndustrialsHealthcareFinancial*Asia-Pacific(n=3,655)Europe(n=903)Latin America(n=412)North America(n=1,392)EnergyConsumer staplesConsumer discretionaryCommunication Services112.Net-Zero Commitment

80、s&Scope 3 Emissions2.2 Asia-Pacific financial institutions&financed emissionsThe category of Scope 3 emissions is highly material for financial institutions.They have relatively low Scope 1 and Scope 2 emissions but significantly higher Scope 3 indirect emissions,which include GHGs emitted by busine

81、sses or projects they finance,invest in or underwrite.Scope 1 emissions are emissions from direct operations,while Scope 2 emissions are indirect emissions primarily derived from purchased energy.Addressing Scope 3 emission reductions can be challenging,because these emissions represent companies en

82、tire supply chains.S&P Global Sustainable1 data indicates that many financial institutions do not address Scope 3 financed emissions(see Figure 2).122.Net-Zero Commitments&Scope 3 EmissionsData as of August 2023.Results based on responses from 802 companies in the financials sector assessed in the 2

83、022 S&P Global Corporate Sustainability Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are included.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pac

84、ific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024 S&P Global.0%10%20%30%40%50%60%70%80%90%100%Republic of Korea(n=23)Taiwan(n=23)Hong Kong(n=8)Malaysia(n=8)Singapore(n=4)Thailand(n=12)Au

85、stralia(n=33)Japan(n=121)Mainland China(n=71)India(n=38)Indonesia(n=8)Philippines(n=4)New Zealand(n=2)FIGURE 2RegionMarketFinancial institutionsNet-zero targets for Scope 3 financed emissions are rare throughout the worldPercentage of financials sector companies with net-zero targets for Scope 3 fin

86、anced emissionsNet-zero target for financed emissionNo net-zero target for financed emission0%10%20%30%40%50%60%70%80%90%100%Europe(n=147)Latin America(n=59)North America(n=193)Asia-Pacific(n=389)132.Net-Zero Commitments&Scope 3 EmissionsAmong 802 Asia-Pacific financial institutions assessed in the

87、CSA,13.4%have a net-zero target,which the CSA defines for financial institutions as including financed emissions.That compares to 43.5%of financial institutions assessed in Europe and 15%in both Latin America and North America.Drilling down further within Asia-Pacific,we find that 39.1%of assessed f

88、inancial institutions in the Republic of Korea and Taiwan have net-zero targets for financed emissions.A quarter of assessed financial institutions in Hong Kong,Singapore,Thailand and Malaysia have a net-zero target for financed emissions.For Japan and Australia,that figure stands at 15.0%.In China,

89、3.0%of assessed institutions said they have a net-zero target for financed emissions.Among the financial institutions assessed in the Philippines,New Zealand,Indonesia and India,none in our sample were found to have net-zero targets including financed emissions.The landscape for financial institutio

90、ns disclosure of Scope 3 financed emissions may change due to pressure from regulators and investors for consistent and comparable climate-related disclosures.For example,mandatory disclosure of climate-related risks will be phased in from 2025 for certain issuers on the Hong Kong stock exchange.12

91、In Singapore,listed issuers and large non-listed companies will be required to report on Scope 3 emissions from 2026.13Regulators are taking a closer look at Scope 3 emissions as a way of looking under the hood of banks climate-related exposure.14 Climate stress tests by banking regulators in some p

92、arts of the world have shown that Scope 3 emissions for most sectors are the dominant driver of carbon intensity.15 Recent climate stress tests are showing there is more work to do:The Peoples Bank of China conducted its first climate stress test at the end of 2021,and Governor YI Gang said in an in

93、terview in June 2022 that the biggest challenge of the climate stress test was“insufficient information disclosure.”16 The climate stress test showed that if companies in the energy,steel,and cement sectors do not decarbonize,their default rates could rise significantly.However,banks would take a mo

94、derate hit to their capital ratios because their loan exposure to those industries is limited.In India,most banks are incorporating climate risks into their risk management,but they have yet to develop mechanisms to identify and manage those risks,according to a report by the Reserve Bank of India p

95、ublished on May 3,2023.17 The results of a climate stress test by the Hong Kong Monetary Authority published on Dec.30,2021,showed that under extreme scenarios,climate risks could cause“significant adverse impacts on the banking sector.”Banks would need to take“early actions”to manage them,it said.1

96、8One of those early actions for financial institutions could be measuring Scope 3 financed emissions and setting intermediate goals to assess climate-related risks across their portfolios.Short-term targets can provide a roadmap to net-zero and allow financial institutions to benchmark themselves al

97、ong the way,especially if they are exposed to carbon-intensive industries.12 Hong Kong Stock Exchange.April 19,2024.Exchange Publishes Conclusions on Climate Disclosure Requirements.https:/.hk/News/Regulatory-Announcements/2024/240419news?sc_lang=en13 Singapores Accounting and Corporate Regulatory A

98、uthority.Feb.28,2024.Climate reporting to help companies ride the green transition.https:/www.acra.gov.sg/news-events/news-details/id/77814 HSBC.July 19,2022.Scope 3 emissions The largest piece in the net zero jigsaw.https:/ European Central Bank.July 2022.2022 climate risk stress test.https:/www.ba

99、nkingsupervision.europa.eu/ecb/pub/pdf/ssm.climate_stress_test_report.202207082e3cc0999f.en.pdf16 The Peoples Bank of China.June 27,2022.Transcript of Governor Yi Gangs Interview by CGTN.http:/ Reserve Bank of India.May 3,2023.“RBI releases draft guidelines on Prudential Framework for Income Recogni

100、tion,Asset Classification and Provisioning pertaining to Advances Projects Under Implementation.”https:/rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR244PRUDENTIALFRAMEWORKF8F044FAC0264AF4BBC62373DF5B945A.PDF18 Hong Kong Monetary Authority.Dec.30,2021.HKMA publishes the results of the pilot climate r

101、isk stress test.https:/www.hkma.gov.hk/eng/news-and-media/press-releases/2021/12/20211230-3/143.Asia-Pacific Financial Institutions&Climate Risk3.1 Climate strategy&materialitySome financial institutions in Asia-Pacific are starting to build strategies to respond to the climate risks across their lo

102、an books and investments.From a sample of 3,668 companies assessed in the CSA across all industries,about 23%of financial institutions identified climate strategy as a top material issue.These companies selected climate strategy as one of their top three material issues out of a total of 14 topics.T

103、o add weight to how important the matter is,climate strategy ranks as their top material issue along with risk and crisis management.Globally,just under a quarter of financial institutions assess climate strategy as one of their top three material issues,putting those located in Asia-Pacific on par

104、with worldwide peers.Amid a changing climate,financial institutions in the Asia-Pacific region could be subject to increased climate-related natural disasters such as wildfires or cyclones that may inflict losses on their balance sheets through asset fire sales,falling real estate values,weakening o

105、f corporate and household balance sheets and declining economic output in affected areas.FIGURE 3Financial institutionsA small share of financial institutions in Asia-Pacific and globally view climate strategy as a top material issuePercentage of companies by sector in Asia-Pacific and globally that

106、 chose climate strategy as a top-3 material issueData as of August 2023.Results based on responses from 6,259 companies assessed in the 2022 S&P Global Corporate Sustainability Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are incl

107、uded.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024

108、 S&P Global.0%10%15%30%35%40%45%50%55%60%UtilitiesEnergyReal estateMaterialsIndustrialsFinancialsInformation technologyAsia-PacificGloballyConsumer staplesConsumer discretionaryCommunication servicesHealthcare25%20%5%153.Asia-Pacific Financial Institutions&Climate RiskFinancial institutions are prep

109、aring strategies to manage and measure climate change risks as shareholders and portfolio managers are increasingly assessing their holdings for climate change risk.And a growing number of regulators in the region are guiding financial institutions in how they can address future risks from climate c

110、hange.For example,in August 2023,the Hong Kong Monetary Authority published a set of principles designed to guide banks on planning the transition to a net-zero economy.19 It requested banks set clear objectives aligned to a net-zero transition and targets aligned with the goals of the Paris Agreeme

111、nt on climate change.The principles also ask banks to devise appropriate initiatives and actions to achieve the objectives.More recently,Chinas major stock exchanges Shanghai,Shenzhen and Beijing introduced requirements for environmental,social and governance disclosure requirements for listed compa

112、nies,reflecting the importance of addressing climate risks in the Asia-Pacific region.20 21Other regulators throughout Asia-Pacific are taking actions to help financial institutions measure and manage their climate risks.Indias central bank published on Feb.28,2024,a draft framework for banks and fi

113、nancial institutions on the adoption of the International Sustainability Standards Board(ISSB)s first two sustainability standards,which include disclosure requirements on carbon emissions and other climate risks.22 India plans to adopt the standards for banks and financial institutions as of 2025.2

114、3 Bangladeshs central bank issued on Dec.26,2023,requirements for banks and financial institutions to disclose their sustainability and climate-related risks based on the ISSBs standards,effective from Jan.1,2024.24The Monetary Authority of Singapore set out guidelines for banks,insurers and asset m

115、anagers on Oct.18,2023,on transition planning for a net-zero economy.25 It said it expects financial institutions to engage with clients rather than divest,to take a long-term perspective on lending or investment to account for climate risks and to provide stakeholders on what steps they are taking

116、to manage short-,medium-and long-term climate-related risks,among others.19 Hong Kong Monetary Authority.Aug.29,2023.Planning for net-zero transition.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2023/20230829e1.pdf20 Shanghai Stock Exchange.Feb.8,2024.SSE Solicits Public Opinion

117、s on Guidelines No.14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies Sustainability Report(Trial)(Draft for Comments)https:/ Shenzhen Stock Exchange.March 1,2024.SZSE Seeks Public Comments on Guidelines for Sustainable Development Report to Further Consolidate the Foundation for

118、the High-quality Development of Listed Companies.https:/ IFRS.June 2023.IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.https:/www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general-requirements.html/content/dam/ifrs/publicat

119、ions/html-standards-issb/english/2023/issued/issbs1/#about23 Reserve Bank of India.Feb.28,2024.Draft Disclosure framework on Climate-related Financial Risks,2024.https:/www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=439324 Bangladesh Bank.Dec.26,2023.“Guideline on Sustainability and Climate-related F

120、inancial Disclosure.”https:/www.bb.org.bd/mediaroom/circulars/gbcrd/dec262023sfd06e.pdf25 Monetary Authority of Singapore.Oct.18,2023.MAS Guidelines for Financial Institutions on Transition Planning for a Net Zero Economy.https:/www.mas.gov.sg/news/media-releases/2023/mas-proposes-guidelines-for-fin

121、ancial-institutions-on-transition-planning163.Asia-Pacific Financial Institutions&Climate RiskFIGURE 4Financial institutions1 in 4 Asia-Pacific financial institutions view climate strategy as a top-3 material issuePercentage of companies by sector in Asia-Pacific that chose the following topics as a

122、 top-3 material issueData as of August 2023.Results based on responses from 3,516 companies assessed in the 2022 S&P Global Corporate Sustainability Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are included.This analysis classifie

123、s geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024 S&P Global.Climate strategy

124、Environmental managementRisk and crisis managementCorporate governanceBusiness ethicsHuman capital managementHuman rightsImpacts from products&servicesInnovationLong term economic trends/issuesLong term environmental trends/issuesLong term social trends/issuesOccupational health&safetyCommunity enga

125、gementCommunication services(n=199)9%5%12%8%10%16%4%21%11%5%1%4%4%6%Consumer discretionary(n=543)13%22%4%12%8%15%4%25%7%3%4%5%8%6%Consumer staples(n=270)16%32%6%6%7%13%6%37%9%3%9%6%8%5%Energy(n=65)43%35%6%12%6%9%3%5%9%9%6%3%43%12%Financials(n=389)23%3%23%21%13%20%1%18%5%13%4%7%2%5%Healthcare(n=244)8

126、%13%4%9%17%16%3%34%20%1%1%5%8%2%Industrials(n=652)25%19%5%15%9%17%4%15%11%6%5%3%16%2%Information technology(n=502)17%18%9%13%7%22%4%17%19%4%2%6%8%3%Materials(n=378)37%34%2%18%11%11%3%15%9%4%4%4%30%4%Real estate(n=178)42%28%6%30%10%20%3%19%5%7%3%4%13%10%Utilities(n=96)48%27%13%19%10%14%2%22%6%11%9%4%

127、30%7%173.Asia-Pacific Financial Institutions&Climate Risk3.2 Adaptation planning to meet physical climate risksFinancial institutions in Asia-Pacific have room to invest more resources into adaptation planning.Just as financial institutions in the region are starting to recognize climate strategy as

128、 material to their business,many are beginning to take steps to adapt their business to the physical risks of climate change.This matters for financial institutions as they are exposed to all sectors of the economy through their loans,investments and underwriting,including high-emitting sectors such

129、 as energy or utilities,which could face challenges in the transition to a low-carbon economy.26 They face higher loan impairments from the physical impacts of climate change and may have to adjust their lending portfolio to reduce exposure to hard-to-abate sectors such as coal.27,28 In their role a

130、s financiers to the wider economy they can take a significant role in facilitating the flow of capital needed to mitigate and adapt to climate change.Formalized climate change adaptation planning is not yet widespread,however.Based on a universe of 3,668 companies in Asia-Pacific,data from the CSA s

131、hows there is a gap between financial institutions in Asia-Pacific that regard climate strategy to be a top material issue and those that undertake adaptation planning about 23%of assessed financial institutions regard climate as material,while 19.1%of assessed financial institutions have an adaptat

132、ion plan.The CSA defines an adaptation plan as a plan to adapt to any climate risks across a companys value chain that the company has identified through a climate risk assessment.The plans can be specific climate-related mitigation plans included in wider risk assessments,or separate climate-specif

133、ic reports.By adapting their businesses to a changing climate,financial institutions can prepare for the effects of extreme weather events on their business and the broader economy.The physical hazards of climate change are becoming more severe and frequent across the world,and Asia-Pacific risks be

134、ing the region that is the most affected globally.South Asia is over 10 times more exposed than Europe,according to research by S&P Global Ratings.29Investments in adaptation will need to increase to cope with the rising costs from physical climate hazards such as wildfires,flooding and cyclones.Acc

135、ording to the World Meteorological Organization,climate-related disasters are now five times as frequent.If the current trend continues,the number of disasters could rise to 560 per year by 2030,up 40%from 2015.Significant funding is needed to adapt to this changing climate:For example,up to US$340

136、billion per year of adaptation finance is needed by 2030 to pay for investments in technology and in transforming agriculture and water systems.30The need for financial institutions in Asia-Pacific to implement adaptation plans is growing amid the rising threat of physical climate hazards.Six of the

137、 top 10 places at the highest risk from tropical cyclones are in Asia,according to the United Nations Intergovernmental Panel on Climate Change(IPCC).31According to a report by S&P Global Ratings,South Asia faces three times more potential economic losses than the world average,with around 12%GDP at

138、 risk annually by 2050 under the IPCCs slow transition scenario.32For example,India will have to raise funding for adaptation,mitigation and the management of weather-related disasters,with investment between US$7.2 trillion and US$12.1 trillion by 2050,the Reserve Bank of India estimated.33Climate

139、change is also affecting other parts of Asia-Pacific,and countries are making adaptation plans accordingly.Japan,which is vulnerable to storms,published a national adaptation plan in 2018.In Japans Ise Bay,for example,current storm surges could result in property and business damages of about Y100.0

140、4 billion(US$676.73 million),with current adaptation efforts such as protective sea walls,but the figure could more than double due to climate change.3426 European Central Bank.May 2021.Financial Stability Review.https:/www.ecb.europa.eu/press/financial-stability-publications/fsr/html/ecb.fsr2021057

141、57f727fe4.en.html27 World Bank.April 18,2023.Banking sector risks in the aftermath of climate change and environmental-related disasters.https:/blogs.worldbank.org/en/developmenttalk/banking-sector-risks-aftermath-climate-change-and-environmental-related-disasters28 S&P Global Ratings,S&P Global Com

142、modity Insights.Nov.16,2023.Will Oil and Gas Producers Lose Access to External Financing as Lenders Decarbonize?29 S&P Global Ratings.Jan.13,2023.Crunch Time:Can Adaptation Finance Protect Against the Worst Impacts From Physical Climate Risks?https:/ S&P Global Sustainable1.Feb.21,2023.Adaptation pl

143、anning is the next step for companies to prepare for climate risk.https:/ United Nations Intergovernmental Panel on Climate Change.Sixth Assessment Report.Chapter 10.Page 1500.Asia.https:/www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter10.pdf ipcc.ch/report/ar6/wg2/downloads/report/

144、IPCC_AR6_WGII_Chapter10.pdf32 S&P Global Ratings.Nov.27,2023.Lost GDP:Potential Impacts Of Physical Climate Risks.https:/ https:/rbidocs.rbi.org.in/rdocs/Publications/PDFs/RCF03052023395FAF37181E40188BAD3AFA59BF3907.PDF34 United Nations Intergovernmental Panel on Climate Change.Sixth Assessment Repo

145、rt.Chapter 10.Page 1500.“Asia.”ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapter10.pdf183.Asia-Pacific Financial Institutions&Climate RiskChina,too,has enacted a national climate adaption plan and will need US$77 billion over the next five years to sufficiently address adaptation,accordi

146、ng to the World Resources Institute.35FIGURE 5Portfolio exposureSome sectors in Asia-Pacific view climate strategy as material but lack physical risk adaptation plansPercentage of companies by sector in the Asia-Pacific region that chose climate change as a top-3 material issue and that have a physi

147、cal risk adaptation planData as of August 2023.Results based on responses from 3,668 companies in the Asia-Pacific region assessed in the 2022 S&P Global Corporate Sustainability Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are in

148、cluded.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.20

149、24 S&P Global.35 World Resources Institute.June 2,2023.China Elevates Climate Adaptation on National Agenda https:/www.wri.org/outcomes/china-elevates-climate-adaptation-national-agenda36 XDI.May 21,2024.How risky is your real estate investment?New report exposes APAC REIT vulnerability to climate c

150、hange extreme weather.https:/xdi.systems/news/how-risky-is-your-real-estate-investment-new-report-exposes-apac-reit-vulnerability-to-climate-change-extreme-weatherHowever,as major economies in Asia-Pacific are taking steps to adapt to a changing climate,many sectors are not implementing adaptation p

151、lans despite viewing climate strategy as material to their business.For example,43%of energy companies view climate strategy as material,but just 26%have a climate adaptation plan in place.In the materials sector,37%of assessed companies regard climate as material to their business,but only 22%have

152、implemented an adaptation plan.In the real estate sector,42%of companies see climate change as material,but only 28%have an adaptation plan in place despite the high risk from extreme weather events in the coming decades.36Energy(n=66)The energy,materials,real estate and utilities sectors view clima

153、te strategy as a top material issue,but many companies are not creating physical risk adaptation plansMaterials(n=383)Real estate(n=177)Utilities(n=95)Financials(n=397)Industrials(n=700)Consumer staples(n=295)Consumer discretionary(n=581)Information technology(n=522)Communication services(n=206)Heal

154、thcare(n=256)0%5%10%15%20%25%30%35%40%45%50%Percentage of companies that chose climate strategy as a top-3 material issuePercentage of companies with an adaptation plan194.Asia-Pacific Financial Institutions&Scenario Analysis4.1 Physical risk scenario analysisThe impact of extreme weather events in

155、several countries in Asia-Pacific shows the need for clear adaptation plans to manage the physical impacts of climate change.But as we have seen,there is a gap between how financial institutions consider climate strategy and how they are adapting to extreme weather events.The financial sector will c

156、ome under pressure to adapt and provide scenario analysis as banking regulators step up climate stress tests,typically using scenario analyses created by the Network of Central Banks and Supervisors for Greening the Financial System(NGFS),a group of more than 100 central banks and supervisors collab

157、orating on how to tackle climate change.37 Financial institutions in Asia-Pacific can use scenario analysis as a tool to provide the foundations for implementing physical risk adaptation plans that prepare them for the effects of extreme weather events on their business and the broader economy.Scena

158、rio analysis can help financial institutions understand how climate change will impact their business and financial performance under different potential future scenarios.Financial institutions can test for physical risks,such as rising sea levels or an increase in extreme weather events like floodi

159、ng and wildfires.They can carry out quantitative scenario analysis that uses analytical models to determine a wide range of climate risk outcomes,and/or qualitative scenario analysis that uses descriptive narratives and is often the first step for organizations to explore potential future climate ou

160、tcomes.Data from the CSA shows 35%of assessed financial institutions in Asia-Pacific conduct some form of physical risk scenario analysis.Just over 10%are conducting only qualitative physical risk scenario analysis while 4.1%conduct quantitative analysis.About 20%of financial institutions in Asia-Pa

161、cific use both quantitative and qualitative scenario analysis for physical risks,according to the CSAs assessment of 797 financial sector companies.In Europe,14.6%of financial institutions conduct qualitative physical risk scenario analysis and 7.6%conduct quantitative analysis,while 41%of financial

162、 institutions in the region conduct both.When drilling down to different geographies in Asia-Pacific,the analysis finds approaches to scenario analysis vary between jurisdictions.For example,in Japan 21%of financial institutions take a qualitative approach,6%take a quantitative one and 26%take a com

163、bined approach,the CSA data shows.In Mainland China,4%of financial institutions take a qualitative approach,while none take a solely quantitative approach and 1%take a combined approach(see Figure 6).Quantitative scenario analysis considers banks exposure to climate-related risks and potential losse

164、s under different scenarios,while qualitative scenario analysis takes into account governance,risk tolerance and decarbonization strategies.38 39(See Glossary for further information.)Using quantitative and qualitative scenario analysis could offer financial institutions a way to prepare for climate

165、 stress tests.HKMA launched a climate stress test in April 2023 to be conducted over 2023 and 2024.In its guidelines,HKMA asked participating financial institutions to use a combination of quantitative and qualitative analyses to assess their exposure to both physical and transition risks.4037 Netwo

166、rk of Central Banks and Supervisors for Greening the Financial System.March 7,2024.Membership.https:/ European Central Bank.July 2022.2022 climate risk stress test.https:/www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.climate_stress_test_report.202207082e3cc0999f.en.pdf39 UNEP FI.Jan.12,2022.Clima

167、te stress testing is here:4 ways your firm can prepare.https:/www.unepfi.org/news/climate-stress-testing-is-here-4-ways-your-firm-can-prepare/40 Hong Kong Monetary Authority.April 2023.Guidelines for Banking Sector Climate Risk Stress Test.https:/www.hkma.gov.hk/media/eng/doc/key-information/guideli

168、nes-and-circular/2023/20230421e1a1.pdf204.Asia-Pacific Financial Institutions&Scenario AnalysisFIGURE 6Financial institutionsFinancial institutions in some parts of Asia-Pacific are performing climate physical risk scenario analysisPercentage of financials sector companies conducting climate physica

169、l risk scenario analysis by geographyQualitative scenario analysis onlyQuantitative scenario analysis onlyCombined scenario analysis approach0%5%10%15%20%25%30%35%40%45%50%55%60%65%Europe(n=144)Asia-Pacific(n=387)Latin America(n=49)North America(n=203)Data as of August 2023.Results based on response

170、s from 797 financials sector companies assessed in the 2022 S&P Global Corporate Sustainability Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are included.This analysis classifies geographies in the Asia-Pacific region as those tha

171、t the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024 S&P Global.0%10%20%30%40%50%60%70%80%90%Taiwan(n=23Singapore(n=4)Republic of Kor

172、ea(n=22)Japan(n=121)Australia(n=33)Philippines(n=4)Malaysia(n=8)Hong Kong(n=8)India(n=-38)Indonesia(n=8)Thailand(n=12)Mainland China(n=71)New Zealand(n=2)RegionMarket214.Asia-Pacific Financial Institutions&Scenario Analysis4.2 Transition risk scenario analysisA similar picture emerges when analyzing

173、 climate transition risk scenario analysis.In Asia-Pacific,34.5%of assessed financial institutions conduct transition risk scenario analysis.Transition risk scenario analysis takes a forward-looking approach to how future policy,regulatory and technological changes as well as legal,market and reputa

174、tional risks would impact a business.This is particularly important for financial institutions as they or their clients could face rising costs from changes in regulation related to the impact of climate change.Clients in high-emitting sectors could be subject to higher carbon prices that could pres

175、sure their finances and thus financial institutions balance sheets.If financial institutions are not prepared for transition risks,they could face increasing pressure on their loan books,investments and underwriting,especially from sectors that are heavily reliant on bank financing.In its principles

176、 to guide financial institutions on the path to net-zero,the Hong Kong Monetary Authority encourages financial institutions to use scenario analysis to develop or plan their transition strategies.It requests that financial institutions embed transition planning into their governance,accountability a

177、nd risk management frameworks.41Other regulators in the region are taking heed.The Monetary Authority of Singapore launched a consultation in October 2023 on potential guidelines designed to guide financial institutions on how they manage energy transition planning with their clients.42The Reserve B

178、ank of India has issued draft guidelines to help the banking sector implement a strategy to address climate change risks.43 The former China Banking and Insurance Regulatory Commission,which is now known as the National Financial Regulatory Administration,has published a set of green finance guideli

179、nes requiring the banking and insurance sectors to develop green finance strategies and reduce the carbon intensity of their asset portfolios,with the aim of making them carbon neutral.44Amid this regulatory push,data from the CSA shows 34.5%of financial institutions in Asia-Pacific conduct transiti

180、on risk scenario analysis,with 20%using both quantitative and qualitative scenario analysis,according to results based the CSAs assessment of 797 financial sector companies.That compares to 41%in Europe.Assessed financial institutions in Australia,China,Hong Kong,India,Malaysia,Hong Kong,Japan,the R

181、epublic of Korea,Singapore and Thailand are taking a combined approach to quantitative and qualitative scenario analysis to varying degrees,while assessed firms in the Philippines are only conducting quantitative scenario analysis and assessed companies in Indonesia are only conducting qualitative s

182、cenario analysis.41 Hong Kong Monetary Authority.August 2023.Planning for net-zero transition.https:/www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2023/20230829e1.pdf42 Monetary Authority of Singapore.Oct.18,2023.MAS Guidelines for Financial Institutions on Transition Plannin

183、g for a Net Zero Economy.https:/www.mas.gov.sg/news/media-releases/2023/mas-proposes-guidelines-for-financial-institutions-on-transition-planning43 Reserve Bank of India.July 27,2022.Discussion Paper on Climate Risk and Sustainable Finance.https:/rbidocs.rbi.org.in/rdocs/Publications/PDFs/CLIMATERIS

184、K46CEE62999A4424BB731066765009961.PDF44 National Financial Regulatory Administration.June 2,2022.CBIRC Releases the Green Finance Guidelines for Banking and Insurance Sectors.https:/ Financial Institutions&Scenario AnalysisFIGURE 7Financial institutionsMost Asia-Pacific financial institutions are no

185、t conducting climate transition risk scenario analysisPercentage of financials sector companies conducting climate transition risk scenario analysis by geographyData as of August 2023.Results based on responses from 831 financials sector companies assessed in the 2022 S&P Global Corporate Sustainabi

186、lity Assessment(CSA).All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are included.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are als

187、o present in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024 S&P Global.Qualitative scenario analysis onlyQuantitative scenario analysis onlyCombined scenario analysis approach0%5%10%15%20%25%30%35%40%45%50%55%60%Europe(n=149)Asia-P

188、acific(n=415)Latin America(n=58)North America(n=195)0%10%20%30%40%50%60%70%80%Taiwan(n=25)Republic of Korea(n=23)Singapore(n=4)Japan(n=144)Australia(n=33)Philippines(n=4)Malaysia(n=8)Indonesia(n=8)Hong Kong(n=8)Thailand(n=12)India(n=-38)Mainland China(n=72)New Zealand(n=2)RegionMarket235.Asia-Pacifi

189、c Financial Institutions&Biodiversity LossThe interconnectedness of climate change and biodiversity risks for financial institutionsInvestors and the financial community are not just considering the risks of climate change.They are increasingly turning their attention to biodiversity because climate

190、 and nature-related risks are intertwined.The loss of forests and other ecosystems both on land and in the oceans will release more carbon emissions into the atmosphere.45 There is a growing understanding that climate and biodiversity risks need to be measured in tandem,and investors are now taking

191、an integrated approach to those two key sustainability issues.This recognizes the critical services that nature provides,including erosion prevention,flood protection,water purification and food supplies.This is particularly true for Asia-Pacific,one of the most diverse regions in terms of biodivers

192、ity on the planet.The region is home to nearly half of the worlds biodiversity hotspots,areas that have a high level of endemic species.46 It includes places like Australia,Indonesia and China,which are suffering biodiversity loss as a result of climate change.47The IPCCs sixth annual assessment rep

193、ort noted that the loss of biodiversity and animals and plants habitats had been linked to climate change in some parts of Asia,including the loss of mammals in China,and plants in the Republic of Korea.48Signs are emerging that policymakers around the world are starting to address biodiversity loss

194、.In December 2022,the UN biodiversity conference known as COP15 ended with a landmark agreement for nature,the Global Biodiversity Framework.49 Governments committed to protect 30%of land and water considered important for biodiversity by 2030.In September 2023,the TNFD published its final recommend

195、ations to guide companies in disclosing their dependencies and impacts on nature,underlining to what extent companies need to consider biodiversity as a potential risk to their business.50 Financial regulators and supervisors are also encouraging financial institutions to look more deeply at their e

196、xposure to nature-related risks.Also in September 2023,the NGFS published a framework to guide policies and actions of central banks toward an integrated assessment of climate and broader nature-related risks.51Despite this,only a small share of companies globally and in Asia-Pacific have set target

197、s to protect biodiversity or address deforestation.Based on an assessment of 3,753 companies in the CSA,only 6.3%of companies assessed have made biodiversity commitments in Asia-Pacific,compared to 16.1%in Europe.Drilling down further,we find that in India,17.4%of companies assessed have made biodiv

198、ersity-related commitments,reflecting the fact that the country has already implemented legislation to protect nature such as its 2002 Biological Diversity Act.5245 Food and Agriculture Organization.2022.The State of the Worlds Forests 2022.https:/openknowledge.fao.org/server/api/core/bitstreams/f81

199、551bf-0a78-498b-a0a6-17f21467389d/content46 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.2018.The regional assessment report on biodiversity and ecosystem services for Asia and the Pacific.https:/ The Royal Society.2024.“Where is most biodiversity loss happening a

200、nd why?”https:/royalsociety.org/news-resources/projects/biodiversity/where-is-most-biodiversity-loss-happening-and-why/48 United Nations Intergovernmental Panel on Climate Change.Sixth Assessment Report.Chapter 10.Page 1473.Asia https:/www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_Chapte

201、r10.pdf49 Convention on Biological Diversity.February 2023.Global Biodiversity Framework.https:/www.cbd.int/gbf50 Taskforce on Nature-related Financial Disclosures.Sept.18,2023.Final TNFD Recommendations on nature related issues published and corporates and financial institutions begin adopting.http

202、s:/tnfd.global/final-tnfd-recommendations-on-nature-related-issues-published-andcorporates-and-financial-institutions-begin-adopting/51 Network of Central Banks and Supervisors for Greening the Financial System.Sept.7,2023.NGFS publishes Conceptual Framework for Nature-related Financial Risks at lau

203、nch event in Paris.https:/ Indias Ministry of Law and Justice.Feb.5,2003.The Biological Diversity Act,2002.https:/faolex.fao.org/docs/pdf/ind40698.pdf245.Asia-Pacific Financial Institutions&Biodiversity LossFIGURE 8Portfolio exposureThai companies lead the Asia-Pacific region in deforestation-relate

204、d commitmentsPercentage of companies across sectors by geography making deforestation-related commitmentsData as of August 2023.Results based on responses from 3,729 companies assessed in the 2022 S&P Global Corporate Sustainability Assessment.No gross deforestation means the company has made a comm

205、itment to end all deforestation.No net deforestation means that damages linked to business activity are offset by at least equivalent gains,avoiding a net loss of biodiversity and ecosystem services.Examples of“other”commitments include:aforestation or conservation activities,the use of certified ra

206、w materials,etc.All Asia-Pacific geographies with at least one company assessed in the relevant 2022 CSA criterion are included.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also pre

207、sent in the CSA universe.To read the full text of CSA criteria and questions,click here.Source:S&P Global Sustainable1.2024 S&P Global.0%10%20%30%40%50%60%5%15%25%35%45%55%65%70%No gross deforestationNo net deforestationOther deforestation commitmentNorth America(n=802)Asia-Pacific(n=2,064)Europe(n=

208、579)Latin America(n=253)-Philippines(n=19)Mainland China(n=395)Australia(n=157)Indonesia(n=25)Japan(n=835)New Zealand(n=29)Singapore(n=18)Hong Kong(n=60)India(n=115)Taiwan(n=117)Republic of Korea(n=153)Malaysia(n=44)Thailand(n=48)255.Asia-Pacific Financial Institutions&Biodiversity LossPortfolio exp

209、osureThai companies lead the Asia-Pacific region in biodiversity-related commitmentsPercentage of companies across sectors by geography making biodiversity-related commitmentsData as of August 2023.Results based on responses from 3,753 companies assessed in the 2022 S&P Global Corporate Sustainabili

210、ty Assessment.Net positive impact means that corporate actions on biodiversity,such as habitat protection,are greater than the impact from its business activity.A commitment to net positive impact typically goes further than a no net loss commitment,which means that damages linked to business activi

211、ty are offset by at least equivalent gains,avoiding a net loss of biodiversity and ecosystem services.Examples of“other”commitments include:No deforestation;no peat;no exploitation;and the use of certified raw materials,etc.All Asia-Pacific geographies with at least one company assessed in the relev

212、ant 2022 CSA criterion are included.This analysis classifies geographies in the Asia-Pacific region as those that the World Bank identifies as part of East Asia and Pacific or South Asia and that are also present in the CSA universe.To read the full text of CSA criteria and questions,click here.Sour

213、ce:S&P Global Sustainable1.2024 S&P Global.0%10%20%30%40%50%5%15%25%35%45%Net positive impactNo net lossOther biodiversity commitmentNorth America(n=806)Asia-Pacific(n=2,076)Latin America(n=255)Europe(n=584)-Indonesia(n=25)Philippines(n=19)Mainland China(n=398)Japan(n=839)Malaysia(n=44)Australia(n=1

214、60)Taiwan(n=118)New Zealand(n=29)Republic of Korea(n=153)Singapore(n=19)Hong Kong(n=61)India(n=115)Thailand(n=47)265.Asia-Pacific Financial Institutions&Biodiversity LossIgnoring biodiversity could present a significant business risk for financial institutions.According to the World Economic Forum(W

215、EF),US$44 trillion of economic value generation,or more than half of the worlds total GDP,is moderately or highly dependent on natural assets and ecosystems.53At the same time,pollution,deforestation and other unsustainable land use,paired with climate change and the spread of invasive species,have

216、put about one million animal and plant species at risk of extinction,many within decades.54Financial institutions have a key role to play in working with their clients to reduce nature-related risks in their businesses.Examples include application of the Equator Principles in financing large-scale p

217、rojects,as well as financing nature-based solutions in climate mitigation and adaptation projects such as coastal mangrove conservation.55In Asia-Pacific,63%of the regions GDP equivalent to US$19 trillion is at risk from nature loss,according to a WEF report.56 The UN Food and Agriculture Organizati

218、on estimates that Asia-Pacific currently loses 2.2 million hectares of forest a year to deforestation.Deforestation has been a focus for financial institutions looking to integrate biodiversity-related data into their investment and lending decisions.In 2021,a group of 37 financial institutions with

219、 more than US$8.9 trillion in assets under management pledged to eliminate agricultural commodity-driven deforestation risks in their investment and lending portfolios by 2025.A one-year progress report in November 2022 by that group indicated some members have published a list of investor expectati

220、ons for companies,established internal policies related to this goal,or created new financial instruments for nature-based solutions.57Yet ending,slowing,or offsetting deforestation is a priority for a small number of the 3,729 companies assessed in the CSA.Only 7.9%of companies assessed in Asia-Pac

221、ific have“no deforestation”commitments,compared to 19.2%in Europe and 19.4%in Latin America.In the Republic of Korea,19%of companies assessed have such commitments,and in Taiwan that figure is 18%.Halting deforestation and preserving forests could cut carbon emissions by 3.6 gigatons of CO2e annuall

222、y between 2020 and 2050,according to the FAO report The State of the Worlds Forests 2022 Forest pathways for green recovery and building inclusive,resilient and sustainable economies.58 That includes around 14%of what is needed up to 2030 to keep global warming within the limits of the 2015 Paris Ag

223、reement on climate change and would protect more than half of the plants terrestrial biodiversity.In Asia-Pacific,financial institutions and their customers are operating in areas essential to biodiversity.Financial institutions can identify and manage the part of their business operating in biodive

224、rsity-rich areas to avoid legal,regulatory,reputational and market risks.59 Their operations may overlap with areas rich in biodiversity,and they may need to assess how their assets or investments are impacting their biodiversity footprint.60S&P Global data shows that financial institutions in the A

225、PAC LargeMidCap index have 5.1%of assets that overlap with Key Biodiversity Areas(KBAs).KBAs are sites contributing significantly to the global persistence of biodiversity.KBAs are identified at the national,sub-national or regional level by local stakeholders based on standardized scientific criter

226、ia and thresholds.That compares to just 2.8%for S&P Global 1200 companies and 3.1%among S&P Global Broad Market Index companies.Six percent of all assets in the S&P Global APAC LargeMidCap index overlap with a KBA.That compares to a 2.4%overlap by S&P Global 1200 companies and 2.9%by S&P Global Broa

227、d Market Index companies.53 World Economic Forum.January 2020.Nature Risk Rising:Why the Crisis Engulfing Nature Matters for Business and the Economy.https:/www3.weforum.org/docs/WEF_New_Nature_Economy_Report_2020.pdf54 United Nations.May 6,2019.“UN Report:Natures Dangerous Decline Unprecedented;Spe

228、cies Extinction Rates Accelerating.”https:/www.un.org/sustainabledevelopment/blog/2019/05/nature-decline-unprecedented-report/55 S&P Global Sustainable1.March 18,2024.Corporate support for nature-based solutions has room to grow.https:/ World Economic Forum.Sept.29,2021.How to address Asia Pacifics

229、biodiversity crisis and encourage nature-positive growth.https:/www.weforum.org/agenda/2021/09/how-to-address-asia-pacific-s-biodiversity-crisis-and-encourage-nature-positive-growth/57 S&P Global Sustainable1.Dec.15,2022.Biodiversity is still a blind spot for most companies around the world.https:/

230、Food and Agriculture Organization.2022.The State of the Worlds Forests 2022.https:/www.fao.org/3/cb9360en/online/src/html/key-messages.html59 Organisation for Economic Cooperation and Development.2019.Biodiversity:Finance and the Economic and Business Case for Action.Chapter 1.4:https:/www.oecd.org/

231、en/publications/biodiversity-finance-and-the-economic-and-business-case-for-action_a3147942-en/full-report/component-5.html#chapter-d1e115960 Taskforce on Nature-related Financial Disclosures.March 2023.The TNFD Nature-related Risk and Opportunity Management and Disclosure Framework.https:/tnfd.glob

232、al/wp-content/uploads/2023/07/23-23882-TNFD_v0.4_LEAP-Guidance-Annex-4.11_v4-2-1.pdf275.Asia-Pacific Financial Institutions&Biodiversity LossFIGURE 9Portfolio exposure6%of all assets in the S&P Global APAC LargeMidCap index overlap with a Key Biodiversity AreaPercentage of assets held by companies i

233、n the S&P Global Asia-Pacific LargeMidCap,S&P Global 1200 and S&P Global BMI indices that overlap with Key Biodiversity AreasData as of August 2023.Key Biodiversity Areas(KBAs)are sites deemed by the scientific community as contributing significantly to the global persistence of biodiversity.The KBA

234、 designation does not carry legal protection,but many KBAs overlap with protected areas such as national parks or wildlife reserves.Source:S&P Global Sustainable1.2024 S&P Global.0%2%4%6%8%10%12%14%16%18%All sectorsUtilitiesConsumer staplesEnergyIndustrialsMaterialsFinancialsAPAC LargeMidCapS&P Glob

235、al 1200S&P Global BMIConsumer discretionaryReal estateCommunication servicesInformation technologyHealthcare285.Asia-Pacific Financial Institutions&Biodiversity LossKBAs are identified by the scientific community based on biological criteria and thresholds,so the designation does not carry legal pro

236、tections.However,governments have been known to use KBAs as reference points in establishing legally protected areas.Protected areas are geographically defined spaces managed through legal or other effective means to achieve long-term conservation of nature with associated ecosystem services and cul

237、tural values.Protected areas include national parks,wilderness areas and nature reserves managed by local,state or national governments.61 A protected area can also be an area of land that is owned or managed by a private owner,NGO,for-profit organizations or Indigenous peoples.62 Financial institut

238、ions can influence the reduction of biodiversity risks in Asia-Pacific.They can play a key role in providing the financing needed to protect key biodiversity areas and ensuring that companies operate in areas that will not harm fragile ecosystems.This could represent a major opportunity for the indu

239、stry.Financial institutions can create lending and investment products to support biodiversity and can collaborate with investors in reducing nature-related risks in portfolios.According to the World Economic Forum,US$1.1 trillion of capital investment annually.63 And financial institutions are well

240、 positioned to mobilize the financing needed to protect and nurture biodiversity.The year 2024 could see major developments in terms of biodiversity.The UNs COP16 biodiversity conference took place in October,building on the decisions of COP15.And right after that,the annual UN climate change confer

241、ence known as COP29 is due to be held in Azerbaijan.The global focus on nature,biodiversity and how relates to climate is taking center stage at these events.61 International Union for Conservation of Nature.2008.Guidelines for Applying Protected Area Management Categories.https:/portals.iucn.org/li

242、brary/sites/library/files/documents/pag-021.pdf62 S&P Global Sustainable1.May 10,2023.How the worlds largest companies depend on nature and biodiversity.https:/ World Economic Forum.Sept.29,2021.How to address Asia Pacifics biodiversity crisis and encourage nature-positive growth.https:/www.weforum.

243、org/agenda/2021/09/how-to-address-asia-pacific-s-biodiversity-crisis-and-encourage-nature-positive-growth/296.Case Study:Bank of China(Hong Kong)Bank of China(Hong Kong)is a cornerstone member of the Alliance for Green Commercial Banks.The bank is present in nine countries in Southeast Asia and is m

244、anaging various challenges related to climate change across the region,including regulatory frameworks,environmental conditions,economic development,and stakeholder awareness levels.The bank draws upon its risk management experience in Hong Kong to develop a strategy that will enable the transition

245、to a low-carbon and climate-resilient economy throughout Southeast Asia.Dr.Yu DONG,Vice President of Sustainability Strategy in the Economics&Strategic Planning Department at BOCHK,laid out the banks strategy for climate risks and opportunities in response to questions posed by S&P Global Sustainabl

246、e1.The following has been edited for length and clarity.Key takeaways from the conversation BOCHK set a 2030 carbon neutrality goal as it seeks to incorporate climate change and the reduction of environmental impacts into its strategic objectives.The lender is also seeking to align its climate strat

247、egy with Chinas climate goals of peaking carbon emissions by 2030 and becoming carbon neutral by 2060,as well as the Hong Kong SAR governments goal of becoming carbon neutral by 2050.The bank is implementing business strategies to support an orderly transition for clients in carbon-intensive industr

248、ies while also considering the need for energy stability and security.The bank is actively seeking to direct capital flows toward areas in climate change mitigation and adaptation.It has also taken measures to establish a governance structure that will oversee sustainability risks throughout the ban

249、ks portfolio.BOCHK works with regulators by taking part in climate stress tests and enhancing the banks risk management policies and industry guidelines in line with regulatory policy requirements.BOCHK sees opportunities in biodiversity and nature through new green financial products and services s

250、uch as loans or projects that support biodiversity and environmental protection.S&P Global Sustainable1:In what ways is climate change material to BOCHKs business strategy?Addressing climate change is indeed a material issue for BOCHK,as evidenced by our comprehensive approach to integrating climate

251、 change and sustainability into strategy planning.BOCHK has been a signatory to the Taskforce on Climate-related Financial Disclosures(TCFD)since 2021 and has progressively disclosed climate-related information based on TCFD recommendations.Our first standalone TCFD Report was released in 2023.We ha

252、ve also been strengthening our asset portfolios resilience against climate change and formulated business strategies for carbon-intensive industries to support long-term sustainability plans.We have expanded control measures and formulated midterm strategies towards sensitive sectors since October 2

253、023 to support an orderly transition for clients in carbon-intensive industries,while considering the need for securing stable energy supplies.We are also actively seeking to direct capital flows toward climate change mitigation and adaptation,and to support clients in their in low-carbon transition

254、.What strategies is BOCHK implementing to respond to climate-related risks?We have established a three-tier sustainability governance structure,consisting of the board,a sustainability committee,and a sustainability executive committee to ensure oversight and implementation of sustainability initiat

255、ives across the organization.We have embedded climate risk into our five-year strategic plan and annual work plan and integrated climate change considerations into our five-year sustainability plan.We are also enhancing climate-related disclosures through regular reporting to the senior management a

256、nd the board on the risk profile of the climate risk-sensitive credit portfolio.We are working on establishing our own taxonomy and sector-specific policies to identify,assess,and manage climate challenges to align our risk management processes with the challenges climate change poses for specific s

257、ectors.306.Case Study:Bank of China(Hong Kong)How important is a net-zero target to achieving BOCHKs strategic goals?We have set a 2030 carbon neutrality goal for our own operations as we seek to incorporate the effects of climate change and the need to reduce environmental impacts into strategic ob

258、jectives.This goal not only supports the banks strategic objectives but also contributes to broader societal and environmental goals.We are seeking to align our climate strategy with Chinas climate goals of peaking carbon emissions by 2030 and becoming carbon neutral by 2060,as well as the Hong Kong

259、 SAR governments goal of becoming carbon neutral by 2050.How is BOCHK addressing financed emissions?We are measuring financed emissions by using a methodology created through a partnership of financial institutions,the Partnership for Carbon Accounting Financials(PCAF).BOCHK has also developed its o

260、wn models based on companies publicly disclosed GHG emissions data,GHG emissions estimated through the companies financial data,and industry-average data to measure financial emissions.We have also carried out a pilot project using PCAF to measure financed emissions across our corporate loans and bo

261、nd exposures to key industries.How does BOCHK work with financial regulators in addressing climate risks?We actively collaborate with financial regulators to address climate challenges by participating in climate risk stress tests.Climate stress tests by regulators provide a framework for assessing

262、the resilience of the banks strategy to different climate-related scenarios.These tests also help the bank optimize its scenario analysis and stress testing methodologies.We also work with regulators on enhancing our risk management policies and industry guidelines in line with regulatory policy req

263、uirements.We maintain close communication with regulators on new initiatives,such as taxonomy setting and sensitive sector policy,to ensure alignment with regulatory expectations and best practices in addressing climate change.What roles do banking alliances play in helping you manage climate-relate

264、d risks and opportunities?We fully understand that promoting sustainability means collaborating with all sectors of the community.By supporting and participating in a wide range of projects with different partners,we are working together to put environmental philosophy into practice and achieve carb

265、on neutrality.BOCHK is a cornerstone member of the Alliance for Green Commercial Banks.The Alliance plays a role in helping BOCHK manage climate-related challenges and opportunities by providing a platform for collaboration,sharing best practices,and promoting the development of green finance.What b

266、usiness opportunities is BOCHK seeing with the energy transition?BOCHK sees business opportunities in supporting customers transitions to green and low-carbon operations and developing green and sustainable finance products.We have developed green finance products like the BOCHK Greater Bay Area(GBA

267、)Climate Transition ETF,which is considered Hong Kongs first ETF tracking an ESG index with investments that help investors capture the economic growth opportunities from the climate transition.BOCHK has developed several new lending products,including green mortgages,green personal loans,green depo

268、sits,green insurance and green retail bonds,among others.These products are part of our commitment to promoting sustainable finance and supporting the low-carbon transition in the GBA.316.Case Study:Bank of China(Hong Kong)To what extent are you identifying biodiversity risks in your lending and inv

269、estment portfolios?We are actively identifying biodiversity risks in our lending and investment portfolios.We have a comprehensive approach to assessing ESG risks,including biodiversity,through the ESG questionnaire used when applying for loans.This questionnaire covers a wide range of factors,inclu

270、ding the impacts on biodiversity and the natural ecosystem.Additionally,we have formulated and implemented a climate risk stress test enhancement plan,which includes expanding the assessment scope and optimizing the content of the questionnaire to enhance the climate,environmental,and social risk as

271、sessment mechanism.What opportunities do you see in creating a nature-positive economy?How much will it lead to new products or new ventures for you?We see opportunities in creating a nature-positive economy by guiding and promoting the green transformation of customers in different industries.This

272、could lead to new lending products or ventures,such as innovative green financial products and services that support biodiversity and environmental protection.How is the TNFD helping you address risks and opportunities related to nature?The TNFD helps financial institutions like BOCHK prepare in adv

273、ance for future requirements related to biodiversity and nature-positive business.We can therefore better prepare for risks and opportunities related to nature by providing guidelines for disclosure and assessment of nature-related financial risks.327.ConclusionFinancial institutions in Asia-Pacific

274、 have a key role to play in financing the transition to low-carbon economies.They can help fund infrastructure projects at the scale needed to have an impact on the regions economy.Asia-Pacific stands to be highly impacted by climate change given that it accounts for more than half the worlds GHG em

275、issions,60%of the worlds population and more than 40%of global GDP.64 65Addressing climate change risks can provide business opportunities for financial institutions.Green finance has grown significantly in recent years and appears poised to continue expanding.For example,green bonds debt that finan

276、ces environmentally friendly projects such as wind farms or solar power have grown rapidly over the last 10 years,from virtually nothing in 2012 to US$492.3 billion in 2023.66 The Asia-Pacific region was the second-largest issuer on a regional basis,with US$174.2 billion of green bonds for the full

277、year,helped by China tapping the green bond market to achieve its carbon neutral goals.67Leading financial institutions in the region say they are making net-zero goals or carbon neutrality a strategic commitment and are seeking opportunities in renewable energy,low carbon infrastructure,clean techn

278、ologies,and energy efficient projects within the region.They are implementing decarbonization strategies for heavy-emitting sectors and taking measures to end financing of new fossil fuel projects.They are also embedding sustainability into their strategies by incorporating sustainability initiative

279、s into their governance and management processes.They are also seeking to adapt their business models to new sustainability-related regulatory requirements.Because of the vast differences between markets within Asia-Pacific,lenders are tailoring their strategies for managing climate risks to particu

280、lar countries needs.Membership in local alliances like the Alliance for Green Commercial Banks is one tool that encourages collaboration and sharing of information and best practices among financial institutions and promotes the development of green finance.As economies in Asia-Pacific grow,so will

281、demand for energy,and financial institutions can play a part in ensuring that energy infrastructure needs are met through renewables like solar and wind power.By collaborating with clients on their transition paths,they can adapt their portfolios to the ways climate change is altering global markets

282、 and reduce their own carbon footprint.And importantly,they can also take stock of their dependencies and impacts on nature to contribute to efforts to preserve biodiversity and the ecosystem services that underpin the global economy.64 Bank of International Settlements.Oct.5,2022.Ravi Menon:Blended

283、 finance for the net-zero transition.https:/www.bis.org/review/r221005b.htm65 Asian Development Bank.June 2,2017.Gross Domestic Product(GDP):12 Things to Know.https:/www.adb.org/news/features/gross-domestic-product-gdp-12-things-know66 S&P Global Market Intelligence.Feb.5,2024.Global green bond sale

284、s to get boost in 2024 as interest rates may fall.https:/ Climate Bonds Initiative.2023.Green Bonds Market Report(10th ed.).https:/ or abbreviationMeaningNet-zero commitmentThe S&P Global Corporate Sustainability Assessment(CSA)defines a credible corporate net-zero commitment as one that includes co

285、mmitments to:Reducing scope 1,2,and 3 emissions to zero or to a level that is consistent with reaching net-zero emissions at the global or sector level in eligible 1.5C-aligned pathways.Neutralizing any remaining emissions that could not be reduced at the net-zero target year and any GHG emissions r

286、eleased into the atmosphere thereafter.Source:https:/ analysisProcess for identifying and assessing a potential range of outcomes of future events under conditions of uncertainty.In the case of climate change,for example,scenarios allow an organization to explore and develop an understanding of how

287、the physical and transition risks of climate change may impact its businesses,strategies,and financial performance over time.Climate-related scenario analysis should consider climate risks that are material to companies operations and value chain.Source:(TCFD(2017),Recommendations of the Task Force

288、on Climate-related Financial Disclosures)Qualitative scenario analysisExplores relationships and trends for which little or no numerical data is available.This is generally a high-level,narrative approach to scenario analysis,suitable for organizations that are familiarizing themselves with the proc

289、ess.For example,relying on industry trends and applying them to a specific organization or business activity,or undertaking quantitative research into a specific trend.Source:https:/ scenario analysisAssesses measurable trends and relationships using quantitative models,data sets and other analytica

290、l techniques to illustrate potential pathways or outcomes.This is a more detailed approach to conducting scenario analysis.External,third-party scenarios or data sets can be used,or companies can develop in-house modeling capabilities considering specific assumptions or parameters.Source:https:/ ris

291、ksTransitioning to a lower-carbon economy may entail extensive policy,legal,technology,and market changes to address mitigation and adaptation requirements related to climate change.Depending on the nature,speed,and focus of these changes,transition risks may pose varying levels of financial and rep

292、utational risk to organizations.Transition risks can be divided into four categories:policy and regulatory risks,technological risks,market risks,and reputational risks.Source:https:/ or abbreviationMeaningPhysical risksPhysical risks resulting from climate change can be event driven(acute)or longer

293、-term shifts(chronic)in climate patterns.Physical risks may have financial implications for organizations,such as direct damage to assets and indirect impacts from supply chain disruption.Organizations financial performance may also be affected by changes in water availability,sourcing,and quality;f

294、ood security;and extreme temperature changes affecting organizations premises,operations,supply chain,transport needs,and employee safety.Source:https:/ capitalThe stock of renewable and non-renewable natural resources(e.g.,plants,animals,air,water,soils,minerals)that combine to yield a flow of bene

295、fits to people(as referenced in TNFD Beta framework).Source:nature-risk-profile-methodology.pdf()BiodiversityThe variability among living organisms from all sources,including,inter alia,terrestrial,marine and other aquatic ecosystems and the ecological complexes of which they are part;this includes

296、diversity within species,between species and of ecosystemsSource:Convention on Biological Diversity,1992Nature-related risksThe TNFD defines nature-related risks as the potential threats posed to an organization linked to its and other organizations dependencies on nature and nature impacts.These ca

297、n derive from physical,transition and systemic risks.In addition to shorter-term financial risks(deemed material today),the TNFDs definition of nature-related risks includes longer-term risks presented by nature-related dependencies and nature impacts.Source:The TNFD Nature-related Risk&Opportunity

298、Management and Disclosure FrameworkTaskforce on Nature-Related Financial DisclosuresNature-positive economyA nature-positive economy is one that underpins the importance of nature in business and financial decisions.It ensures that nature is not harmed in any way and aims to restore nature loss.Sour

299、ce:World Economic Forum,What is nature positive and why is it the key to our future?DecarbonizationDecarbonization is the process of reducing and removing emissions from the atmosphere and turning to renewable sources of energy instead of fossil fuels to achieve a rapid reduction in carbon emissions

300、.Source:S&P Global,What is the Energy Transition?35Copyright 2024,S&P Global(and its affiliates as applicable)and Bank of China(Hong Kong)(and its affiliates as applicable).All rights reserved.This content(including any information,data,analyses,opinions,ratings,scores,and other statements)(“Content

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