Tcfd and Paris Agreement

Climate change is one of the most important global problems to solve in the 21st century. Based on this recognition, the Paris Agreement was adopted and entered into force in 2016. In order to achieve the long-term objectives set out in this agreement, including limiting the increase in global average temperature to two degrees Celsius above pre-industrial levels, countries have submitted their greenhouse gas emission reduction targets to the United Nations and are implementing appropriate measures. Developed countries are pursuing measures to create a carbon-free society, while the construction of new coal-fired power plants is still underway in some Asian countries, according to the Report by the International Energy Agency (IEA). In addition, the Japanese government has set a goal of reducing the country`s greenhouse gas emissions by 80% by 2050. At the „One Planet Summit“ in Paris in December 2017, we announced our support for the TCFD (*1). At the same time, we will continuously support our customers in their efforts to reduce greenhouse gas emissions, for example by promoting the introduction of environmentally friendly technologies as part of their business activities. As we are committed to reducing greenhouse gas emissions, we will design our business in a way that contributes to the growth of our customers and society and further improves our response to climate change. (*1) The Task Force on Climate-Related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) in April 2015 to require sole proprietorships to disclose their impact on climate change in their financial reports.

To support the objectives of the Paris Climate Agreement, the Financial Stability Board (FSB) launched the Working Group on Climate-Related Financial Disclosure (TCFD) in 2015. This voluntary disclosure platform was developed to „provide a framework for companies and other organizations to develop more effective climate-related financial information through their existing reporting processes“ and to support „more informed investment, credit [or credit] and insurance underwriting decisions.“ In February 2019, the United Nations Principles of Responsible Investment (PRI) stated that the climate risk strategy and governance indicators in line with the TCFD guidelines will become mandatory for PRI signatories from 2020, but will voluntarily become known to the public „As a company, we need to understand the true financial impact of climate change, and as an airline, we need to understand the conditions in which we will fly in the future. Disclosure of climate risks – and the thinking behind them – protects our customers, crew members and shareholders. These new recommendations guide us on how to do this. We help you consider the opportunities that could arise from the transition to a low-carbon economy, including the extent to which your existing product portfolio and future development plans are well positioned for the transition to a low-carbon economy. „These recommendations are welcome. The impact of climate change and the transition to a low-carbon economy deserve board-level scrutiny and governance. An independent study commissioned by HSBC shows that less than a quarter of companies currently disclose their environmental impact. This makes it very difficult for analysts and investors to assess and compare the sustainability of these companies.

These recommendations are a practical and pragmatic response to the need for consistent and comparable disclosure of climate-related financial data. For this reason, more than 190 countries signed the Paris Agreement in 2015, which establishes a global framework to combat climate change. The main objective of the Paris Agreement is to limit global warming to well below 2°C, preferably 1.5°C, compared to pre-industrial levels. In recent years, more than 130 countries have announced their ambitions to reduce their emissions to net zero, and many, including the UK, have set legally binding targets. Following the public consultation, the Bank will present its innovative approach to greening its corporate bond portfolio when it launches the next round of CBPS reinvestments on November 21. We are committed to conducting our own physical operations responsibly and sustainably. In June 2021, the NGFS published its second year of NGFS scenarios, as well as its own website, developed as part of WS2 with the aim of providing central banks and regulators, as well as financial companies and corporations, with a common starting point for analysing climate-related financial risks in different future climate paths. To support the implementation of these scenarios, WS2 has also published a climate scenario analysis guide for central banks and regulators. . In June 2021, we published the Key Elements document, which outlines the 2021 biennial exploratory scenario on financial risks related to climate change. The Climate Biennial Exploratory Scenario (CBES) will examine the resilience of the UK financial system to the physical and transition risks associated with three scenarios of early, late and no further action based on a subset of the scenarios published by the Network for Greening the Financial System (NGFS). UN Environment`s Finance Initiative (UNEP FI) today announced a partnership with 16 of the world`s largest insurers, representing approximately 10% of global premiums and $5 trillion in assets under management, to develop a new generation of risk assessment tools designed to enable the insurance industry to better understand the impact of climate change on its business.

This understanding is crucial for an industry whose core business is managing risk. 20 December 2021: The Climate Financial Risk Forum (CFRF) publishes the minutes of its eighth meeting, which will discuss the future strategy of the CFRF in the next phase of work (Session 3). In addition, by estimating the impact on each sector`s credit risk of projected changes in resource prices and demand, including crude oil and natural gas, and the cost of electricity generation (*7), in each scenario, the total projected borrowing costs by 2050 are estimated. In the 2°C scenario, estimated borrowing costs are expected to increase by about 2 to 10 billion yen per fiscal year compared to the stated policy scenarios. This is the first step in scenario analysis, and SMBC Group will continue to strive to improve it. In October 2021, the CFRF published its second set of guidance to help the financial sector develop best practices for managing climate-related financial risks and opportunities. These guides include best practices and are written by industry for industry. They build on the 2020 guide and focus on risk management, scenario analysis, disclosure, innovation, and climate data and measurement. Our Trucost climate analysis and specialized support services feed into every step of the TCFD reporting process, from quantifying climate-related financial risks and opportunities to working with business partners to turn measurements into action. The Bank is an active member of global organizations and partnerships that seek to provide analysis and solutions to climate change. He has assumed key roles as President and invested in promoting joint work.

In 2021, the Bank supported the UK Government in implementing a G7 agenda focused on climate change to date. The bank has also stepped up climate training for central banks through its Centre for Central Bank Studies. Through public consultations, the working group aims to better understand the development of climate-related forward-looking measures used and disclosed by asset owners, asset managers, banks and insurance companies. The financial and economic consequences of climate change are not just national concerns. As such, we play an active role in supporting a coordinated international approach to climate change. For example, through our cooperation with other central banks and financial regulators, playing a leading role in international for a (such as the G7 and G20) and working with the government to implement its COP26 agenda. (*2) Scenario of representative concentration pathwaysFor example, RCP2.6 assumes radioactive propulsion (the difference between the energy absorbed by the Earth and radiated into space, which influences changes in the Earth`s climate system) is 2.6 W/m2. . . . .