CTBC’s latest report identifies climate change risks, designs new evaluation model

CTBC released its first "2021 CTBC Climate Risk Assessment Report" on Monday. (Photo courtesy of Shutterstock)

TAIPEI (The China Post) — As climate change continues to loom over many aspects of our daily lives, CTBC Financial Holding Co., Ltd. (中信金控), released its first “2021 CTBC Climate Risk Assessment Report” (2021中國信託金控氣候風險評估報告書) on Monday.

Taking the lead in the financial banking industry, CTBC applied the climate change situation detailed in The Network for Greening the Financial System (NGFS, 綠色金融體系網路) into its report.

The company then had its subsidiaries jointly conduct climate change pressure tests and came up with a detailed and comprehensive report explaining its corresponding risk management framework and risk evaluation for climate change.

The “2021 CTBC Climate Risk Assessment Report” expanded on the chapter “Task Force on Climate-related Financial Disclosure” (TCFD, 氣候相關財務揭露建議) included in its 2020 corporate social responsibility report to assess the expected losses in between 2030 to 2050 due to climate change issues.

In addition to publishing the inventory results of financed emissions, CTBC also pulled data from the report published by NGFS in June 2021 and chose the three most workable scenarios for their goals including the “2050 global net-zero carbon emission,” the “Paris Agreement” target and “no additional carbon reduction act” (無新增減碳作為).

CTBC developed measurement indicators and internal loss models for climate change risks and identified extreme climates such as typhoons and rainstorms, which may lead to a high probability of flooding or landslide disasters.

The impact they could have on real estate collateral and investment property insurance claims for corporate credit and mortgage levies, as well as the operating base, are relatively significant risks.

In this regard, the risk management team for personal finance of CTBC applied the flooding data of external institutions to develop a real estate value-change risk evaluation model for different residential buildings so as to assess the possible losses, among others.

With the release of new insights, data, and evaluation models, CTBC actively strengthens its climate change response measures in the hopes of becoming a leading and sustainable financial leader in Taiwan.