Climate Strategy: Risk and Opportunity Assessment
Identification of and Response to Climate-Related Risks and Opportunities
To identify the climate-related risks and opportunities that Uni-President Asset Management may face, along with their potential impacts, the Sustainable Development Promotion Team has compiled relevant sustainability disclosure frameworks and reviewed domestic and international climate issue trends. In accordance with the principles of IFRS S2, the Team has conducted the identification of climate-related risks and opportunities. Through discussions with departments responsible for sustainability matters, together with questionnaire surveys and qualitative and quantitative analyses, and with consideration given to the impact of traditional risks, the Team comprehensively assessed the potential financial impacts and likelihood of occurrence of various transition and physical risks and opportunities across operational and investment activities over the short term (within 1 year), medium term (1–5 years), and long term (more than 5 years). At the same time, potential opportunities were also identified to enable relevant departments to capture low-carbon trends, make early preparations, and transform them into sustainable business opportunities. Ultimately, through prioritization, one material climate-related risk and three material opportunities were identified.
Climate Risks and Opportunities Identification Procedures
Identification of Climate Change Risks
Uni-President Asset Management has assessed the short-, medium-, and long-term impacts of transition risks and physical risks on the Company. The results are summarized in the table below. A climate risk matrix was established by ranking the materiality of climate risks based on “financial impact” and “likelihood of occurrence” to identify the most significant climate-related risks.
Summary Table of Climate Risk Assessment Outcomes
Operational Impact
Operational shutdowns or disruptions to investees caused by extreme weather events (heavy rainfall and flooding)
Financial Impact
Reduction in portfolio asset value, declining investment performance, and decreased management fee revenue
Corresponding Existing Risk
Market risks
Identification of Climate Change Opportunities
Uni-President Asset Management has conducted a comprehensive assessment of climate-related opportunities across various dimensions and their short-, medium-,and long-term impacts on the Company. The results are summarized in the table below. A climate opportunity materiality matrix was established based on “impact” and likelihood of occurrence” to identify the top three climate related opportunities.
1. Summary Table of Climate Opportunity Assessment Outcomes
Operational Impact
Invest in green industries or green bonds to balance investment returns with investors’ sustainability needs
Financial Impact
Increase assets under management and management fee revenue
Response Measures
Monitor policy developments and international trends, and assess opportunities to expand investments in green and key strategic industries
2. Summary Table of Climate Opportunity Assessment Outcomes
Operational Impact
Issue sustainability products, such as ESG funds, in response to market demand
Financial Impact
Increase assets under management and management fee revenue
Response Measures
Launch the Uni-President Global 15+ Year BBB ESG Corporate Bond ETF
Develop sustainable products and strengthen the Company’s sustainable brand image
3. Summary Table of Climate Opportunity Assessment Outcomes
Operational Impact
Use TESG screening and engagement to promote the transition of investees with high climate-related risks
Financial Impact
Reduce investment and operational losses and safeguard asset value
Response Measures
Conduct quarterly screening and engagement to facilitate investee transition and enhance the corporate image of both parties
Note 1: Likelihood of occurrence: Low (unlikely to occur and expected to occur once every five years (inclusive) or longer, on average); moderate (likely to occur; approximately 50% probability; once very 1 (inclusive) to 5 years on averag e); high (very likely to occu r; approximately 75% probability; once within 1 year).
Note 2: Financial impact: Low (equivalent to 0.5% (inclusive) or less of the Company’s net worth); moderate (equivalent to 0.5% to 1% of the Company’s net worth); high (equivalent to 1% (inclusive) or ore of the Company’s net worth). The Comp any comprehensively considers current and future financial imp acts, as well as management costs, to determine the level of impact.
Note 3: Duration of imp act: Short-term (within 1 year); med ium-term (1–5 years); long -term (5 years or more)