04 / OUR SUSTAINABILITY APPROACH 01 02 03 05 06 07 08 09 51 SUSTAINABILITY STATEMENT The Process The climate scenario analysis followed four (4) key steps: The Outcome As a result of the analysis, the following top three (3) risks were identified based on the top three (3) driving forces: Key Control Measures Across Climate Scenarios The risk assessment incorporated existing controls identified by the respective BUs, providing a practical view of how exposures are managed across different scenarios. The key measures implemented across all three (3) scenarios are summarised below: • Established governance: Sustainability and climate risk governance structures are in place, supported by an updated sustainability and climate-related risk management framework. • Strengthening resilience to physical risks: Group-wide Business Continuity Plans are maintained to enhance resilience against physical climate impacts. • Ongoing monitoring of climate exposure: Climate risks are monitored through periodic client reviews, collateral assessments, supplier ESG evaluations and the collection of clients’ GHG emissions, supported by continuous client engagement. • Reducing coal exposure: Measures are implemented to minimise or avoid coal-related investments and lending activities. • Enterprise decarbonisation efforts: Sustainability initiatives—such as solar panel installation, EV adoption and actions guided by the Decarbonisation Roadmap—support emissions reduction within the Group. • Capacity building and compliance: Regular awareness and capability building sessions are conducted, with climate-related regulatory reporting in place since 2022 and annual external audits performed on disclosed data. Identification of Driving Forces Six (6) climate related drivers were identified, including changes in policies, carbon pricing, energy transition, shift in market demand and sentiment, extreme climate events and climate litigation, informed through TCFD guidance, regulatory expectations and broader environmental analysis. Controls and Mitigation Appropriate controls and mitigation strategies were developed for risks and opportunities identified under each scenario. Risk Assessment BUs assessed scenario specific risks using the Group’s risk assessment methodology, evaluating likelihood, impact and existing controls. Scenario Selection Three (3) scenarios, NZ2050, DNZ2050 and NDCs, were selected to align with BNM’s CRST methodology. Top Three (3) Risks Identified Top Three (3) Driving Force Strategic risk Shift in market demand and sentiment Extreme and catastrophic climate events Carbon price and carbon tax Market risk Operational risk
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