Impacts and Key Considerations for the Life Insurance Industry

Impacts and Key Considerations for the Life Insurance Industry

Climate Change Starter's Guide

Climate Change Starter's Guide

Life Insurance Association of Japan

Life Insurance Association of Japan

Climate Change
Starter's Guide

Impacts and Key
Considerations for theLife Insurance Industry

Life Insurance Association of Japan

Climate Change Starter's Guide
Impacts and Key Considerations for the Life Insurance Industry
CONTENTS

I Why is climate change important today?
1. What is climate change? .............................................................................................................................. 2
2. What if climate change continues? ............................................................................................................ 4
3. What factors affect climate vulnerability? ................................................................................................ 8

II What are the impacts of climate change in each business sector?

1. Business sectors directly vulnerable to physical impacts of climate change ................................... 11
2. Industries that emit greenhouse gases .................................................................................................... 16

III

What are the impacts of climate change on the life insurance industry?
1. Impacts on life insurers (major physical risks) ......................................................................................... 22
2. Impacts on institutional investors .............................................................................................................. 27IV

What is the global community thinking and doing?
1. What is happening with international negotiations? ............................................................................ 30
2. What is Japan doing? ................................................................................................................................... 32
3. What are investors doing? ........................................................................................................................... 32
4. What are companies doing? ........................................................................................................................ 33
5. What are NGOs doing? ................................................................................................................................. 33
6. What will the world do next? ...................................................................................................................... 34

V

Understanding the TCFD Recommendations
1. Why was the TCFD created? ....................................................................................................................... 35
2. What is the TCFD? .......................................................................................................................................... 36
3. What are the key messages of the TCFD Recommendations? ............................................................. 37
4. What are the four pillars of the TCFD Recommendations? ................................................................... 39
5. What do the TCFD Recommendations expect from life insurance companies? ............................. 43
6. What is next for the TCFD Recommendations? ...................................................................................... 44
7. What is happening with TCFD Recommendations in Japan? .............................................................. 45

VI

Examples of TCFD-type disclosures
1. Examples of disclosure in the financial sector ......................................................................................... 46
2. Non-financial sectors: Scope 1 and 2 type companies ......................................................................... 48
3. Non-financial sectors: Scope 3 type companies ..................................................................................... 54
4. Non-financial sectors: Low emission companies .................................................................................... 58
i. References for further study: Examples of the TCFD approach to information disclosure ............. 62

VII Essential points for life insurance companies to consider based on the TCFD
1. The life insurance company’s status .......................................................................................................... 63
2. Creating the right internal systems ............................................................................................................ 66
3. Climate-related disclosures by life insurance companies ..................................................................... 71
4. Evaluating climate-related disclosures by investee companies .......................................................... 75
i. Useful online resources ................................................................................................................................. 76
About this publication• The response to climate change has become a major challenge for the world. Companies everywhere, life insurers included, need to see
it as an important management issue.
• Meanwhile, climate change is a specialized topic that many people in the industry may not have learned about previously. It is a challenge
at levels that require cross-departmental and comprehensive discussions spanning across any organization’s vertical structures from top
management to line personnel as well as horizontal coordination between different corporate departments. Until now it has beendifficult to find publications on this topic written at the introductory or beginner level.
• That is why this guide was prepared. It is for people who have been given some responsibility to deal with climate change and needintroductory-level information on what is important and how to respond. It is designed as a beginner’s guide, with summaries of basic
knowledge, actions, and important points. We hope that companies will find it useful.
• This publication was prepared by Green Pacific Co., Ltd., a company with expertise on the subject of responses to climate change.

Climate Change Starter's Guide

1

Why is climate change important?
Points!

Climate change is fundamentally not about identifying who is the cause andwho is the victim.
Everyone's daily actions are a factor in climate change.
Climate change impacts also affect every one of us.
In other words, we are all part of the cause and we are all victims.

1 What is climate change?
Carbon dioxide and other greenhouse gases(GHGs) in the Earth’s atmosphere maintainsurface temperatures at levels that support
life. As a result of human activities, these GHGs
emissions have increased rapidly over the past
century, leading to a rise in the Earth’s averageatmospheric temperatures, and the climate is
beginning to change as a result.
GHGs that cause climate change are emitted
from all activities associated with our daily
lives, and those impacts, as described below,
are affecting every aspect of our lives. In otherwords, we are part of the cause and we are also
victims.

Release of heat Release of heat

Sunlight

Atmosphere(greenhouse gases)

Atmosphere(greenhouse gases)

Sunlight

Heat

Heat
Heat absorbed

More heat absorbed

What are the mechanisms ofglobal warming?
Earth(about 200 years ago)
At start of Industrial Revolution,
CO2
CO2 concentrations were about 280 ppm

Earth(today)CO2 concentrations rose above 400 ppm in 2013.

Source: Japan Center for Climate Change Actions website (http://www.jccca.org)

Past environmental issues...
Easier to identify sources (causes) andlocation of impacts

Now with climate change...
Our own activities are a cause, and every aspectof our lives is affected.

SourceAir pollution

SourceClimatechangeWater
pollution
Noise,
vibration

Waste

2

Greenhousegases

Climate change is moving steadily ahead. But the pace of change often makes it difficult for humans to
notice. For example, it is not unusual for air temperatures to rise and fall by more than 10°C each day.
But, on the scale of the Earth, a one degree change of average temperatures for our entire planet
represents a huge change. And on top of that, the warming that is occurring, over spans ranging fromdecades to centuries, is extremely rapid for the Earth.
(°C)
0.6

(100 million t-CO2e/year)

0.2

Anthropogenic CO2 emissions

0.85°C increase from1880 to 2012!

0.4

0.0
−0.2
−0.4
−0.6
1850

1900

1950

2000 (Year)

Source: Adapted from Working Group I contribution to the Fifth Assessment Report of the IPCC.

Rapid increase in anthropogenic
CO2 emissions

350
300

Middle East and Africa

250

South America

200

Asia

150

Economies in transition(former Soviet Union)

100
50
0

OECD
(including Japan)

1750

1800

1850

1900

1950

2000 (Year)

Source: Adapted from Working Group III contribution to the Fifth Assessment
Report of the IPCC.

GHGs are emitted from every aspect of our lives.
Therefore, it is often difficult to take immediate action, and it also takes time to really take action.
However, because the Earth is an enormous system, it takes time for actions to take effect. That is anotherreason why it is difficult to take immediate action. The longer we delay, the bigger will be the impacts
facing future generations.
So, what is happening in our society today?

Linkages with ourdaily lives
GHGs

GHGs

Climate change

Sources
GHGs

GHGs

Climate Change Starter's Guide

3

Why is climate change important?

To begin with, is the Earth really warming? Is the climate changing as a result of the warming? And if bothare true, is it being caused by humans, not a natural occurrence? It has taken some time to get answers tosuch questions.
Even after it became clear that warming is under way and climate change is occurring, it still took time todetermine what to do about it, to decide on targets, and to start taking action.
During the past thirty years, events like the following have occurred with increasing frequency aroundthe world.

Largetyphoons

Large
typhoons

Typhoon 15 in Japan (2019)

Typhoon 19 in Japan (2019)

Heat stroke
Europe (2019)

Drought
Forest fires

Extreme heat

United States (2018)

Kumagaya, Japan (2018)

2 What if climate change continues?
If GHGs continue to build up in the atmosphere and global warming continues, the climate will changeeven more. A variety of impacts will be felt around the world, but let’s have a look at some of the main
impacts in Japan so far.

4

Rainfall patterns change
In particular, the timing and amounts of rainfall will change. In
the past, intense and torrential rainfall events, prolonged rain,
and shortages of rain (droughts) have caused extensive
damage.

Days per year with maximum daytime temperature above
35°C (extremely hot days) in Japan (average of 13 locations)
JMA

Days per location (days)

Trend = 2 (days/100 years)

Years

Nationwide (AMeDAS) number of days per year withat least 400 mm of daily rainfall
Trend = 2.1 (days/10 years)

JMA

Days per 1300 locations (days)

Temperatures rise
With warming, it is not only the average temperatures thatrise throughout the year, but also the maximum andminimum temperatures. Hot summers and warm winters will
become more common. Extremely hot periods will last
longer, with more intense heat in summer, higher daytime
maximum temperatures, and less cooling at night. During thewinter, less snow will fall where snow once fell every winter, or
snowfall patterns may change.

Years

Average temperature differencecompared to average years (°C)
2018

But now it is likely that ever larger typhoons will be generated
earlier in the year, and more of them will approach and makelandfall in Japan.

Ogasawara Islands

Precipitation compared toaverage years (%)
2018

Sea levels rise
When sea temperatures rise due to warming, the warmer
seawater expands in volume. Another impact of warming is
the melting of glaciers on the continents and ice sheets inGreenland, and the amount of water flowing into the sea will
increase. When sea levels rise from these impacts, areas withcoastal erosion and flooding will increase, and there will be
more damage from storm surges.

Ogasawara Islands

Sunlight hours compared
to average (%)
2018

Ogasawara Islands(Updated on January 10, 2019)

Source: Japan Meteorological Agency website

IPCC Reports
However, if emissions reach near zero at the end of thetwenty-first century (blue band), the range of projected
temperature rise is 0.3°C to 1.7°C.
(°C)
6.0
4.0

Global average temperature rise
Model results for historical period
RCP2.6
RCP8.52018 – 2100
Average

39

2.0
0.0
−2.0
1950

42

32
2000

2050

RCP2.6
RCP4.5
RCP6.0
RCP8.5The Intergovernmental Panel on Climate Change (IPCC) wasestablished in 1988 by the United Nations Environment
Programme (UNEP) and World Meteorological Organization(WMO). With researchers participating from 195 countries andregions around the world, it consists of three Working Groups (IThe Physical Science Basis; II Impacts, Adaptation and Vulnerability; III Mitigation), and issues assessment reports every five toseven years.
The Fifth Assessment Report (AR5) was issued in 2014 andprojects future climate change based on “scenarios” envisaging
different paths for future society.
It projects that global average temperatures will rise by 2.6°C to
4.8°C by the end of the twenty-first century if GHG emissions
continue to follow current trends (orange band in graph).

2100 (Year)

Source: Adapted from Working Group I contribution to the Fifth Assessment Report of the IPCC.

Climate Change Starter's Guide

5

Why is climate change important?

Projected impacts, by topic
What will happen to nature?
If rainfall patterns change due to climate change, plants and animals may nolonger survive in their original habitats. Plants whose seeds are dispersed by thewind or animals can eventually become established in new locations if they
have a suitable habitat. Animals can seek and migrate to livable habitats.
However, alpine plants and animals arelimited in terms of the environments towhich they can adapt, and may have noplace to find refuge.

Source: Ministry of the Environment,“Stop the Global Warming 2017.”

Changes in ptarmigan habitat due to global warming

Habitat(today)1°C warming!
(1°C above
baseline)

1°C warming!
1°C warming! Approx.
(2°C above(3°C above 80% decline
Approx.
baseline)baseline) in population

Approx.
10% decline
in population

50% decline
in population

Approx.
154 m higher

Approx.
308 m higher

Source: Prepared from Ministry of the Environment,“Stop the Global Warming 2017.”

What will happen to water?
While torrential rains are becoming more common, theannual number of days with rainfall has been declining. As aresult, water use restrictions are nearly an annual occurrence,and there are concerns about water shortages. In the future,
decreases in rainfall and snow accumulation will result indroughts, and there are concerns about durations becoming
longer and shortages more severe.
Water temperatures are increasing in 70% of rivers and lakes
in summer and 80% in winter. As a result, eutrophication andother water quality problems are expected to worsen.

Approx.
462 m higher
Extirpated on Mount Ontake
and Mount Norikura, andreduced to just 35 individuals
in Southern Japan Alps!

The dry Sakamoto Dam reservoir along the Higashino River,a tributary of the Kitayama River system (photo April 2011).

What about agriculture?
Agriculture has always survived by adapting to a variety of natural conditions, but if parameters such astemperature and rainfall change significantly, there will be many impacts on farming.
Warming has already resulted in lower rice quality and increases in diseases and pests, declines in fruit
production, and less robust livestock that are more susceptible to disease. Water is a crucial input for
agriculture, so droughts and torrential rains can have serious impacts on agriculture in the relevant
regions.

Rice grains appear white and cloudy
due to inadequate starch accumulation

Rice grains with cracked
endosperm

FY 2015 Global Warming Impact Study Report, Ministry of Agriculture, Forestry and Fisheries.
(http://www.maff.go.jp/j/seisan/kankyo/ondanka/attach/pdf/index-3.pdf )Summary for Policymakers, Working Group II contribution to Fifth Assessment Report of the IPCC.

6

Ministry of Agriculture, Forestry
and Fisheries, “Global Warming
Impact Study Report 2014”

Good color

Discolored

Source: Prepared from Ministry of the Environment, “Stop the Global Warming 2017.”

Projected impacts, by topic
What about major infrastructure?
Stronger typhoons mean greater risk from storm
surges in coastal areas, so there are projections ofimpacts such as greater damage to seawalls. Also,
there could be direct and physical damage to industrial
production and distribution facilities in coastal areas.
More frequent typhoons and flooding lead to concerns
about impacts on essential infrastructure that serves
day-to-day life such as highways, rail lines, and watersupply systems.

What about urban living?
Populations are concentrated in urban areas, so
incidents of flooding of underground shopping areas,
power outages, and rail and air travel service disruption due to record heavy rains can affect large numbersof people and cause enormous and costly damage tofacilities.
There are also concerns about negative impacts on
low-lying land and slopes from increases in thefrequency of disasters such as floods and landslides.
Also, where the urban heat island effect happens inaddition to climate change, the temperatures rise evenhigher in urban areas. In Japan, in less than a hundredyears from 1931 to 2014, the temperature rise was
1.4°C in small and medium-sized cities, and 2.0°C to
3.2°C in large cities.

What about human health?
As temperatures rise, mortality risk also rises, and thisphenomenon has already been confirmed around theworld. In Japan as well, the number of hospitalizedheat stroke patients every summer has been increasing.
Going forward, the frequency of heat waves is projected to increase, as well as the numbers of heat stress-related deaths and sufferers, in Tokyo and many other
Asian cities. In Japan, heat stress mortality risk is
projected to be 1.8 to 2.2 times higher in the 2050s
relative to the period 1980 to 2000, and 2.1 to 3.7 times
higher in 2100 (Climate Change Adaptation Information Platform).

Climate Change Starter's Guide

7

Why is climate change important?

3 What factors affect climate vulnerability?
Differences in vulnerability, by region
Developing countries are particularly vulnerable
The negative impacts of climate change tend to beparticularly serious for developing countries that lacksufficient response technologies and funds. Small islandstates such as Tuvalu and Kiribati in the South Pacific,
which only have a maximum elevation of about two
meters above sea level, are facing the threat of land loss
due to climate change-induced sea-level rise. That has
already been widely reported, but they also face a variety
of other vulnerabilities and impacts.

Vulnerability to
climate change
impacts

Developing
countries

Infrastructure is not adequately developed.
Cannot quickly recover from climate disaster damage.
Inadequate medical and health care facilities.
Cannot respond quickly to health impacts when they occur.
Agriculture is a core industry that employs many people.
Vulnerable to direct impacts of climate change.

Developed countries also feel impacts
Looking at examples of impacts that have alreadyoccurred, no one can say that developed countries aresafe from climate change. For example, homes in Europe
typically did not have air conditioners because summer
temperatures rarely got extremely hot, but more than
35,000 people died due to a heat wave in 2003. In thesummer of 2019, there were many reports of maximum
temperatures exceeding 40°C around Europe.

Vulnerability to
climate change
impacts

Developed
countries

8

Better equipped to deal with impacts of extreme weather, but it still takes time torecover from large-scale climate disasters.
Infrastructure has a difficult time keeping up with rapid changes in climate.
An aging society means a growing population will be vulnerable to health impacts,
including elderly persons living alone in cities.

Vulnerability of cities
This map shows ground surface temperatures in Japan recorded
at 3 pm on August 11, 2013. In large metropolitan areas including
Tokyo, Osaka and Kyoto, the temperature at this hour alreadyexceeded 50°C. It is projected that combined with the heat islandeffect, the larger the city, the more severe will be the effects ofextreme heat due to climate change.
Cities have a concentration of population and industrial activities,
so the increased scale and frequency of extreme weather events
due to climate change will tend to result in greater numbers ofpeople affected and higher costs of damage. At the same time,cities tend to have many alternative response options if problems
arise and recovery from damage can be quicker.
Vulnerability to
climate change
impacts

CitiesPopulation and economic activity is concentrated
in cities, so there is a tendency for the scale ofdamage to be larger.
Impacts affecting cities can spread to other regions
and countries.
When transportation is affected, alternative routes
or modes may be available, as long as the affectedarea is partial and limited.
Cities have many means of communicating information.

Vulnerability of rural areas
In contrast to cities, rural areas do not have as much populationand infrastructure exposed to impacts. However, villages canbecome isolated if roads are blocked by flooding, and heavyequipment may not have easy access to disaster affected areas
to help restore infrastructure, so recovery from damage can taketime and be slow to complete.
Economic disparities between urban and rural areas are large
particularly in developing countries, so crucial infrastructure
improvements might be delayed in some areas. In rural areas
many people depend on agriculture, making them more
vulnerable to impacts of disasters.
As climate change advances, there are concerns about thesekinds of impacts being exacerbated.
Vulnerability to
climate change
impacts

Rural areas

Source: Japan Meteorological Agency website

Damage from torrential rains in Kyushu (Aso, Kumamoto)Disaster recovery may be slower for infrastructure in remote areas.
Urban-rural economic disparities are larger especially in developing countries.
The agricultural population is larger in rural areas, making it more vulnerable to impacts.

Climate Change Starter's Guide

9

Why is climate change important?

Mountainous areas
Climate change is not the only factor that could result in slope collapses and landslides. However, theimpacts of human activities such as forest logging, land clearing and development, when combined with
the impacts of weather-related disasters such as torrential rainfall, can raise the likelihood of a landslide
occurring. There are also concerns about combined effects. A major earthquake occurring after torrential
or prolonged rain could have a greater chance of causing landslides if the rain has made the groundunstable.
Such threats are typically addressed through existing disaster prevention plans, but climate change canintensify such disasters. If climate change trends continue on the present course, the likelihood of slope
failure is projected to increase nationwide in Japan, outside the Kanto region.

National Slope Collapse Probability
MIROC
2081-2100
Source: Ministry of the Environment,“Stop the Global Warming 2017.”

Coastal areas
It is predicted that by 2100 more than 80% of sandy
beaches in Japan will have disappeared due to coastal
erosion from sea-level rise. There are predictions thatshorelines will recede by an average of 25 meters, andland area will be lost.
Buildings and structures located in coastal areas could
be submerged or more vulnerable to damage fromstorm surges. There are also concerns about increasedsalt-water damage to vegetation and buildings as salt
water intrudes upstream from estuaries and enterswater intakes.

10What are the impacts of climatechange in each business sector?
Points!

Where and how are the impacts of climate change affecting us? Let’s look a little
closer.
How will the sectors that support our daily lives be affected by climate change?
Which of the sectors are most relevant with climate change? We will see some ofthese impacts in our daily lives.

Business sectors directly vulnerable to the physical1 impacts of climate change
The Intergovernmental Panel on
Climate Change (see Chapter 4
for more on the IPCC) classifies
the impacts of climate change
broadly into eight categories,
summarized for this Handbook
as shown in Figure II-1.

1

8

Loss ofterrestrial
ecosystems

Sea-level rise
Storm surge(coastal, small islands)

2

Flooding(large cities,
inland areas)(loss of terrestrial and inland
water ecosystem-dependent
livelihoods )7

Loss ofmarineecosystems(impacts on fisheries,
esp. tropical and Arctic)

Major futurerisks(esp. drinking & irrigationwater in semi-arid regions)(electricity, water supply,
health services,
emergency services)

4

6

Water
shortages

3

Infrastructure
disruptions

5

Food
shortages

Mortality andillness due toheat waves(esp. vulnerable
urban dwellers,
outdoor workers, etc.)(threats to food security)

Figure II-1 Major risks to multiple sectors and regions
Source: Working Group II contribution to the Fifth Assessment Report of the IPCC.

There is not just one impact of climate change on industries that support our day-to-day lives. Individual
impacts can combine to have compound impacts, and all together these can have enormous
impacts. For example, floods and heavy rains affect all industry types, and when sea-level rise and storm
surges are also considered, it is impossible to say with confidence that you will be safe from impacts if you
are located away from a coastal area. The major damage caused by heavy rains and typhoons in recent
years has had broader impacts as a result of interruptions in transportation within Japan, as well as thetransport of imports and exports. This is still a fresh recent memory.
Continued globalization makes it essential to prepare response with a proper understanding of theextent and scope of impacts on supply chains in Japan and around the world.

Climate Change Starter's Guide

11

What are the impacts of climate change in each business sector?

Climate change and supply chains
The initial reason for attention being given to the linkages between climate change and supply chains
was their importance as a source of GHG emissions. That point is discussed in the latter half of thischapter.
In recent years, the importance of supply chains has also attracted attention as they are also affected byclimate change. A version of Figure II-2 will appear again in the second half of the chapter, but here itshows the flow from company procurement of raw materials for the manufacture of products, toprocessing, and then to the usage stage, and disposal.

Products & services
procured

Capital goods

Transport &distribution

Electricity, steam, heating,cooling procured
for company use

Investment
Leased assets

Fuel & energy-related
activities

Corporatefacilities
Processing ofproducts sold

EmployeecommutingFranchises

Corporate
vehiclesTransport &distribution

Waste frombusiness activities

BusinesstravelLeased assets
Use ofproducts
After-use
disposal
soldof products used

Figure II-2. Conceptual flow of supply chains

Source: Adapted from Ministry of the Environment “GHG Protocol, Technical Guidance on Calculation of Scope 3 Emissions.”

How impacts are interconnected
The impacts of climate change, besides
arising from changes in the actual
climate, also arise due to interconnections with trends of changes in society
itself. Among the impacts themselves,
there are direct impacts as well as
indirect and combined impacts. An
overview is provided in Figure II-3,
showing their complex interconnections.
Rather than explain each individual
impact in detail, here we focus on the
supply chain shown above. We look at
the sectors that are closely connected
to our daily lives, examining how they
are likely to be affected by climatechange, and also, which sectors are
emitting GHGs, which are driving
climate change.

12

ClimatechangeHeavy rain,
typhoons,strong winds

High waves,storm surge,
sea-level rise

Sectoral impacts(direct)
Natural disasters/coastal
Flooding, inundation,
overflow, landslides

Heavy snow,
snow accumulation
Heat waves,intense heat,cold waves

Agriculture/forests/fisheries
Rice, fruit

Sectoral impacts(indirect/combined)
Human casualties,
damage to equipment & facilities,
recoveryTransportation gridlock,urban facilities disruptions

Natural ecosystems
Water resources andwater environment
Drought, water shortages
HealthHeat stroke,
infectious diseases

Social trends
Seniors’ medicalcare, increased costsof medical care
Population decline,
aging of society,fewer children

Industry & economic
activity
Finance, insurance

Reduced imports of grains &raw materials.
Shortages of food & animal feed

Worsened labor conditions

Impacts on residents,
travelers, overseas visitors

Rising claims and premiums
Citizens, urban living

Complex pollution

Infrastructure, events,
local industries

Air, pollen, chemicals

Figure II-3. Inter-connections between climate change, social trends,
and sector-by-sector impacts

Primary industries, food industries

Major
impacts

Climate change affects all primary industries, such as
agriculture, forestry, livestock-raising, and fisheries. Alleight of the impacts depicted on the right are involved.
Below is a list of just some of the typical types of impacts.

81

Sea-level rise
Storm surge

Loss ofterrestrial
ecosystems

7

Loss ofmarineecosystems

Relatedimpacts

3

Infrastructure
disruptions

4

6
Water
shortages

2
Flooding

5

Mortality andillness due toheat waves

Foodshortages

Sea-level rise and storm surge: Saltwater intrusion of coastal farmland
Floods and torrential rains: Farmland and forest land damaged by flooding
Infrastructure disruptions: Unable to transport products, livestock feed, etc.
Heat stroke: Increased risk of heat stroke when working outdoors
Food shortages: Cannot produce enough or cannot deliver product
Water shortages: Cannot produce crops, cannot raise livestock
Marine ecosystem loss: Fisheries resources negatively affected
Terrestrial ecosystem loss: Forest products (timber, mushrooms, etc.) negatively affected

Points ofconcern

Speed of change
Primary industries have already faced many natural threats in the past. We have benefited
from agricultural products with improvements in crop varieties and growing methods to
produce products suited to the local environment, but some of this will have to change.
Productive zones for high quality rice have shifted northward, but there has also been
progress with improved rice varieties adapted to warmer temperatures. With fruit such as
mandarin oranges and apples, varieties cannot be changed as quickly, but some researchhas been under way on this for over ten years. Despite efforts, however, some regions andcrops may be unable to keep up with the pace and features of climate change.

Food importing countries
Japan is a country endowed with abundant water and productive soils, but as is commonly
known, it also has a low rate of food self-sufficiency and is heavily dependent on foodimports. As a result, climate change impacts that occur in countries that produce crops forJapan to import will also affect Japan directly. For
Will “food basket” countries like China andthe United States have crop failures?
example, what will happen if there is a prolonged
drought in a region of the world that serves as a“food basket” for Japan?
Figure II-4 shows how soybean and wheat harvests
were affected by warmer temperatures (climate
Soybeanchange) over the thirty-year period from 1981 to2010. Losses have been estimated at 13.6 billion
and 6.5 billion US dollars for wheat and soybean,
respectively.
If such losses occur frequently in many places inWheat
the future, not only will the industries that manufacture and process foods be affected, there will
also be other major impacts. For example, shipping
Figure II-4. Percent change in yields under a no-warming scenario (%) companies and trading firms doing the import andSource: Adapted from Iizumi T, Shiogama H, Imada Y, Hanasaki N, Takikawa H,
export of those products will also be affected.
Nishimori M. Crop production losses associated with anthropogenic climatechange for 1981–2010 compared with preindustrial levels. Int J Climatol.
2018;38:5405–5417. https://doi.org/10.1002/joc.5818.

Climate Change Starter's Guide

13

What are the impacts of climate change in each business sector?

Infrastructure and distribution

Major
impacts

Similar to primary industries, infrastructure and distribution
are inter-connected with many other sectors. Sea-level rise,storm surges, floods and heavy rains can cause damage that
directly disrupts infrastructure functions, and this could also
threaten human security.

8

1

Sea-level rise
Storm surge

2

Loss ofterrestrial
ecosystems

7

Loss ofmarineecosystems

Flooding

Infrastructure
disruptions

4

6
Water
shortages

3

Relatedimpacts

5

Mortality andillness due toheat waves

Food
Sea-level rise / storm surge: Damage to buildings, port facilities andshortages
other industrial facilities in coastal areas, or the actual loss of land
Floods and torrential rains: Damage to buildings, transportation, industrial and energy facilities
Infrastructure disruptions: Above impacts lead to disruptions of infrastructure functions,leading to major impacts on daily life
Heat stroke: Electricity cannot be supplied due to damage to power facilities, leading to morecases of heat stroke in summer and illness due to cold in winterFood shortages: Disruptions to the food supply chain
Water shortages: Reduced rainfall and damage to water supply facilities lead to shortages indrinking water and industrial water supplies

Points ofconcern

Intensified impacts and infrastructure service life
The infrastructure and distribution functions that support our daily lives have survived
many disasters in the past. But, weather disasters much larger than experienced in thepast are increasing in frequency today. Also, much of the infrastructure that was built
during Japan’s period of rapid economic growth in the mid-twentieth century is now halfa century old and starting to show signs of their age. The serious damage from a typhoonthat made landfall in Chiba in September 2019 may be one example that proves therelevance of concerns about aging infrastructure.
Global supply chains
Massive flooding in Thailand in late 2011 had ripple effects on industries in many countries of the world, including Japan. Global economic damage was estimated at 3.8 trillion
yen. More than half of the approximately 800 companies affected were Japanese corporations or their affiliates.
Going forward, when considering the impacts of infrastructure disruptions it will be
crucial to consider how to maintain stable supply chains. This work should not be delegated solely to national and local governments, but must also be considered by eachindividual company.

Impacts rippled out fromThailand across the world
Impacts of massive floods along
the Chao Phraya River in Thailand (2011)14

Tourism
8

Major
impacts1

Sea-level rise
Storm surge

2
Loss ofterrestrial
Flooding
There may be a tendency to understate the impacts on
ecosystems
tourism, compared to impacts on industries that provide
7
3
RelatedLoss of
Infrastructuremarinedisruptions
food, electricity, gas and other essentials for living. Never- ecosystems
impacts
theless, countries and regions whose economies depend
4
6Mortality andWater
on tourism can also be affected by climate change.
illnessdue toshortages
5 heat waves
Food
Pacific island states are finding that not only can theirshortages
tourism industries be affected by sea-level rise, they alsorisk the actual loss of land. In other countries, tourist areas that rely on winter sports arebeing affected by reduced snowfall.
Sea-level rise and storm surge: Damage to coastal natural areas and towns, and other touristic
resources
Floods and torrential rains: Damage to essential tourist-serving buildings, modes of transport,
communications, and energy facilities, etc.
Infrastructure disruptions: The impacts listed above could lead to disruptions of infrastructure
functions, leading to other major impacts on tourism.
Heat stroke: Changes in temperatures and rainfall in touristic areas could increase harmful
health impacts on tourists. Tourist numbers could drop as they seek to avoid risks.
Food shortages: Negative impacts on local specialty food items and other touristic resources
Water shortages: Reduced rainfall and damage to water supply facilities can lead to problems
including drinking water supply shortages in tourist areas.

Points ofconcern

The first concern is the severity of impacts on countries and regions with a high ratio of
tourism in the economic activity. In some cases new touristic resources can be developed
due to climate change, but in most cases, the history and nature of the region is being
used as tourism resource. If climate change means losing those resources, it could bevery difficult to recover. Also, residents who live or work in touristic areas will haveconcerns about impacts on themselves and their communities. Another concern is
impacts on the people who visit as tourists, who could experience health impacts or beaffected by extreme weather at touristic destinations. The magnitude of potential
impacts becomes clear when impacts on infrastructure affect core services that support
tourism. For example, consider the damage to Kansai Airport from Typhoon 21 in
September 2018 and Narita Airport from Typhoon 15 in September 2019. There areconcerns that such damage will increase in the future.

Problems in Oze and Nikko National Parks
Japan has many national parks where deer habitat is expanding, including the Southern Alps, Oze, Nikko, and Yoshino Kumano. The parks areexperiencing damage from deer eating the vegetation.
Because less snow is falling in areas where previously the snow cover
would have been deep, deer are now entering the areas for wintergrazing. There are concerns that local ecosystems may not recover fromdamage caused by grazing deer. The reduced snowfall is seen as one of
the impacts of climate change.

Net installed to keep deer out of Ozenuma in
Oze National Park

Climate Change Starter's Guide

15

What are the impacts of climate change in each business sector?

2 Industrial sectors that emit greenhouse gases
GHGs are emitted from human activities of daily life, but many emissions also come from the industries
that support them. Figure II-5 shows the latest sector-by sector data on CO2 emissions, which account for
92% of Japan’s total GHG emissions (fiscal 2017).

The industrial sector
accounts for largest shareof emissions

Oil refining,
electricity
generation, etc.

39.6% Iron and steel

Waste

2.4%

Industrial
processes

4.0%

HouseholdsectorEnergyconversion
sector7.7%

Factories

15.6%

Approx. 1.19
billion tons

Commercial(FY2017 indirect emissions)and other
sectors
Commerce, services,
offices, etc.
17.4%

Industrial
sector Breakdown

34.7%

14.7% Chemicals

of industrial
sector

12.4% MachineryTransportation
sector

17.9%

7.6% Ceramics &Automobiles,
etc.

paper,
5.6% Pulp,
paper products
4.9% Food, beverages

Figure II-5.
Share of Japan’s CO2 emissions sector-by-sector andbreakdown for industrial sector
Source: Prepared from Ministry of the Environment,“FY2017 Greenhouse Gas Emissions (Confirmed Numbers).”

clay/stone products

8.6% Other manufactured products
6.6% Non-manufacturing

Let’s have a closer look at the breakdown within the industrial sector.
About 40% of the emissions come from the iron and steel industry. Next come chemicals and machinery.
But it must be noted that these are only emissions from within Japan. In other words, these numbers onlyreflect the CO2 emissions from factories and facilities located in Japan.

16

GHG emission trends of Japanese companies
Now we return to a figure we introduced earlier in this chapter, the conceptual flow from company
procurement of raw materials for the manufacture of products, to processing, and then to the usage stage,
and disposal.
Emissions from companies are classified as Scope 1, Scope 2, or Scope 3.

Scope 1
Emissions from fossil
fuels consumed by acompany’s own
factories, offices, andcommercial vehicles

Scope 2Emissions fromelectricity and steam,etc., procured for use
by the company

Scope 3All other emissions
generated in thecompany’s value chain

For example, a company that uses a lot of heat for manufacturing processes will likely
operate boilers. A company that operates its own vehicles for construction or transporting goods will consume gasoline or diesel. The company’s Scope 1 emissions arecalculated using the quantity of fossil fuels consumed multiplied by an emission
factor* for direct consumption of fossil fuels in the company’s activities.
For example, the emission factor for the electricity purchased from a utility will be
determined depending on the type of generating plant operated by the power utility
that produces the electricity (each power utility publishes its own numbers). Using
these emission factors and the amount of electricity the company purchased fromthe utility, the company’s Scope 2 emissions can be calculated.
For example, this includes emissions during the use of devices or equipment manufactured and sold. Gradually, an increasing number of companies is now calculating
Scope 3 emissions, but there is a large range and scope of activities covered, so calculations are complicated. Thus, it is the progressive companies that are gradually
starting to calculate and publish these emissions.

* CO2 emission factor: Amount of CO2 emitted per unit when fuel is burned. The ratios of CO2 emitted for the same amount of thermal energy
are 10:7.5:5.5 for coal, oil, and natural gas, respectively.

Scope 1
DirectScope 2
Indirect

Scope 3
Indirect

Products & services
procured

Scope 3
IndirectTransport &distribution
Investment

Capital goods
Electricity, steam, heating,cooling procured
for company use
Fuel & energy-related
activities

Leased assets

Corporatefacilities
Franchises

Processing ofproducts sold

EmployeecommutingCorporate
vehiclesTransport &distribution

BusinesstravelUse ofLeased assets
products
After-use disposal
soldof products used

Waste frombusiness activities

Figure II-6. Scope 1, 2, 3
Source: Adapted from Ministry of the Environment “GHG Protocol, Technical Guidance on Calculation of Scope 3 Emissions.”

Seen in terms of these three scopes, what are the emission trends for Japanese corporations?

Climate Change Starter's Guide

17

What are the impacts of climate change in each business sector?

Note the different quantities inthe vertical and horizontal axes

(1,000 t-CO2/year)

450,000

Vehicles

400,000

Scope 3 type companies
have large emissions
from the total value chain

Scope 3 emissions

350,000

Companies with high levels of Scope 1 and 2
emissions are those that have high CO2 emissions from their own factories and facilities inJapan. For these companies, emissions arisingfrom the total value chain are not large compared to their Scope 1 and 2 emissions.

300,000

250,000

Electricalequipment

Energy200,000

150,000

Rubber100,000 Machinery

Scope 1 and 2 type companies
have large emissions from theirown factories & facilities

50,0000

The graph on the left shows the CO2 emissions
in 2017 from major tier-1 listed companies inJapan. The vertical axis shows Scope 3 and thehorizontal axis Scope 1 and 2 emissions.

Meanwhile, Scope 3 type companies have low
emissions from their own factories and facilities, but may have high emissions from the total
value chain, which may include emissions fromtheir products being used around the world.

Iron and steel Electricity
0

20,00040,00060,00080,000

Scope 1+2 emissions

100,000(1,000 t-CO2/year)(1,000 t-CO2/year)

50,000

EnergyHome appliances

45,000The lower graph is an enlargement of thecollection of yellow dots concentrated in thelower left corner of the upper graph.

Chemicals

40,00035,000

Scope 3 emissions

This group as well shows a divergence between
Scope 1 and 2 versus Scope 3 type companies.
Note the collection of blue dots in the bottom
left.

Gas

30,000Machinery
25,00020,000Electricalequipment

15,000CementLow-emission companies
have low emissions bothby the company and in
the value chain

10,0005,000
0The low-emission companies here are companies that besides having almost no emissions
from their own factories, have almost no emissions from the use of their products.
Starting on the next page, we will look at examples of each type of company.

Shipping

Air lines
0

5,000

10,00015,00020,000

Scope 1+2 emissions

25,000(1,000 t-CO2/year)

Figure II-7. Emission trends of Japanese companies

18

Scope 1 and 2 company examples

Detailed examples are also presented in Chapter VI.

Iron and steel
An enormous amount of coal is used as a raw material in the processes of manufacturing iron and steel.
As a result, the actual GHG emissions from these industries are significant. However, the production
efficiency of Japan’s iron and steel industry has been the highest in the world for many years. A variety ofenergy saving equipment has been developed and installed, and Japan also offers technical assistance toimprove the energy efficiency of companies in other countries. It is also important to pay attention to the
manufacturing processes and energy efficiency depending on the quality of the steel produced.
The topic of “avoided emissions” has attracted attention in recent years. For example, cars built using
strong, light steel produced through efficient processes will have better fuel efficiency than cars built
using heavier steel. This means avoiding a corresponding amount of CO2 emissions.
Progress is under way for practical applicationsof technologies using hydrogen instead of coal,and the Japan Iron and Steel Federation has
stated a goal of zero CO2 emissions from the ironand steel industry by 2100. In Europe as well,demonstration projects have started to test
steelmaking technologies that do not use fossil
fuels.

160
150
140
130
120
110
100
90
80

Japan

Korea Germany China

UK

FranceBrazil

India

RussiaUS

Source: “Estimated energy intensity in 2015,” RITE (index developed by Japan Iron and Steel Federation)

Figure II-8. International comparison of energy intensity
in iron and steel industry (Japan = 100)
Source: Japan Iron and Steel Federation, “The challenge for zero carbon steel.”

Night view of steel factory(Photo: JFE Holdings)

Examples of benefits of high-quality steel: Automobiles

Blast furnace plant

Examples of benefits of high-quality steel: Ships(Photo: NYK)

Climate Change Starter's Guide

19

What are the impacts of climate change in each business sector?

Examples of Scope 3 companies

Detailed examples are also presented in Chapter VI.

Electrical equipment manufacturing
For companies that manufacture electrical equipment such as air conditioners and televisions, theenergy used at their factories is not that large. Many processes involve assembling parts, and the factories
and processes themselves are very efficient. Companies like these are characterized by high Scope 3
emissions that occur when the equipment is used.
Scope 3 emissions began attracting more attention around the time of the Paris Agreement in 2015. Until
then, constraints such as excessively broad coverage and the complexity of calculations hindered
progress, so above all, domestic emissions in each country have been the main focus in setting CO2
reduction targets and measures.
This company has low emissions at theplant during manufacturing.
But today, companies that manufacture products are
expected to be more aware of their global emissions,
not just domestic emissions. The TCFD Recommendations stated that information regarding Scope 3
emissions should be disclosed if they are significant,so more attention is being directed toward theseemissions. In other words, the preparedness of companies to deal with Scope 3 emissions is becoming
very important.
Assembly line

CO2

CO2
CO2

CO2

CO2

Coal-fired
power plant

CO2
CO2

Coal-fired
power plant

Coal-fired
power plant

Scope 3 emissions when products are used in acountry with a high ratio of electricity from coal-fired
power generation

CO2

Solar farmWind farm

Emissions when products are used in a country
with a high ratio of renewable energy

If electricity supplied around the world shifts to low-carbon or zero-carbon, these
Scope 3 emissions will also decline.

20

Examples of low-emission companies

Detailed examples are also presented in Chapter VI.

Food industries, information industries, etc.
These types of companies do not emit much CO2 when manufacturing their products. Some companies
do not have their own factories. The products they manufacture and sell also do not account for a large
share of the CO2 emissions in the value chain. This type of company includes food and beverage
manufacturers, and information services providers.
Such companies probably find it less difficult to tackle climate change than those that have higher Scope
1, 2, and/or 3 emissions. Many are already making efforts to switch their power consumption to 100%
renewable energy, or to offset their CO2 emissions by purchasing renewable energy.
Some companies are also encouraging other companies in their supply chain to make efforts to reduce
CO2. For example, some are including emissions in their criteria for choosing parts suppliers.
Some companies can also use their products and services to help other companies reduce their own CO2emissions and/or adapt to climate change. Examples include tools that optimize the operating efficiencyof energy-consuming equipment to achieve significant energy savings, and systems that monitor riverwater levels to detect a potential flood and generate an alarm. Such measures and technologies are
expected to make further advances as more companies engage in businesses based on climate change
measures.

Equipment

Control equipment
Equipment

Monitoring equipment to optimize operations

Flood monitoring system
Source: NEC (https://www.nec.com/en/global/eco/climatechange/adaptation/02.html)

Climate Change Starter's Guide

21

What are the impacts of climate changeon the life insurance industry?
Points!

The impacts of climate change on human life are a major issue for the life
insurance industry. These topics continue to be studied.
At the same time, climate change is a relevant factor for the assets held byinsurers in their role as institutional investors.

Life insurance companies have two major aspects of their business—as life insurers and as institutional
investors. This chapter gives an overview of the impacts on both aspects.

1 Impacts on life insurers (mainly physical risks)
Climate change impacts on human life and healthAs shown in Chapter 1, climate change has impacts on everything from human health to mortality rates.
Figure III-1 shows the situation of impacts of changes due to climate change on many aspects of humanhealth. In addition to things like increases in illnesses and mortalities due to extreme heat and disease
vectors, some of the many other examples include deterioration of air and water quality, and impacts on
mental health and potential forced migration.

Figure III-1. Impact of climate change on human health
Source: Adapted from Center for Disease Control and Prevention (https://www.cdc.gov/climateandhealth/effects/default.htm)

22

Ninety percent of major natural disasters that occur around the world areweather-related disasters (Figure III-2).
As climate change progresses, thesekinds of weather disasters are expected
to increase everywhere. Many factors
besides climate change can affecthuman life and health. Some are natural and some are human-caused, but
the impacts of these factors could befurther intensified by climate change,
and new impacts not seen before could
also arise.

450
400
350
300
250

90% of natural disasters overthe past 20 years were weather-related

200
150
100
50
0
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Geophysical (earthquake, landslide, etc.)

2009

2010

2011

2012

2013

2014

2015

Weather-related disasters

Figure III-2. Trends in the number of disasters by major category
Source: CRED, UNISDR, “The Human Cost of Weather-Related Disasters 1995-2015.”

What has the greatest impact?

Looking at the factors affecting
human mortalities due to natuFloodral disasters over the past twenty
Drought
Landslide & Wildfire
years, the largest is storms,
followed by extreme temperatures. Among 164,000 deaths
from extreme temperatures,
148,000 (90%) were due to heatwaves. Deaths from flooding are26%
similar in magnitude.
157,000
Storm

Extreme temperature

27%

40%

164,000

242,000
4%
22,0003%
20,000Figure III-3.
Numbers of people killed bydisaster type

Source: CRED, UNISDR, “The Human Cost of Weather-Related Disasters 1995-2015.”

Table III-1. Events and victims of natural disasters worldwide (1995-2015)
Type of disaster

Number of occurrences

People affected

Deaths

Cases

Percent

Million persons

Ratio

Thousand persons

Ratio

Flood

3,062

43%

2,300

56%

157

26%

Storm

2,018

28%

660

16%

242

40%

Earthquake

562

8%

-

-

-

-

Extreme temperature

405

6%

94

2%

164

27%

Drought

334

5%

1,100

26%

22

4%

Landslide387

5%

Forest fire

251

4%

8

0.2%

20

3%

Volcanic activity

111

2%

-

-

-

-

Total

7,130

Total weather-related disaster

6,457

4,160

605

Source: CRED, UNISDR, “The Human Cost of Weather-Related Disasters 1995-2015.”

Climate Change Starter's Guide

23

What are the impacts of climate change on the life insurance industry?

Where will the impacts be the greatest?
Fundamentally, human health and mortalities are associated with many other factors besides climate.
And since projections of climate change also involve uncertainty, it is not a simple task to evaluate andproject the precise impacts of climate change. In addition, the vulnerability to climate change impacts
such as intensification of weather-related disasters can vary significantly with factors such as a person’sage, economic status, country and region. Research is ongoing in countries around the world to better
understand the kinds of impacts that will arise, where, and how to identify and evaluate them.
High resilience
High risk
Figure III-4.
Pathofsocioeconomic
ClimatechangeandMultiple aspects ofdevelopment
responses to climate changeHighvulnerability determinedby combinations ofcharacteristics of inequality
Capacity andMultiple aspects
opportunities

The vulnerable and poor*
have high risk from climatechange. Conversely, theprivileged have low risk andhigh resilience.

of vulnerability*For example, for health impacts
from climate change, this refers to
the elderly and socially isolated.
Similarity markers andcharacteristics of inequality

Low
Privileged

Vulnerable,
poor

Population

GenderSocial class
Ethnicity
Age
Race
Disabilities (yes/no)

Combination ofcharacteristics
of inequality

Source: Adapted from summary of the Working Group II (Impacts, Adaptation, Vulnerability) contribution to
the Fifth Assessment Report of the IPCC; including content from Ministry of the Environment.

What about impacts in developed countries?
Natural disasters can occur anywhere in the world (Figure III-5, left), but the numbers and ratios of people
affected by disasters will be different in developed countries, which have better-developed infrastructure, medical care and insurance, etc. Figure III-5, right shows that the high number of weather-disaster
deaths in developed countries was mainly due to heat waves.
185,896 deaths

53,490 deaths

13%

9%

29%

30%

31%

Number of
weather-related
disasters perincome group28%

304,639 deaths

50%

Number of deaths
per income groupfor weather-related
disasters

High income group
Upper middle income group
Lower middle income group
Low income group10%

61,514 deaths

Figure III-5. Number of weather-related disasters and deaths per income group*Smaller numbers for the low income group are due to lack of available data.
Source: Adapted from CRED, UNISDR, “The Human Cost of Weather Related Disasters 1995-2015.”

24

The high number
of weather-related
deaths inhigh-income
countries were due
to heat waves

The use of air conditioning is a basic means of mitigating theimpacts of extreme heat. In developed countries, people cantypically obtain air conditioners more easily than indeveloping countries. Also, warmer winter temperatures are
expected to have the positive effect of reducing the numberof deaths from cold waves.

Excess mortalities (%)

5Southeast Asia (71 locations)

Excess mortalities (%)

105Southern Europe (63 locations)15-10,000

5

0
2030

2050
Year

2100

2030

2050
2100
Year

Figure source: adapted from Schwartz et al., Projections of temperature-attributablepremature deaths in 209 U.S. cities using a cluster-based Poisson approach 2015

1990s
2010s
2030s
2050s
2070s
2090s

0

1990s
2010s
2030s
2050s
2070s
2090s

10,000

10

1990s
2010s
2030s
2050s
2070s
2090s

MIROC5

Excess mortalities (%)

Changes in mortalities

10

0

20,000-20,000

Excess mortality due to heat15

The examples from the United States compare values withthe year 1990 in 209 cities. The summer (April to September)increase in deaths is projected to be greater than thedecrease in deaths in winter (October to March).
30,000

Excess mortality due to cold0

Recent research, however, projects that, in Europe and theUnited States, rising mortalities from extreme heat and heatwaves will have a negative impact that more than offsets thedecline in deaths from cold waves (Figure III-6, Figure III-7).

GFDL-CM3

North America (161 locations)15

RCP2.6

RCP4.5

RCP8.5Figure III-6. Warming scenarios andmortalities to 2100

Figure III-7. Projected mortalities by season in United States
cities Changes in mortalities

Source: Adapted from Gasparrini, A. et al., Projections oftemperature-related excess mortality under climate change
scenarios, Lancet Planet Health 2017; 1: e360–67.

Source: Crimmins, A. et. al., Executive Summary. The Impacts of Climate Change on
Human Health in the United States: A Scientific Assessment, USGCRP, 2016.

What will happen in Japan?
In Japan as well, the intensity of extreme heat is already being felt each year. Heat stroke deaths are on
the rise, and other impacts are becoming evident, such as expanded range of disease vectors.

Male

Temperature variation

Mortalities (persons)Variation in averagesummer temperatures
FemaleThe Asian tiger mosquito
habitat is within the青森
zone of annual averagetemperatures of 11°C or 八峰
higher. This range is能代moving northward with
秋田
global warming.
本荘

酒田

八戸(2009,2010, 2011)
盛岡( 2009～)
花巻(2007～）
2010年

横手

宮古(2007)
大槌(2011～)

新庄

気仙沼
2000年

山形

石巻

会津若松

仙台

Year
Source: Ministry of Health, Labour and Welfare, Annual mortalities fromheat stroke: “Vital Statistics.”
Temperature variations: Prepared from Japan Meteorological Agency:
http://www.data.jma.go.jp/gmd/risk/obsdl/index.php

Figure III-8. Trends in annual mortalities
from heat stroke
Source: Ministry of the Environment, “Stop the Global
Warming 2017.”

白河～1950年

軽井沢
日光100 Km

確認地
未確認地

東京

Figure III-9. Expanding range of the Asiantiger mosquito (Aedes (Stegomyia) albopictus)
Source: Global Warming Impact Integrated Projection
Project Team, Global Warming Impact Assessment/
Adaptation Policy Integrated Research 2014. Report“S-8 Global Warming: Impacts on Japan”

Source: Ministry of the Environment, “Climate Change
Adaptation Information Platform” portal site.

Figure III-10. Line of 20°C sea
surface temperature in August
and areas of disease outbreaks
from vibrio vulnificus bacteria
Source: Ministry of the Environment,“Stop the Global Warming 2017.”

Climate Change Starter's Guide

25

What are the impacts of climate change on the life insurance industry?

It has been predicted that in the absence of aggressive GHG emission reduction measures, the numberof hospitalized heat stroke patients will increase nationwide (Figure III-11).
Climate change projections
Topic: Number of hospitalized heat stroke patients
Target period: End of 21st century (2081 to 2100)

Aggressive
climate action(RCP2.6)

No aggressive
climate action(RCP8.5)
8 to 10 fold
6 to 8 fold
4 to 6 fold
3 to 4 fold
2 to 3 fold
1.8 to 2 fold
1.6 to 1.8 fold
1.4 to 1.6 fold

8 to 10 fold
6 to 8 fold
4 to 6 fold
3 to 4 fold
2 to 3 fold
1.8 to 2 fold
1.6 to 1.8 fold
1.4 to 1.6 fold

• Climate model: MIROC5• Grid resolution: Prefectures• Multiples are relative to “1” for hospitalized heat stroke patients using 1981-2000 as the baseline period.
All of the projections provided on this site are based on specific scenarios, and the actual outcomes could differ due to various factors(uncertainty).

Figure III-11. Examples of projected impacts/SCENARIOS
Source: Ministry of the Environment, “Climate Change Adaptation Information Platform” portal site.

Multiple

15

Without
adaptation

Model
MIROC5
MRI-CGCM3.0
Magnitude of change

The increase in hospitalized patients will
also lead to an increase in mortalities. In theabsence of aggressive climate actions,deaths from heat stress could increase
four-fold to thirteen-fold nationwide by theend of the century. If appropriate actions
are taken, it is projected that this increase
could be limited to less than two-fold.

10

GFDL CM3
HadGEM2-ES
Grey: With climate
adaptation

5
With
adaptation

0

R2.6 R4.5 R8.5
2031-2050

R2.6 R4.5 R8.5
2081-2100

Source: Global Warming Impact Integrated Projection Project Team,
Global Warming Impact Assessment/Adaptation Policy Integrated
Research 2014. Report “S-8 Global Warming: Impacts on Japan”

Figure III-12. Increase in excess mortalities from heatstress (totals for Japan)
Source: Ministry of the Environment, “Stop the Global Warming 2017.”

26

2 Impacts on institutional investors
What are transition risks for life insurers?
Besides physical risks, major impacts of climate change facing life insurers as institutional investors
include changes associated with the transition to a low-carbon or decarbonized society. These arereferred to as “transition risks.” Here we look at the transition risks life insurance companies face in theirroles as institutional investors.
GHG emissions from the actual business activities of life insurance companies are very limited. Most of
those emissions are probably related to electricity used for things like office lighting and air conditioning,plus the use of gasoline for employee commuting and mobility. But in their roles as institutional
investors, it is important for life insurers to know about GHG emissions from the companies in which they
invest or provide financing. In other words, the investment portfolio.
There are five main types of transition risk.1

Public policy
andregulation

New policies and regulations related to climate change (e.g., emissions trading)will affect the business of companies in a portfolio.

Technology

As we have seen with rapidly decreasing costs of solar panels and batteries,
technological advances reduce costs and the rapid spread of those technologies
will change existing markets, affecting asset values.

Investor
preferences

Changes in market sentiment to avoid carbon risks and divestment (described
below) will affect asset values.

Disasters caused by extreme weather will not only affect market forecasts andSevereweather-related market sentiment, but also lead to rapid regulatory and public awarenessdisasterschanges, which will also affect asset values.
Research progress on the phenomenon of global warming will reduce uncerAdvances inclimate science tainty. As a result, the basis for the 2°C emission reduction target will be reexamined, for example, and projections of asset risk will become more accurate.

Life insurers typically hold assets for the long term, so as institutional investors, life insurers will see theirassets directly affected by climate change over the long term.
1 PRA 2015, The impact of climate change on the UK insurance sector - A climate change adaptation report by the Prudential Regulation
Authority

Climate Change Starter's Guide

27

What are the impacts of climate change on the life insurance industry?

In the short term, transition risk will be one of thelargest factors affecting asset value, but over the
medium to long term, the impacts of physical risks
from climate change affecting asset values andeconomic performance will be greater than transition risk. In the longer term, the physical risks fromclimate change are expected to become significantly greater and affect investment performance morethan transition risks. It is important for insurers tocarefully understand and monitor these trends
affecting their investments and financing.
Many life insurers may have invested in or financed
companies that consume a large amount of fossil
fuels in the course of doing business and companies
in industries that depend on fossil fuels. Sectors
including iron and steel, electricity, chemicals, petroleum and coal, automobiles, and general trading
companies were listed in a July 2019 survey of members of the Life Insurance Association of Japan as
industries that should receive attention in engagement on the Task Force on Climate-related Financial
Disclosures (TCFD) described in Chapter V.
These companies, as we saw in Chapter II, provide
crucial infrastructure for day-to-day life and underpin the activities of society today. They consume
fossil fuels for their business activities and as a result
emit large amounts of GHGs. As one would expect,many are making an effort to reduce their own emissions, but the higher their emissions the more attention they attract for concrete measures they aretaking to deal with emissions.

What is a stranded asset?
To achieve the 2°C target of the Paris Agreement (seeChapter IV), about 70% of proven fossil fuel reserves
cannot be burned (Figure III-13). The term “stranded
asset” refers to this portion of a company’s listed
assets that represent carbon that cannot be released.
Around the world, some institutional investors havedeclared a policy of making no new investments incompanies that hold such assets, and divesting fromany such companies if they hold any of them.
Reserves
2.9 trillion t-CO2
Emission budget
Approx. 1
trilliont-CO2(870 billion to
1.24 trillion t-CO2)

Figure III-13. Fossil fuel(carbon) reserves andemission budget tomeet 2°C target(units: CO2 equivalent)

Source: IPCC, 2018: Global Warming of 1.5°C, and Adapted from
McGlade, C. and P. Ekins, 2015: The geographical distribution of fossil
fuels unused when limiting global warming to 2°C. Nature, 517 (7533),
187-190.

Definition of short, medium and long term
The definition of “short-term,” “medium-term,” and“long-term” is different for corporate activities versus
climate actions. A company’s short-term activities arenormally considered to be within one year, and a
medium-term plan would be three years. For climate
actions, however, “medium term” is considered to beabout 10 to 30 years, and “long-term” projections are
typically for the years 2050 and 2100.
In response to climate change, companies are
required to take actions with a long-term perspectivethat differs from their conventional business definition of long term.

How do others see the financial sector?
Increasingly, companies in the financial sector are disclosing how they are dealing with their fossil fuel-related assets. Internationally and in Japan, a number of companies in the insurance industry have clearly
articulated their stance.
Reflecting these developments, there are now also projects that compare, evaluate and rank company
responses to climate change based on reports published by major insurance companies. Some NGOs arealso active, saying that those efforts are not yet sufficient and that much more progress is needed.

28

With significant influence as long-term institutional investors, life insurers are the focus of muchattention and need to understand such trends in society. The box below provides examples of climate
risks associated with insurance operations and activities. “Reputational risk” is one of these. Life insurers
need to understand such public attention, criticism, and external evaluation, and to respond
appropriately. In responding to external factors such as these, it might be important for Life Insurance
Association of Japan members to work collaboratively and move forward with careful actions.

Examples of climate risks across various insurance operations and activities
The “Issues Paper on Climate Change Risks to the Insurance Sector,” prepared by the International Association of
Insurance Supervisors (IAIS) and Sustainable Insurance Forum (SIF) together with the United Nations Environment
Programme (UNEP), describes the following climate risks for insurance operations and activities.

Physical and transitional risks can pose a variety of strategic, operational and reputational risks to insurers acrossunderwriting and investment businesses. Some of the climate factors are long-term in nature, but many havealready proven to be important to businesses. These are listed below.
Underwriting risk

Investment risk

Climate change is already affecting the frequency andconcentration of high-impact natural catastrophes
around the world, leading to increases in weather-related insurance claims.

If climate-related risks significantly disrupt capital
markets, insurers’ solvency to cover anticipatedclaims could be significantly affected.

Strategic risk

Market risk

Risks arising from climate events or (internal or external) scenarios may present challenges to insurers’
achievement of strategic goals. Examples include
losses due to inappropriate strategies related toclimate goals, risks associated with poor managementof future plans, or failure to respond to transition
factors affecting the industry landscape.

Insurers’ capacity to underwrite may be constrainedby increased physical risk to assets as risk-based
pricing rises beyond demand elasticity and customer
willingness to pay. Market contractions could further
exacerbate barriers for consumers to accessinsurance.

Operational risk

Reputational risk

Physical climate-related factors could affect insurers’
own assets (property, equipment, IT systems, humanresources, etc.) and lead to increased operating costs,
inhibited claims management capacity, or potential
stoppages of operations.

In recent years, underwriting or investment in sectors
perceived as contributing to climate change has
emerged as a civil society issue. Examples include
prominent social movements calling for divestment
from fossil fuels and the cessation of underwriting of
coal-fired power generation infrastructure.

The impacts of climate change on insurers depend on their core underwriting business areas and investment
allocation strategies. However, in the long run, climate change will have implications for all insurers through either
their underwriting or investment activities.

Climate Change Starter's Guide

29

What is the global community
thinking and doing?
The importance of climate change was recognized by the global community
Business
about 30 sectors
years ago. directly vulnerable to the physicalimpacts
climatechangeThe Parisof
Agreement
is a significant
achievement, with all participating countries

Points!

1

committing to emission reduction targets.
Readers may wish to bookmark these pages as a handy reference on what drove
investors to start taking action, and what direction the global community is
taking, etc.

What is happening with international negotiations?
From the Kyoto Protocol to the Paris Agreement

Kyoto Protocol
Climate change was discussed at the “Earth Summit” organized in 1992 by the United Nations in Rio deJaneiro, Brazil, resulting in adoption of the UN Framework Convention on Climate Change (UNFCCC).
International negotiations on the topic of climate change were conducted through the Conference of theParties to the Framework Convention on Climate Change (COP). Scientific knowledge underpinning theinternational negotiations has been provided regularly by the Intergovernmental Panel on Climate
Change (IPCC) established in 1988.
In 1997, the Kyoto Protocol was adopted at the Kyoto Climate Change Conference (COP3) in Japan. It
established the goal of reducing GHG emissions from developed countries by 5% relative to 1990 overthe five year period from 2008 to 2012. However, in 2001 the United States, the world’s largest emitter at
the time, announced it would not ratify the Protocol. Under the Kyoto Protocol, agreement was reachedon the rules for the “Kyoto Mechanisms,” which included carbon emissions trading between developed
countries, and the Clean Development Mechanism. Under the CDM, developed countries could provide
funding and technology to developing countries for renewable energy and energy efficiency projects inorder to reduce emissions in developing countries, and have those reductions counted as reductions by
developed countries. As a result, the pace of carbon emissions trading and CDM activities accelerated.
However, the global financial shock that occurred in 2008 had a major impact on international climate
negotiations. Economic activity slowed as a result of the economic downturn, and GHG emissions fromenergy use also dropped. As a result, trading activity dropped as buyers lost interest in carbon
emissions trading under the CDM and similar trading mechanisms, which had mostly involved
governments and large companies in developed countries. Prices fell from over fifty dollars to about one
dollar per ton of CO2. Despite these circumstances, the first commitment period of the Kyoto Protocol
ended with all parties achieving their goals.

30

Paris Agreement
Discussions on an international framework to replace the Kyoto Protocol from 2020 onward started at
COP meetings around 2011, leading to the Paris Agreement being adopted at COP21 in Paris in 2015. The
Paris Agreement has the following goals:

the increase in the global average temperature to well below 2°C above pre-industrial“1. Holding
levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial
levels.
2. Aiming to reach global peaking of greenhouse gas emissions as soon as possible … and toundertake rapid reductions thereafter … to achieve a balance between anthropogenic emissions by sources and removals by sinks (including forests) of greenhouse gases in the second
half of this century.

”* The Industrial Revolution was a restructuring of industry and society in the latter half of the eighteenth century. Historical temperatures are
not well documented, but the IPCC uses the average temperature from 1850 to 1900 to provide reliable temperature data when referring to
the extent of global average temperature rise.

Item 1 above is generally referred to as “the 2°C target.”
The Paris Agreement is a framework that calls on all participating countries, including both developed
and developing countries, to make efforts to reduce emissions. It is a landmark international agreementof historic importance. Under the Kyoto Protocol, only developed countries set reduction targets, and thefact that it accounted for only about 30% of global emissions was a major issue. However, even though
the United States announced its withdrawal in 2017, the Paris Agreement still applies to more than 80%
of global emissions.
Unlike the Kyoto Protocol, which only regulated total emissions in developed countries, under the Paris
Agreement each country can determine its own method of setting reduction targets. The targets varycountry by country. Some countries, Japan included, focus on total emissions. For example, Japan’s target
is to reduce total CO2 emissions by 26.0% in 2030 compared to 2013. China’s target is to reduce CO2
emissions per unit of GDP by 60% to 65% in 2030 compared to 2005. Korea’s target is to reduce emissions
by 37% in 2030 compared to a business-as-usual scenario. A major theme of ongoing international
negotiations relates to who will do what further amount of emission reductions in order to reach the 2°C
target between 2030 and 2050.

Other
20.3

2000

United States
24.3

Saudi Arabia 1.2
Brazil 1.2
Poland 1.3
Approx.
Spain 1.3
23.6 billion tons
Iran 1.3(CO2 equivalent)
Ukraine 1.4
China
(%)
South Africa 1.5
14.2
Mexico 1.5
Australia 1.5
France 1.6
Russia6.1
Italy 1.9
Japan
Korea 1.9
5.1
Canada 2.2
India
UK 2.4
4.1
Germany 3.6

Other
20.4
France 0.9
Poland 1.0
Italy 1.0
Turkey 1.2
UK 1.2Australia 1.2
Brazil 1.2
South Africa 1.3
Mexico 1.4
Indonesia 1.6
Canada 1.6
Saudi Arabia 1.7
Iran 1.9
Korea 2.1
Germany 2.1

2018

China
28.0

Approx.
33.6 billion tons
(CO2 equivalent)(%)
United States
14.9
India
Russia 7.4
Japan 4.6
3.4

Figure IV-1. Global CO2 emissions and ratios, by country
Source: Prepared from Global Note (www.globalnote.jp )Climate Change Starter's Guide

31

What is the global community thinking and doing?

2 What is Japan doing?
Japan’s emissions declined significantly in 2009
and 2010 due to the global financial crisis. After the
Tohoku earthquake and tsunami disaster of 2011,
emissions increased due to the shutdown ofnuclear power plants in Japan and a significant
increase in the use of thermal power plants.
Despite the big increase, however, Japan achieved
its target for the first commitment period of the
Kyoto Protocol.

Million tons (CO2 equivalent)
1500
Carbon dioxide (CO2)1450

Methane (CH4)

Nitrous oxide (N2O)

4 CFC alternatives

Compared to 2013

1400
1350
1300
1250
1200
1150

As for the Paris Agreement, Japan’s target is to 1100
reduce GHG emissions by 26.0% in 2030 from the 1050
level in 2013. In June 2019, Cabinet adopted 1000
1990
1995
2000
2005
2010
2015 Year
Japan’s “Long-term Strategy under the Paris
Figure IV-2. GHG emission trends in Japan
Agreement“ and is proceeding with actions. The
Source: Prepared from data by the National Institute for Environmental Studies
strategy mentions cross-sectoral measures torealize a “virtuous cycle of environment andgrowth,” and these include the “promotion of innovation”, the “promotion of green finance”, “business-led
promotion of international application (of green technologies), and international cooperation.”
The “promotion of green finance” includes sections on “mobilizing finance through disclosure including
the TCFD and dialogue,” and “promoting initiatives to expand ESG finance.” In other words, companies
and financial institutions are expected to be key players in Japan’s efforts under the Paris Agreement,
unlike the Kyoto Protocol where the government played a leading role. Notably, the TCFD Consortium(see page 45) - Japan’s original organization created in June 2019 - serves as a forum for dialogue
between financial institutions and companies, and is expected to lead global disclosure efforts bydeveloping and updating guidance for financial institutions and companies.

3

What are investors doing?

The PRI (Principles for Responsible Investment) are an important example of international activities thatare motivating investors to take action on climate change. The PRI are voluntary investment principles
created in 2006 under the leadership of the United Nations Environment Program’s Finance Initiative(UNEP-FI), in response to an appeal by Kofi Annan who was then the UN Secretary-General. These
principles call for environmental, social and governance (ESG) considerations to be incorporated into
investment decision-making processes.
It has become common practice for investors making ESG investments to endorse the PRI. The number ofsignatories has continued to rise since 2006, and more than 2,200 organizations have signed as of theend of 2018, including more than 70 from Japan. Once an organization has signed the PRI, the PRISecretariat assesses its efforts on a scale of A+ to E once a year.

32

Examples of the types of assessment criteria include “strategy and governance,” “listed equity,” and“bonds.” It is expected that investors such as life insurers, asset managers and pension funds will makegreater efforts to address climate change through efforts to raise their PRI scores.
Some organizations among the investors who have signed the PRI are taking the initiative to attract
partners and engage in joint efforts. One example in the area of climate change is Climate Action 100+.
This is a global initiative of 100 companies and institutional investors who have a significant impact onsolving global environmental problems such as climate change. They are promoting constructive
dialogue on information disclosure and efforts to reduce GHG emissions. Ten of the 100 companies arefrom Japan.

4 What are companies doing?
Under the Kyoto Protocol, the main activities of companies were related to the CDM and other carbon
emission trading schemes. Notable in Japan were companies that acquired carbon emission credits
based on Keidanren Voluntary Action Plans, and the trading companies and securities companies thatpurchased those credits. In recent years, there has been an increasing number of companies declaring
and implementing their own measures to tackle climate change, in response to the increasing investor
involvement in ESG investment, thanks to the penetration of the PRI. Renewable Energy 100% (RE 100) is
an initiative in which member companies declare a target of sourcing 100% renewable energy to cover
the energy they need for business operations. As of September 2019, there were 193 member
companies, of which 22 were from Japan.
The number of green bonds issued by companies and local governments to raise funds for green projects
is also on the rise internationally. According to results published by the Climate Bonds Initiative (CBI), aninternational NGO in the UK, green bonds issued worldwide increased from 3.1 billion US dollars in 2012
to 167.6 billion in 2018. In Japan, the value of green bonds issued rose from about 200 billion yen in 2017
to over 500 billion yen in 2018, and the number issued more than tripled.

5 What are NGOs doing?
Independent bodies are increasingly active in evaluating climate change initiatives of investors andcompanies. CDP is one example. Its predecessor is the Carbon Disclosure Project, established in the UK in
2000. With the aim of promoting low-carbon efforts by companies, it has been collecting and analyzing
climate change related information of the world’s leading companies from the perspective ofmanagement risk, evaluating the results in eight stages, and disclosing the results to institutional
investors. Originally, it only targeted climate change, but in recent years it has expanded to water andforest resources. In 2018, more than 7,000 companies, accounting for more than 50% of global market
capitalization, disclosed environmental data through the CDP platform. CDP participates in the TCFD asan observer and since 2018 has incorporated TCFD recommendations into the questionnaire it sends tocompanies.

Climate Change Starter's Guide

33

What is the global community thinking and doing?

From the perspective of third-party evaluation of life insurers, several other NGOs also investigate andreport or evaluate the climate risk of institutional investors, either independently and in cooperation withothers.

6 What will the world do next?
There was another major move on the global scene in 2015 when the Paris Agreement was adopted: theSustainable Development Goals (SDGs) that were adopted at the UN Sustainable Development Summit
in September 2015. The SDGs consist of 17 international goals, and among them, Goal 13 has the themeof Climate Action, with the message being “take urgent action to combat climate change and its impacts.”
Other goals are also related to climate change and are linked to actions for the Paris Agreement. For
example, Goal 7 calls for “Affordable and Clean Energy.” Thus, with the adoption of the Paris Agreement
and the SDGs, it is now recognized that the rules by which the world operates have made a dramatic shift
in the direction of a low-carbon society. In the next several years, we can expect to see a variety ofdevelopments around the world as more and more stakeholders work individually and/or collectively inthis direction.
In the financial sector, the actions of central banks and financial supervisory authorities are also
attracting attention. For example, the Network for Greening the Financial System (NGFS) was establishedin December 2017 by financial authorities of countries around the world. It has the aim of supporting,from the financial dimension, the development of environmental and climate risk management in thefinancial sector and the transition toward sustainable economies. Japan’s Financial Services Agency is amember of the NGFS, and it is considering how financial supervision can address climate change risks.
Many will be monitoring its future discussions.

34

Understanding the TCFD
Recommendations
Points!

The TCFD is a task force created to address climate change-related risks tofinancial stability.
The TCFD Recommendations encourage companies to examine the risks andopportunities of climate change in terms of impacts on their own businessactivities, and to disclose the findings in their financial disclosures.
The TCFD Recommendations consist of four main pillars (governance, strategies,
risk management, and metrics and targets) and provide sector-specificrecommendations on disclosures.

1 Why was the TCFD created?
The TCFD was in response to the perception among the finance ministries and central banks of major
world countries that climate change-related issues could potentially be as large a destabilizing factor in
financial markets as the financial crisis of 2007 and 2008. They viewed climate change as the next
potential threat to financial stability.
In his “Breaking the Tragedy of the Horizon: Climate Change and Financial Stability” speech in September
2015, Mark Carney, then the chairman of the Financial Stability Board (FSB) of the Bank for International
Settlements, aptly explained the relationship between financial markets and the risk of climate change:“

The horizon for monetary policy extends out to 2-3 years. For financial stability it is a bit
longer, but typically only to the outer boundaries of the credit cycle – about a decade. In
other words, once climate change becomes a defining issue for financial stability, it may
already be too late.

”

Mr. Carney also said that international insurance companies were already experiencing enormous losses,
including asset losses, from extreme weather disasters.
In April 2015, the Group of 20 (G20) Finance Ministers and Central Bank Governors formally requested
that the Financial Stability Board (FSB) bring together public- and private-sector stakeholders to examine
how the financial sector can take account of the impacts of and responses to climate change as a crucial
topic for global financial markets. In response, in December that year the FSB established the Task Forceon Climate-related Financial Disclosures (TCFD), chaired by former New York mayor Michael Bloomberg.
The FSB, consisting of representatives from finance ministries and central banks of member countries,
thus began in earnest to tackle the issue of climate change as a potential future threat for financial
markets.
To protect financial markets from the impacts of climate change, it is important to identify assets that
could be affected. It is also important to support businesses to make a quick transition to the low-carbon
economy. The FSB asked the TCFD to develop standards and frameworks that could assess the risks andopportunities of climate change (business risks and new business opportunities) on the companies inwhich the financial sector is invested.

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35

What is the global community thinking and doing?

In the preface to the TCFD Recommendations, Mr. Bloomberg articulated his expectations as follows:“

The Task Force’s report establishes recommendations for disclosing clear, comparable
and consistent information about the risks and opportunities presented by climatechange. Their widespread adoption will ensure that the effects of climate change becomeroutinely considered in business and investment decisions. Adoption of these recommendations will also help companies better demonstrate responsibility and foresight intheir consideration of climate issues. That will lead to smarter, more efficient allocationof capital, and help smooth the transition to a more sustainable, low-carbon economy.

”

2 What is the TCFD?
The TCFD Recommendations were prepared with European financial institutions playing a central role.
The TCFD has 32 members, sixteen of whom are from financial institutions (of which nine are European)
including banks, insurance companies, asset managers, and asset owners, and eight are from four large
accounting and consulting firms (EY, Deloitte, KPMG, and PwC), and finance-related organizations,
including two large credit rating agencies (S&P and Moody’s). In effect, three-quarters of the members
were there either in the role of calling for corporate disclosure of climate-related financial information, or
the role of auditing, assessing or rating that information. Meanwhile, all eight members fromnon-financial organizations were from European or American companies; and the representatives ofindustries such as automobiles and steelmaking, sectors in which Japanese companies are major players
on the global stage, were generally from European and American companies. The sole member fromJapan was Masaaki Nagamura of Tokio Marine Holdings.
The TCFD proceeded with a very rapid pace of meetings and extensive discussions. TCFD members wereselected in January 2016, and the TCFD Recommendations were submitted to the FSB in June 2017. The
pace of work was quick, with three types of reports completed in the course of just over a year.

What are the key messages of the TCFD Recommendations?
After the Kyoto Protocol was adopted, the United
Nations and states played a major role in responses to theissue of climate change. One of the underlying messagesof the TCFD Recommendations is a shift of efforts from“state actors and the United Nations” to “investors andcompanies” playing a major role. There is some expectation that the TCFD Recommendations will be used as a
guide to help create a low-carbon society. This would beaccomplished by shifting to a system in which investors
and others can, based on financial information, evaluate acompany’s intentions and achievements in responding toclimate change, and those evaluations can be reflected in
a company’s ratings, share prices, and financing conditions.
The future as envisioned by the TCFD Recommendations
is as follows:

Carbon taxes and emissions trading will be introduced and carbon prices will rise (to US$50 to $100/t- CO2 by 2030).
Electricity generation will shift to renewable sources, making electricity from renewable energy more accessible.
Existing fossil fuel technologies will become obsolete due to the development and spread of new technologies.
Consumers will prefer low-carbon products and services.
Green finance will expand in markets.

36

3 What is the big picture of the TCFD Recommendations?
Three core documents
The FSB's request to the TCFD was to develop climate-related disclosures that “could promote more
informed investment, credit [or lending], and insurance underwriting decisions” and, in turn, “would
enable stakeholders to understand better the concentrations of carbon-related assets in the financial
sector and the financial system’s exposures to climate-related risks.” Therefore, likely users of the TCFD
recommendations include investors, lenders, and insurance underwriters as primary users, and also
credit rating agencies, equity analysts, stock exchanges, and investment consultants. In other words, the
TCFD Recommendations were developed so that persons in the financial sector responsible for corporate
valuations could indicate in a systematic and understandable format the information that they wantcompanies to disclose.
A summary of the three documents of the TCFD Recommendations is provided below.
Final Report: Recommendationsof the Task Force on Climaterelated Financial Disclosures

Annex: Implementing the
Recommendations of the Task
Force on Climate-related
Financial Disclosures

Technical Supplement: The Useof Scenario Analysis in Disclosureof Climate-related Risks andOpportunities

This is the main report of the TCFD
Recommendations. It describes“climate-related risks, opportunities andfinancial impacts,” followed by“recommendations and guidance” incommon for financial and non-financial
sectors. It also explains the need for
scenario analysis and provides
recommended approaches.

This report provides supplementary
guidance targeting the financial sector
and non-financial sectors that may be
exposed to more significant negative
impacts from climate change and thetransition to a low-carbon society. The
financial sector is divided into “banks,”“insurance companies,” “asset owners”
and “asset managers,” while thenon-financial sector is divided into
groups for “energy,” “transportation,”“materials and buildings,” and“agriculture, food, and forest products.”
More detailed guidance is provided
based on the characteristics of eachgroup.

This report is a technical supplement withan overview of “scenario analysis” andpoints to be noted for the
implementation of therecommendations. It supports disclosure
activities aligned with the TCFD
Recommendations.

Note: Links to download the TCFD Recommendations are provided at the end of this paper.

Climate-related risks, opportunities and financial impacts
The TCFD classified and defined climate change-related risks and opportunities so that companies cangrasp in a financially quantifiable way the climate-related risks and opportunities that could affect theirown business activities, and also be (easily) able to disclose them as financial information. Risks areclassified as “transition risks” in the transition to a low-carbon economy, and “physical risks” such as theimpacts of weather-related disasters. Transition risks are further classified as (1) policy and legal, (2)technology, (3) market, and (4) reputation. Physical risks are classified as (1) acute and (2) chronic. For
example, for policy and legal risks, examples cited include policy changes associated with the shift tocarbon pricing and renewable energy, as well as the tightening of laws and regulations.

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What is the global community thinking and doing?

Examples of acute physical risks include the risks from cyclones, hurricanes, and extreme weather, while
examples of chronic physical risks include sea-level rise and changes in weather patterns.

Policy and Legal
Resource Efficiency
Technology
Transition Risks

Energy Source
MarketRisks

Opportunities

Products/Services

Reputation
MarketsAcute
Physical Risks
Chronic

Strategic Planning

Resilience

Risk Management

Financial Impact
Revenues
Expenditures

IncomeStatement

Cash Flow
Statement

Balance
Sheet

Assets &Liabilities
Capital &Financing

Figure V-1. Climate-related risks, opportunities, and financial impact.
Source: Adapted from Recommendations of the Task Force on Climate-related Financial Disclosures (Final Report).

The TCFD Recommendations, as shown in Figure V-1, recommend that companies indicate the financial
impacts of climate change-related risks and opportunities in corporate income statements, cash flow
statements, and balance sheets. For example, it is suggested that companies consider specifically how toindicate the impacts in their income statements. If a carbon pricing policy is introduced or strengthened,such as by raising the carbon tax, the income and expenditures of a company dealing with fossil fuels will
be affected in the future. By predicting future carbon pricing policies, a company can set a carbon pricefor its internal carbon pricing and forecast future revenues and expenditures. However, the TCFD
Recommendations do not imply that companies must suddenly disclose difficult-to-disclose informationsuch as internal carbon pricing. The basic stance is that companies should start disclosures with what they
are able to disclose, and then move forward step by step.

38

4 What are the four pillars of the TCFD Recommendations?
The TCFD Recommendations areorganized around four major themes
for corporate management: “governance,” “strategy,” “risk management,”
and “metrics and targets.” Figure V-2
is useful to help understand the four
themes.
Figure V-2.
The four themes of the
TCFD Recommendations
Source: Adapted from Recommendationsof the Task Force on Climate-related
Financial Disclosures (Final Report).

Governance

Strategy
Identification

Impact assessments

Adaptation assessments

Business
Strategy
Financial planning

Scenario analysis• 2ºC• NDCs• Other

Risks
Opportunities

Risk management

Metrics and targets

Risk identification, assessment processes

Use of metrics for strategy/& risk management

Risk management processes

GHG emissions (Scope 1, 2, 3)Integration into overall risk management

Targets and performance against targets

Governance
Governance is a system of corporate management and control that increases the value of a company
over the medium and long term. Investors need to be able to evaluate a company’s governance in orderinvest with confidence. The TCFD Recommendations state that for investors to judge the appropriatenessof a company’s governance, it is important to have an understanding of information about board
oversight of the company’s response to climate change, and the role of corporate management inassessing and managing climate change-related risks and opportunities.
Information needs to be disclosed so that investors and other stakeholders can understand whether
corporate management of companies affected by transition risks and physical risks, or that of companies
that may benefit from business opportunities in their responses to transition risks and adaptation
measures, has put in place organizational structures to understand the risks and take advantage of theopportunities, whether or not those organizational structures are functioning and whether or not they
are effective. They are interested in having the disclosures done in a format that is useful for investors not
only to evaluate management but also so that they can evaluate
The TCFD Recommendations indicate the following disclosure contents relating to governance.
A. Description of board oversight structure➤ Processes and frequency by which the board and/or board committees are informed

about climate-related issues

Recommended
disclosure➤ Whether the board and/or board committees consider climate-related issues relating tostrategy, action plans, risk management policies, annual budgets, and business plans, etc.

➤ How the board monitors and oversees progress against goals and targets for addressing

climate-related issues

B. Description of management role
➤ Status of climate-related responsibilities assigned to management-level positions orRecommended
disclosurecommittees➤ Organizational structure (chart) relating to climate-related issues➤ Processes by which management is informed about climate-related issues➤ Methods and processes for management to monitor climate-related issues

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What is the global community thinking and doing?

Strategy
The most important theme of the TCFD recommendations is strategy. The strategy development process
identifies climate change risks and opportunities that affect business activities, assesses the impact of
those risks and opportunities for the business, strategic and financial planning of the company, andshows the direction of transformation of the business, strategy and financial planning to respond to theimpacts. When developing strategies, the TCFD recommendations encourage the use of a “scenario analysis” approach to show medium to long-term risks and opportunities objectively and understandably forthe company
The TCFD Recommendations encourage companies to present investors the following storyline as a partof strategy, in relation to climate-related disclosures..

“1. In the context of various global circumstances including climate change, our strategies and financial planning are robust for today and the future.
2. Our systems are proactive in addressing future climate-related risks and opportunities, and aggressive in reducing risks and taking advantage of opportunities.
3. Our organization is flexible enough to respond to the highly uncertain impacts ofclimate change.

”

Investors first need to evaluate the scenario analysis of the companies in which they invest. In Europe,some companies conduct complex scenario analysis using models, but most Japanese companies thatcurrently conduct scenario analysis use what is referred to as the “qualitative approach.” In other words,
companies present their qualitative analysis of future trends for their business based on future climate
scenarios, including those prepared by the IPCC.
To evaluate a company’s scenario analysis, investors engage in dialogue to obtain explanations from thecompany’s personnel responsible for the scenario analysis assumptions and criteria, and then judge
whether or not they are consistent, reasonable, and logically convincing.
Specifically, it is desirable to review mainly the following points about scenarios disclosed by a company.
What was the rationale for selection of the climate scenario(s) adopted by the company?
Are the future visions assumed in the adopted scenario(s) consistent with the company's businessmodel?
Is the timescale of the adopted scenario(s) appropriate (too short or too long)?
Are the risks and opportunities identified through scenario analysis logically convincing?
Are systems in place to incorporate strategies into business plans to reduce risks and take advantage
of opportunities?

40

Risk management
In the “Global Risks Report 2019” of the Davos World Economic Forum, “extreme weather” topped the listof risks with the highest likelihood of occurring for three consecutive years, followed by “failure ofclimate-change mitigation and adaption.” This ranking reveals the extent to which the issue of climatechange, including extreme weather, has risen in importance. In that context, based on a company’s own
industrial characteristics, the question of whether or not a company is able to address climate change asa management issue will affect its success or failure in avoiding climate change risks and exploiting
opportunities.
The TCFD Recommendations encourage companies to have company-wide integrated risk management
to manage climate-related risks.
The TCFD Recommendations present the following recommended disclosures relating to risk management.
A. Describe the organization’ s processes for identifying and assessing climate-related risks➤ The important perspective for process description, from among the various risks that can affect a company,

is to explain how the organization judged the relative importance of various risks and how it ultimately
identified and decided on those risks.
➤ In doing so, describe also whether or not an effort has been made to consider new regulations such astighter GHG emission controls and other related factors (e.g., technology innovation, market changes,
changes in consumer preferences).

B. Describe processes by which the organization manages climate-related risks➤ Describe processes to manage climate-related risks such as how decisions are made to “mitigate,” “transfer,”“accept” or “control” those risks.

➤ Describe how climate-related risks were prioritized, and processes to do so.

Scenario analysis (selected excerpts from TCFD Recommendation)…organizations … should consider (1) using scenario analysis to help inform their strategic and financial planning
processes, and (2) disclosing how resilient their strategies are to a range of plausible climate-related scenarios.
For many organizations, scenario analysis is … a largely qualitative exercise. However, organizations with more significant exposure to transition risk and/or physical risk should undertake more rigorous qualitative and, if relevant, quantitative scenario analysis...
For organizations just beginning to use scenario analysis, a qualitative approach that progresses and deepens overtime may be appropriate ...
The Task Force recommends organizations use a 2°C or lower scenario in addition to two or three other scenarios most
relevant to their circumstances, such as scenarios related to Nationally Determined Contributions (NDCs), physicalclimate-related scenarios, or other challenging scenarios.
Financial-sector organizations should consider using scenario analysis to evaluate the potential impact of climate-related scenarios on individual assets or investments, investments or assets in a particular sector or region, or underwriting
activities.

Climate Change Starter's Guide

41

What is the global community thinking and doing?

Metrics and targets
The TCFD Recommendations encourage companies to disclose information on climate change-related
metrics and targets from a different perspective than what is used in traditional environmental reports
and CSR reports, which might have shown the amount by which emissions declined year on year. Below
are the disclosures recommended in the TCFD Recommendations.
A. Key metrics used by companies to assess and manage relevant climate-related risks andopportunities➤ Consider including key metrics on climate-related risks associated with water resources, energy, land use,

and waste management where relevant and applicable.

➤ Where climate-related issues are material, describe whether climate risk-related performance metrics areincorporated into the company's remuneration policies, and if so, how they are applied.
➤ Disclose “internal carbon price” as well as climate-related opportunity metrics (e.g., revenue from products
and services designed for a lower-carbon economy).
➤ Disclose the values for these key metrics over sufficient historical periods to allow for trend analysis.

B. Disclosure of company GHG emissions➤ Disclose company GHG emissions based on GHG Protocol methodology for Scope 1 and Scope 2 and (ifnecessary) Scope 3. (The use of GHG Protocol allows aggregation and comparison across companies,
countries and regions.)➤ For companies in industries with high energy consumption, metrics for GHG emission intensity areimportant (e.g., disclosure of GHG emission intensity in units of t-CO2 per ton of product).
For GHG emissions and related metrics, disclose the values over sufficient historical periods to allow for trend
analysis (disclose calculation methods as necessary)

C. Disclose targets used to manage climate-related risks and opportunities, and performance➤ Companies should describe their climate-related targets such as those related to GHG emissions, water

usage, energy usage, etc., in line with anticipated regulatory requirements or market change and constraints
or other goals (which may include financial goals, financial loss tolerances, avoided GHG emissions, or net
revenue goals for products and services designed for a lower-carbon economy, etc.).
➤ In describing targets, consider the following:・ Whether target is absolute or intensity based・ Time frames over which the target applies
・ Base year from which progress is measured
・ Key performance indicators (KPI) used to assess progress against targets

42What do the TCFD Recommendations expect from
5 life insurance companies?
Life insurance companies have two dimensions, as life insurance operators and as institutional investors. In
the supplemental guidance for the TCFD Recommendations, these are referred to as “insurance companies” and “asset owners.” Asset owners have a particularly large impact, and the following perspectives areprovided for them in the TCFD Recommendations.

““

Whether asset owners invest directly or through asset managers, asset owners bear the
potential transition and physical risks to which their investments are exposed. Similarly,
asset owners can benefit from the potential returns on the investment opportunities
associated with climate change.
Asset owners sit at the top of the investment chain and, therefore, have an importantrole to play in influencing the organizations in which they invest to provide betterclimate-related financial disclosures.

””

For a company’s disclosures based on the TCFD Recommendations, it is desirable to show the linkages
between increasing medium to long-term corporate value and realizing a virtuous cycle for the entire Japanese economy. To do so, insurance companies engaged in disclosures based on the TCFD Recommendations need to understand and evaluate matters through dialogue and publicly available documents.
More detailed explanations are provided in Chapter VII. Readers are encouraged to review that material.

“Intensity” measures and “avoided GHG emissions”
Metrics and targets to be disclosed include intensity andavoided GHG emissions.
The inclusion of both of these is significant.
Total GHG emissions from a company’s products can becalculated as the “emission intensity” (e.g., GHG emissions
per ton of product) multiplied by the number of units
produced. Thus, it is easy to understand the importanceof reducing the intensity as a means of reducing GHG
emissions.
The term “avoided GHG emissions” refers to the reduction in GHG emissions during the use of products andservices newly developed by a company to replace
existing products and services. A product has GHG
emissions throughout its entire value chain (life cycle), notonly in production processes in a factory but also fromthe extraction of raw materials, the usage of the product,and disposal. If a product is used that has lower GHG
emissions through the entire life cycle, it will have more
avoided GHG emissions. Companies in highly productive
industries procuring raw materials may be able to exploit
avoided GHG emissions as a business opportunity.

Climate Change Starter's Guide

43

What is the global community thinking and doing?

6 What is next for the TCFD Recommendations?
The TCFD has been actively publishing materials since the TCFD Recommendations were released. It has
also continued its work on “Key Issues Considered and Areas for Further Work,” as mentioned at the endof the TCFD Recommendations.
The “TCFD Status Report 2019,” published in June 2019, reviews progress made after release of the
Recommendations. Please see below for some highlights.
The TCFD plans to release a new Status Report in September 2020. Future plans also include the preparation of “additional process guidance around how to introduce and conduct climate-related scenario analysis” and “business-relevant and accessible scenarios.”“➤ Disclosure of climate-related financial information has increased since 2016, but is stillinsufficient for investors… the Task Force sees progress being made to improve theavailability and quality of climate-related financial information. However … morecompanies need to … disclose material findings.

More clarity is needed on the potential financial impact of climate-related issues oncompanies… Without such information, users may not have the information theyneed to make informed financial decisions.
Of companies using scenarios, the majority do not disclose information on the resilience of their strategies. Three out of five companies responding to the TCFD surveythat view climate-related risk as material and use scenario analysis to assess the resilience of their strategies do not disclose information on the resilience of their strategies… Companies are still early in the process of using climate-related scenarios internally, evolving their approaches, and learning how to integrate scenarios into corporate strategy formulation processes.
Mainstreaming climate-related issues requires the involvement of multiple functions.
While sustainability and corporate responsibility functions are the primary drivers of
TCFD implementation efforts, risk management, finance, and executive management
are increasingly involved as well. The Task Force believes involvement of multiple
functions is critical to mainstreaming climate-related issues, especially the involvement of the risk management and finance functions.
…The Task Force believes the success of its recommendations depends on continued,
widespread adoption by companies in the financial and non-financial sectors…
Through widespread adoption, climate-related risks and opportunities will become anatural part of companies’ risk management and strategic planning processes. As thisoccurs, companies’ and investors’ understanding of the financial implications associated with climate change will grow, information will become more useful for decision
making, and risks and opportunities will be more accurately priced, allowing for the
more efficient allocation of capital and contributing to a more orderly transition to a
low-carbon economy.

”

44What is happening with TCFD Recommendations
7 in Japan?
When the TCFD Recommendations were first released in June 2017, initial interest was not particularlyhigh in Japan. Over time, however, corporate interest began to rise.
Support from government bodies
One major feature in Japan compared to other countries is the involvement of government bodies
actively supporting the spread of the TCFD efforts. The TCFD Study Group, established by the Ministry of
Economy, Trade and Industry to examine green finance and corporate disclosures, prepared a paper inJapanese entitled “Guidance on Climate-related Financial Disclosures” (TCFD Guidance) and published it
in December 2018. It was written for the non-financial sector, that is, companies whose disclosures will be
evaluated by investors and other stakeholders, and it provides guidance on how to respond to the TCFD
Recommendations and highlights noteworthy points using concrete examples.
TCFD Consortium
The TCFD Consortium was established in Japan on May 27, 2019 as a forum to promote collective efforts
by companies, organizations, and financial institutions that endorse the TCFD Recommendations, and to
discuss initiatives that will lead to effective corporate disclosure and appropriate investment decisions byfinancial institutions and other organizations using such disclosed information
As of September 2019, the TCFD Consortium had the participation of 181 member companies who had
endorsed the TCFD Recommendations. Japan has now surpassed the UK, making it the top country interms of the number of companies that have endorsed the TCFD Recommendations. Another distinction
for Japanese signatories is the significantly larger number of companies providing products and services,compared to financial institutions. The Ministry of Economy, Trade and Industry (METI), the Financial
Services Agency, and the Ministry of the Environment are observers.
The TCFD Consortium has a Planning Committee, a Working Group on Information Utilization, and a
Working Group on Disclosures. In October 2019, the Consortium co-organized the TCFD Summit together with METI and the World Business Council for Sustainable Development (WBCSD) and released “Green
Investment Guidance” for investors. Going forward, the Consortium plans to revise and further develop
the above-mentioned TCFD Guidance for companies.
Scenario Analysis Support Project
When responding to the TCFD Recommendations, one of the challenges companies face is finding ways
to analyze various scenarios. One concern raised by companies is that climate scenarios are not always
straightforward for them to apply in their own business strategies and risk management, because climate
scenarios themselves are typically framed in the context of scientific research.
Thus, to promote decarbonization-oriented corporate management that incorporates climate-relatedrisks and opportunities in line with the TCFD Recommendations, Japan’s Ministry of the Environment is
implementing a project to support the work of scenario analysis. In March 2019, findings were publishedas “Suggestions for Developing Management Strategies Utilizing the TCFD: A Practical Guide to Scenario
Analysis Incorporating Climate-related Risks and Opportunities.”

Climate Change Starter's Guide

45

Examples of TCFD-type disclosures
Points!

We introduce leading examples of companies doing information disclosure in
their respective industries.
For companies that are starting to consider their own information disclosure,please consider these examples as ideals to achieve, and look for pointers on
governance and strategies, etc.
For non-financial sectors, please also look at differences in Scope 1, 2, and 3.

Information disclosure in line with the TCFD recommendations has only just begun in financial andnon-financial sectors. This chapter introduces leading examples from the financial sector in Europe andbest practices from the non-financial sector in Japan. Regarding companies in non-financial sectors, for
the GHG emission trends of companies introduced in Chapter 3, we introduce examples of three types ofcompanies: Scopes 1 and 2, Scope 3, and low-emission.

1 Examples of disclosure in the financial sector
AVIVA
Aviva was established in 2000, and in 2006 became the world’ s first insurer to become a carbon neutralcompany, by using offsets to achieve zero CO2 emissions in respect of their own operations. Since then,the company has been proactive in its climate change measures and published its own climate change
adaptation strategy in 2015. After the TCFD recommendations were issued, the company was quick tomove ahead with information disclosure in accordance with the recommendations.
Governance
On Aviva’s Board, the Risk
Committee and GovernanceCommittee are responsible
for the role of overseeing climate-related risks and opportunities. In 2018, the Risk
Committee met five times
and the Governance Committee four times, and discussions included topics
such as responses to climate-related risks and opportunities.

Plc Board

Point!
Aviva
Group
CentreBoard
Risk
Committee

Board
Audit
Committee

Point!
Board
GovernanceCommittee
AI Group
Responsible
Investment

Plc Executive Committee

Aviva
Investors
LondonGroup Sustainability

Aviva Investors
Executive
Committee

BU Board/Executive Committee
Business
Units (BUs)

Investment
Function

Risk Function

Underwriting

Capital management

Insurance companies

ESG Committee(France only)

Aviva
Investors(non UK
entities)

Asset manager

Aviva’s climate governance structure46

As part of regular training programmes a presentation was made to board members in 2018 aboutclimate risks and opportunities. Responses are also required at the board level for each country. For
example, in France, board training on climate risk is mandatory.

Strategy
Aviva’s strategic response to climate change, published in 2015, lists the following five pillars.
Integration of climate risk into
investment considerations

To obtain sustainable and superior investment outcomes long-term, since2012, [the company] has committed to integrating ESG factors into all assets

Investment inlower carbon infrastructure

In 2015, [the company] declared the goal of investing 500 million pounds
annually for five years into low-carbon infrastructure

Support forstrong policy action[The company] advocates for reforms of capital markets and correction ofexisting market failures, in order to mobilize trillions of pounds required fortransition to a low-carbon economy

Active stewardshiprelated to climate risk

[The company] actively engages with companies in order to enable thecreation of business strategies to make companies climate-resilient

Divestment where necessary[The company] uses its influence as a shareholder to transition companies to a
low-carbon economy. [It] divests in cases where the efforts of companies withhigh carbon emissions are not showing adequate progress.

Risk management

Envir
ome
nta
l

Econ
Finan omic &
cial
Ma
rke
ts

y

Becoming
Proximate(Mobilise)Lessremote(Analyse)

Remote(Monitor)alProximate(Action)

l th

Po
litic

Hea

Based on this, Aviva acts to reduce andmanage current and future climatechange impacts, and moves to respond toclimate-related transition risks, physicalrisks, litigation risks, and stranded asset
risks.

essbusin
gy & atsole
no el thrchTe mod

or
ulat
Reg

Aviva manages Group risk using aspectrum chart (see figure on right) toevaluate the distribution of areas of risk. It
is used to comparatively consider the
impacts and timescale of various external
factors. According to it, climate-relatedrisks impose significant and long-termrisks for Aviva’s business model, and they
are also proximate risks on the timescale.

So

c iet
al

p
Geo-

i ca
o li tl

Climate related risk

Climate Change Starter's Guide

47

Examples of TCFD-type disclosures

2 Non-financial sector: Scope 1 and 2 type companies
Sumitomo Chemical
The chemical industry has diverse climate-related risks and opportunities due
to its diverse products. For example, not only does a reduction in grain
production due to extreme weather create physical risks that lead to a
reduction in the use of agrochemicals, there are also new opportunities such as
the development of improved agrochemicals and fertilizers to adapt to climatechange.
Sumitomo Chemical manufactures and sells a wide range of products, including
chemical materials, agrochemicals, and pharmaceuticals, and approximately
two-thirds of its emissions are Scope 1 or Scope 2. Below we introduce some of
Sumitomo Chemical’ s initiatives in response to the TCFD Recommendations.
Governance and risk management

Scope 1,2

Scope 3

Sumitomo Chemical, Annual Report 2019 (excerpt)

The President is responsible for promoting climate-change measures, together with the executive officer of Responsible Care. In March 2018, medium- to long-term plans for greenhouse gas (GHG) reductions were deliberated at our management meeting and we agreed to establish science-based targets (SBTs) in accordance with
the Science Based Targets initiative. The Sustainability Promotion Committee and the Responsible Care Committee periodically deliberate and decide on measures to deal with climate change. The Responsible Care
Committee also assesses and monitors the risks of climate-related challenges.
Corporate Governance Organization (As of July 1, 2019)
General Meeting of Shareholders
Appointment and removal

Appointment and removal

Accounting
Auditors

ReportAppointment and removal

6 Nomination
Advisory Committee

AdviceMonitoring

Audit

2 Board of Corporate Auditors

Advice(13 Directors, including 4 Outside Directors)(5 Auditors, including 3 Outside Auditors)

Accounting audit

1 Board of Directors

Audit

Appointment and removal,
and supervision

7 Remuneration
Advisory Committee

Report and advice

Executive Organization
5 Company-wide Committees

President

Management,
supervision, andguidance

Group Companies in Japan and Overseas

48

Internal Control &Audit Department

Audit andsupportResponsible Care
Committee

Compliance Committee

ReportAudit

Committee on Antitrust Complianceand Corruption Prevention

Corporate Departments, Plants,
Laboratories, and Others

Risk Crisis Management Committee

3 Executive Oﬃcers

Responsible Care Committee

Promotion, awareness raising, management,
and guidance of activities

Internal Control Committee

4 Management
Meetings

Point!

Board ofCorporate
Auditors

Strategy

Sumitomo Chemical, Annual Report 2019 (excerpt)

Responding to risks and seizing opportunities
Point!
The Sumitomo Chemical Group has established a dedicated organization in the Responsible Care Department
to deal with climate change. The organization identifies and analyzes the risks and opportunities posed by climate change issues to the Sumitomo Chemical Group’s business over the medium- to long-term, including thesize, scope of impacts, and other issues. In addition, we are implementing measures to respond to risks
through initiatives for achieving our SBTs, and striving to seize new business opportunities through the development and spread of products and technologies designated as Sumika Sustainable Solutions. Concrete initiatives are reported to management meetings, the Sustainability Promotion Committee, the Responsible
Care Committee, the Plant Managers’ Meetings, and the Group-wide President Meetings. In order to steadily
implement these initiatives, we hold meetings linking factories, research laboratories, business sectors, andGroup companies, and have established a framework for prompt information sharing.
Risks

Opportunities

Transition risks

Increases in tax burden due to the introduction and increase of carbon prices

Increases in manufacturing costs associated with the increase in energy
taxes
Higher logistics costs due to higher energy prices
Physical risks
Damage to production facilities due to wind and ﬂood damage caused
by abnormal weather
Decline in sales of related businesses due to changes in crop cultivationin various regions worldwide due to abnormal weather conditions

Expanding the market for products that contribute to
reducing GHG emissions
Expanding the market for products that adapt toclimate change impacts
Expanding the market for low-carbon processes
Fostering new businesses in the ﬁeld of
climate change countermeasures throughR&D and digital innovation

Responding to Risks

Initiatives for Seizing Opportunities

Initiatives for achieving our SBTs
• Revision of the internal carbon price system to strengthen energy
conservation and promote investment in GHG emissions reduction• Fuel conversion (Niihama LNG Station, renewable energy utilization, etc.)• Introduction of innovative low-carbon technologies• Initiatives to raise awareness within the Group and foster momentum• Approaching major suppliers about
setting GHG emissions reduction targets
Strengthening measures against wind and ﬂood damage at
production bases

Expansion of sales of products designated as Sumika Sustainable Solutions• Products that contribute to reducing GHG emissions• Products, components, and materials used in connection withthe creation of new forms of energy• Products that contribute to adaptation to climate change impacts
Expanding licensing revenues for low-carbon process technologies
Acquisition of investment funds through information disclosure

Metrics and targets

Sumitomo Chemical, Annual Report 2019 (excerpt)

Our Group will focus on reducing its GHG emissions (Scope 1+2) by 57% or more from fiscal 2013 levels by fiscal
2050, while providing solutions for significant GHG reductions in the value chain. We aim to quickly double
the sales revenue of Sumika Sustainable Solutions compared with FY2015 (Sumitomo Chemical Group
products and technoloOur Approved GHG Emissions Reduction Targets
Sales Revenue of Designated Products and Technologies
gies that contribute to
Scope 1 + 2
Scope 3600
such issues as global
By FY2030
By FY2050
By FY2024
500
Have major suppliers
Reduce by 30%
Reduce by over 57%
warming countermeaset reduction targets(vs. FY2013)(vs. FY2013)
400
sures, reducing environGHG Emission Volume and Reduction Targets
300
mental burdens, and ef200
1,000
954
fective use of resources,
286
100
776
750
544
726
Reduceby 30% Reduce by
668
over
57%
are referred to as Sumika
500
0
’15
’16
’17
’18
’19
’20
’21 (FY)
410
250
Corporate Business Plan
Sustainable Solutions, orPetrochemicals & Plastics
Energy & Functional Materials
0
IT-related Chemicals
Health & Crop Sciences
SSS).
’13
’17
’18
’30
’50
(Billions of yen)

(10 thousand tons)

SBT

Baseline year

Target Target(FY)(Billions of yen)

FY2018
Sales revenue of Sumitomo Chemical Group
Sales revenue of SSS

2,318.6
381.3

Climate Change Starter's Guide

49

Examples of TCFD-type disclosures

JFE Holdings
The iron and steel industry consumes a significant amount of coal in steel-making processes due to the use of coke, which is made from coal. As a result, theindustry must deal with transition risk. Meanwhile, Japanese steelmakers, asworld leaders in production efficiency and product quality, are also contributing
to CO2 emission reductions in other industries. For example, the use of strong
and light steel sheets reduces automobile weight by about 8%, which saves acorresponding amount of fuel consumption in gasoline-powered vehicles. SimiScope 1,2
Scope 3larly, high performance steel sheets help ships and trains use less energy (andreduce CO 2 emissions) (Japan Iron and Steel Federation). In this way, the iron and steel industry ismaking a contribution through “avoided GHG emissions” in other industries.
Approximately 80% of the emissions from JFE Holdings, Inc. an affiliate of JFE Steel, are Scope 1 or
Scope 2 emissions.
Below is an introduction to some of the efforts of JFE Holdings, Inc. in response to the TCFD Recommendations.
JFE Group’ s Initiatives for Climate Change Issues

JFE Group Report 2019, Integrated Report (excerpt)

Basic policy
The JFE Group’ s business involves steel manufacturing, which emits massive amounts of CO 2. That is why
climate change issues are serious management issues from the viewpoint of business continuity. The steelbusiness accounts for 99.9% of the JFE Group’ s CO2 emissions. The JFE Group is able to manufacture steel
with the lowest CO2 emission intensity among all the integrated steel mills in the world through developing
diverse technologies that enable energy saving and CO2 emission reduction, and applying them to our ironand steelmaking processes. We will continue developing processes to reduce environmental impact andspread our vast accumulated technologies globally for new opportunities, in order to contribute to
mitigating climate change.
Long-term vision and direction
The Japan Iron and Steel Federation, to which JFE Steel,the steel operating company of JFE Group, belongs, has
set 2030 as the target year to achieve its Commitment to a
Low Carbon Society. In addition, in November 2018, theFederation established and announced the Japan Iron
and Steel Federation’ s long-term vision for climatechange mitigation for 2030 and beyond, which ultimately
aims for Zero Carbon Steel production. JFE Steel played apivotal role in the development of this long-term vision.
To help achieve the Paris Agreement’ s long term goal ofholding the average global temperature rise well below
2C, the company continues to develop and spreadrequired technologies and contribute to playing its part in
mitigating climate change.

50

Results of Scenario Analysis

JFE Group Report 2019, Integrated Report (excerpt)

Climate Change Starter's Guide

51

Examples of TCFD-type disclosures

NYK
The marine shipping industry is reliant on fossil fuels as it uses bunker oil andother fuels to power oceangoing vessels. The cargo volume carried byinternational marine transport is expected to rise in the future, so the industry
will likely have to deal with transition risks such as a reduced dependency on
fossil fuels. More specifically, some potential responses include a fuel shift frombunker oil to natural gas and making shipping operations more efficient by
reducing ship weight and hull resistance. However, the fact that ships can haveservice lives spanning several decades makes it necessary to implement
Scope 1,2
Scope 3systematic and well-planned measures.
NYK has various operations in the international marine transport industry, including general cargo andpassenger ships, and has begun taking action in response to the TCFD Recommendations.
Climate risk

NYK Report 2019 (excerpt)

NYK Group uses the World Energy Outlook of the International Energy Agency (IEA) as reference points for
future energy-related trends. The IEA publishes a New Policies Scenario (NPS) as its main scenario and a
Sustainable Development Scenario (SDS), which assumes that the Sustainable Development Goals (SDGs) of
the United Nations will be achieved. The IEA projects that global energy demand in 2040 under the NPS will
increase by 27% compared to 2017 and decrease by 2% under the SDS. The NPS assumes current efforts willcontinue, and new measures and technological innovations will be implemented. However, NPS projections
for global energy consumption and CO 2 emissions have been reduced each year based on growing
expectations for a global transition to renewable energy and accelerating progress in technologicaldevelopments. Therefore, projections for energy trends must be based on a careful analysis of both the NPS
and SDS and factor in the influence from increasing implementation of climate change measures.
NYK Group also uses the IEA’ s World Energy Outlook as a reference point for an annual analysis of thepotential impact on demand for our freight transport services. Because we operate our large seagoing cargovessels for 15 to 20 years, framing an accurate long-term projection for the freight transport trend is criticalfor investment and other business planning. While we base our projections primarily on the IEA’ s main
scenario, we also must take a long-term view on our business operations, which requires considering thepotential impact on Group business from changes in overarching trends or freight volume and in the eventthat stepped-up climate change measures were to cause a shift in freight demand.

52

NYK SUPER ECO SHIP 2050（NYK SES）

NYK Report 2019 (excerpt)

In November 2018, NYK developed a new concept ship called NYK SES 2050, a carbon-free vessel of the future
aimed at achieving NYK’ s medium- to long-term environmental targets. It is a concept ship for 2050
modeled after a pure car and truck carrier. Minimal resistance is achieved with a low weight hull andoptimized shape, while the use of electricity capitalizing on fuel cells and the adoption of high efficiency
systems achieve a 67% reduction in energy derived from fossil fuels (compared to ships built in 2014).
Several of the technologies depicted in the concept ship NYK SUPERECO SHIP 2030 (NYK SES 2030)
announced by the NYK Group in 2009 have already been introduced and practically applied on vessels. We
have also made changes to our road map on the elemental technologies of ships to reflect the stricter
environmental regulations and rapid technological advancements of recent years in new research domains.
Going forward, we will promote collaboration with a broad range of global partners in the marine industry
aimed at research and development, verification, and the introduction of elemental technologies proposed
for NYK SES 2050.

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53

Examples of TCFD-type disclosures

3 Non-financial sectors; Scope 3 type companies
Toyota Motor Corporation
For the automotive manufacturing industry, CO2 emissions from gasoline anddiesel consumption when vehicles are operating is significantly greater thanemissions from the manufacture of vehicles in factories. Global demand forautomobiles is expected to continue rising for the foreseeable future. This makes
it necessary to consider transition risks, including the decarbonization of
automotive fuels. Key measures will include improving fuel efficiency, using
biofuels, and promoting hybrid vehicles. The recent development and popularityof electric vehicles has shown some promise for the near future. However, even if
Scope 1,2
Scope 3
electric vehicles were to become popular globally, that would not completely
ensure a reduction in CO2 emissions, because many regions around the world rely on coal and otherfossil fuels to generate electricity. In developing countries in particular, the widespread use of inefficientcoal-fired power plants means that vehicles might be powered by electricity produced with high CO2emissions.
As a global automobile manufacturer, Toyota has begun to act on the TCFD Recommendations.
2030 Milestones Set in Order to Achieve
the Toyota Environmental Challenge 2050

Toyota Environmental Report 2019 (excerpt)

In September 2018, Toyota announced the 2030 Milestones, indicating the status of six challenges in 2030,
which is one of the medium- to long-term initiatives to achieve the Toyota Environmental Challenge 2050. By
setting quantitative and qualitative milestones for each of the challenges, we will be able to promote
reductions of the environmental impacts and accelerate activities that have a net positive social impact. By
establishing them in combination with the Toyota Environmental Action Plan which sets specific actionplans and targets for every five-year period, we will clarify value-creation stories for achieving the Toyota
Environmental Challenge 2050, further promote activities, and contribute to the realization of a sustainable
society.

54

Thinking About the Climate Change Effects
in 2030 Using Scenario Analysis

Toyota Environmental Report 2019 (excerpt)

To confirm that the 2030 Milestone is a valid and resilient strategy for addressing the effects that climatechange will have on Toyota, we conducted scenario analysis by picturing multiple future images in 2030. The
climate scenarios mentioned above were developed by referencing scenarios equivalent to “2 °C (2DS)” and“Beyond 2°C (B2DS)” in the International Energy Agency (IEA) reports and others.

The percentages of electrified vehicles and ZEVs in global sales of new vehicles vary considerably dependingon the scenario, and in anticipation of these circumstances, it will be important to flexibly consider
powertrain lineups and development of mobility businesses.
Under the 2030 Milestone, the percentage of ZEVs will exceed the 2DS level, but will not reach the level
necessary to achieve B2DS. However, through the development of HEVs, Toyota has been establishing a mass
production base by cultivating the component technologies essential to electrified vehicles. These
technologies can also be utilized in ZEVs, and Toyota is capable of making flexible and strategic changes topowertrain lineups according to demand changes. Therefore, Toyota will be able to respond to changes insocial demand through advances in its electrified vehicle technologies.
Specific measures relating to electrified vehicle sales targets include the announcement that the projection
for achieving the electrified vehicle sales
target in the 2030 Milestone has been
moved up by approximately five years.
Point!
Also, Toyota invested in Uber which isdeveloping a large sharing business inNorth America, and is steadily advancing
in response to the development of new
mobility businesses, including developing
ridesharing for automated driving.

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Examples of TCFD-type disclosures

Daiwa House Industry
House construction is an industry with significant CO2 emissions during the use,
deconstruction, and disposal of buildings, as well as the manufacture andtransport of construction materials procured. Thus, most of the emissions are
Scope 3. Below is an introduction to initiatives by Daiwa House Industry in
response to the TCFD Recommendations.
Scope 1,2

Governance

Scope 3

Daiwa House Group Sustainability Report 2019 (excerpt)

Our Group positions “slowing and adapting to climate change” as one of the important management issues
and has appointed a Senior Managing Executive Officer as Executive Officer in charge of the Environment,
who is responsible for implementing a climate change strategy, with the Group Environmental Promotion
Committee chaired by an Executive Officer in charge of the Environment. The committee, which is convened
biannually, discusses and makes decisions on matters about our Group’ s environmental initiatives including
climate change-related ones and risks and opportunities, managing the Group’ s environmental initiatives.
Strategy

Daiwa House Group Sustainability Report 2019 (excerpt)

Climate change-related risks and opportunities can result from two factors: “transition” derived fromtightening of regulations, technological advancement, and changes in market environment accompanied bya shift to a decarbonized society; and “physical changes” such as acute extreme weather and chronic
temperature rise as a result of global
warming. Some effects of climate change
may not last long, but others can havemedium- or long-term consequences.
Classifying of factors of various external
environmental changes accompanied byclimate change into “transitions” and“physical changes,” we assess possible
financial impacts facing us on a scale oflarge, medium, and small with affectedperiods assumed, tr ying to identify
important risks and opportunities.
In addition, based on such risks andopportunities, in order to devise businessstrategies that flexibly resp ond toexternal environmental changes in the
future, we assess the degree of impact on
our business by using multiple scenarios.

56

Risk management

Daiwa House Group Sustainability Report 2019 (excerpt)

We recognize that the climate change risk is one of the risks that have significant impacts in the medium andlong run and integrate it in the Groupwide risk management process. We carefully identify and assess risks
and opportunities nearly every three years, their identification and assessment used to identify priority issues
in a Medium-Term Management Plan, which is formulated every three years, and an Action Plan for theEnvironment or reflected in major policies and target levels in these plans. In response to the Environment
Department’ s identification of “external environmental changes” associated with a shift to a decarbonizedsociety and “physical changes” from global warming, we assess important risks and opportunities from thelikelihood of these changes and possible financial impacts if they occur.

Point!

Metrics and targets

Daiwa House Group Sustainability Report 2019 (excerpt)

Aiming to minimize risks and maximize
opportunities associated with climatechange, we have set short-, mediumand long-term targets as below.

ZEH: Net Zero Energy House
ZEB: Net Zero Energy Building
SBT (Science Based Target): An international initiative to encourage companies to set science based greenhouse gas
reduction targets aligned with the “2oC target” of the Paris Agreement.

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Examples of TCFD-type disclosures

4 Non-financial sectors: Low-emission companies
Kirin GroupThe food manufacturing industry generally has low transition risk, as many
companies in the industry have low CO2 emissions. However the procurement of
raw materials in the form of agricultural products such as grain and fruit fromoverseas for use may expose them to significant impacts of physical risks thatarise in producer countries. They may also be exposed to physical risks to port
facilities, roads and other components of logistics routes from the producer
countries to the food products manufacturing plants.
Below is an introduction to the initiatives of the Kirin Group in response to the
TCFD Recommendations, with a special focus on physical risks.

Response to the New Frameworks forDisclosure of Climate Related Information

Scope 1,2

Scope 3

Kirin Group Environmental Report 2018 (excerpts)➤ Governance

The Kirin Group is reliant on natural capital in the pursuit of its business. That natural capital is being
affected greatly by climate change resulting from global warming. Perceiving such circumstances as majorrisks and opportunities, in 2012, the Kirin Holdings’ Board of Directors approved the Kirin Group Long-Term
Environmental Vision. At the same time, it declared the lofty goal of halving the CO2 emissions of its businessby 2050 from a 1990 base year, across its entire value chain. From 2017 onward, as part of the CSV
Commitment, the Group CSV Committee has set a number of targets, including CO 2 emission reduction
targets for 2030, and is monitoring progress and establishing new policies. The Group CSV Committee wasestablished for the Kirin Group to actively promote CSV. It brings together the presidents of the Group’ s main
companies and the executives responsible for finance, IR, SCM, marketing, and other divisions to formulate
CSV policies and monitor the progress. Along with the CSV Commitment, the major policies decided in theCommittee are discussed and approved by the Group Executive Committee or the Board of Directors.
➤ Strategy

The likely risks of climate change associated with global warming include disruption of operations due towater shortages, impact on crops in production regions due to rising temperatures and natural disasters,
and increased investment on energy conservation. Meanwhile, initiatives to tackle climate change, such as
joint delivery, are leading to collaboration in non-competitive areas in the same and other industries. Suchinitiatives could provide opportunities to solve other problems for the societies and companies besides
climate change. Through the appropriate identification of and response to these kinds of risks andopportunities, the Kirin Group is pursuing initiatives that will solve issues related to climate change. Climatechange risks and opportunities are subject to the risk management system, and the material items andcorresponding policies are reported to the Group CSV Committee, which approves the policies for dealing
with them. These items are integrated in the business plans of the individual operating companies andaddressed accordingly.

58

➤ Risk management

Point!

The effects of climate change have already manifested, and we recognize that the physical risks andtransitional risks have become greater. In particular, the impact of natural disasters on agricultural
production regions can no longer be ignored and water issues are also very serious. The Kirin Groupevaluated the risks surrounding biological resources in around 2013. In 2017, we repeated a 2014 evaluationof water risks in the catchments of our business locations and upstream in the value chain. Decisions on
policies and the contents of initiatives are based on the tangible outcomes of investigations.
Key risks are monitored by the Group CSV Committee and policies are formulated and revised where
necessary. Other risks are identified and handled within the risk management system and the environmental
management systems of the individual operating companies and business locations.
➤ Metrics and targets

The Kirin Group monitors Scope 1, 2, and 3 emissions across the entire Group and uses the outcome of thatmonitoring in the formulation of its next strategies. Currently, initiatives are generally progressing asplanned.
Scenario analysis

Kirin Group Environmental Report 2019 (excerpts)

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Examples of TCFD-type disclosures

Mitsubishi Corporation
General trading companies have low CO2 emissions from their own operations, but their businessactivities could face climate change-related risks and opportunities due to involvement in businesses
surrounding a wide range of services and products, including fossil fuels such as coal and petroleum.
Mitsubishi Corporation was the first Japanese general trading company to disclose according to the
TCFD Recommendations. Below is an introduction to their initiatives.
TCFD responses

ESG Data Book 2018 (excerpt)➤ Governance

Climate change is one of the most important issues acknowledged by MC’ s top management. MC’ s basic
policy on climate change and important matters therein are deliberated and decided upon by its Executive
Committee, the company’ s officer-level decision-making body. As stipulated in the regulations governing
MC’ s board of directors, the Executive Committee reports its findings regularly (at least once a year) to theboard, appropriate supervision of which is facilitated by the structure of MC’ s governance framework. Before
the Executive Committee has addressed basic policy and important matters pertaining to climate change,
actions are taken ty MC’ s Sustainability Advisory Committee and Sustainability and CSR Committee. The
former fields opinions and advice from outside experts, and the latter (which reports directly to the Executive
Committee) holds extensive hearings with all the Business Group CEOs.
The Business Groups also act independently to address climate change. Group Chief Sustainability Officers
and Group Sustainability Managers are appointed with each Group’ s department responsible formanagement strategy in order to oversee sustainability-related initiatives (including climate change) andreflect climate-related opinions and information into their respective businesses and strategies. At MC, thecompany’ s basic policy on climate change and important matters therein are comprehensively addressed
when making decisions on business strategies and investments.
➤ Strategy

MC considers the opportunities and risks associated with climate change to be key variables in establishingits business strategies, and recognizes the possibility that the impact of climate change on its operations willgrow over the medium to long term. Accordingly, MC is identifying where the risks and opportunities arelikely to reveal themselves up to and even beyond the year 2030. Regular internal analyses and assessments
also factor in changing external trends.

60

Point!

➤ Risk management

MC regularly assesses which climate-related opportunities and risks warrant themost attention through both internal andexternal surveys, and makes official determinations at the Sustainability & CSR
Committee, which consists of Group CEOs
from each of MC's Business Groups. The
specified opportunities and risks are managed under MC's sustainability promotion
framework from two perspectives: Strategic Planning and Project-by Project Business Management.

➤ Metrics and targets

MC has set the following climate-related targets to capitalize on opportunities and mitigate risks on aconsolidated basis.

Target 1: Greenhouse Gas Emissions Reduction

Target 2: Renewable Energy

Reduce emissions*1 per total assets*2by 25% by 2030

By 2030 aim to achieve at least 20% renewableenergy in MC’ s power generation business(based on generation amount).

*1 Compared to fiscal year ended March 2017 levels. Greenhouse gas
emissions on a consolidated basis (MC on a non-consolidated basis
plus subsidiaries)*2 The total assets used for this target represent the numerical values
within the emissions reporting calculation range, which differ fromthe total assets reported in MC’ s financial reports.

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Examples of TCFD-type disclosures

References for further study: Examples of the TCFD approach to
information disclosure
More examples of disclosure that is consistent with the TCFD Recommendations can be expected toappear in the future. Besides the examples provided on pages 46 to 61 of this handbook, a number ofcompanies around the world have been proactive in adopting the TCFD approach.
Anyone interested in learning more is encouraged to review reports by the following companies, whichhave been particularly proactive in climate-related information disclosure.

Financial sector (life insurance companies)●AXA Group●●Allianz●

Shaping our sustainable future - Allianz group sustainability report 2018

●Storebrand●Green is good - Annual report 2017

●Swiss Re●

Resilience in action - 2017 Financial report●BHP Billiton●

BHP Annual report 2019

●EnBW

●

Integrated annual report 2018

●ENI

●

Eni for 2018 - Sustainability report●Royal Dutch Shell●

Annual report and form 20-F for the year ended December 31, 2018

●Unilever●

Unilever annual report and accounts 2018 - Making sustainable living commonplace

Climate-related investment & insurance report - in line with France’ s Article 173 andTaskforce on Financial Climate-related Disclosure (TCFD) recommendations

Non-financial sector

62Essential points for life insurers
to consider based on the TCFD
Points!

Life insurance companies need to consider the TCFD Recommendations fromtwo perspectives—as life insurers and as institutional investors.
As life insurers, they need to do disclosures that take into account the impacts ofclimate change, but much remains to be researched in this respect.
As a result, disclosures from the perspective of institutional investors are thecurrent focus of attention.

1 What is the status of life insurance companies?
There are two aspects to the operations of life insurance companies: as life insurers and as institutional
investors. What is required of each in terms of responding to the TCFD?
Considerations from the perspective of a life insurer
In the life insurance industry it is crucial to understand the impacts of climate change
on human life and health. Chapter III showed how various impacts of climate change
are now being recognized and predicted, but research on this topic is still at an early stage for the life
insurance industry compared to the general insurance industry. The wide variety of factors that affecthuman health is one factor making this research a challenge.
Basic context

It is worth noting that the impacts of climate change on the life insurance industry have not been particularly significant to date. However, it would not be appropriate to wait until after impacts are more obvious
to everyone, so now is the time to gather information, study the impacts of climate change on health andmortality rates, and properly consider how to apply the findings in the life insurance industry.
The TCFD Recommendations include supplemental guidance for specificsectors. In addition to the guidance provided for all sectors, this supplemental guidance is intended to promote better disclosure based on the characteristics of specific sectors. The supplemental guidance for insurance companies applies to the liability(underwriting) side of insurance activities.
Key points of the TCFD
Recommendations

Supplemental guidance for insurance companies
Strategy• Describe potential impacts of climate-related risks and opportunities• Provide supporting quantitative information (where available) on core businesses, products, and services

Risk
management• Describe the processes for identifying and assessing climate-related risks on re-/insurance portfolios bygeography, business division, or product segments.
• Describe key tools or instruments, such as risk models, used to manage climate-related risks in relation to
product development and pricing.
• Describe the range of climate-related events considered and how the risks generated by the rising propensity and severity of such events are managed.

Metrics andtargets• Provide aggregated risk exposure to weather-related catastrophes of their property business (i.e., annual
aggregated expected losses from weather-related catastrophes) by relevant jurisdiction (country, region,etc.).

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Essential points for life insurers to consider based on the TCFD

Examining the above points, however, one can see that many are closely associated with the generalinsurance and re-insurance businesses. The life insurance business is obviously related to these, but there
are still many aspects (e.g., scenario analysis and risk models) where information and tools that provide abasis for consideration are still limited.
Therefore, for the near term, when members of the Life Insurance Association of Japan begin to respondto the TCFD Recommendations, it would be appropriate to begin with the supplemental guidance
addressed to all sectors. The disclosure items common to all sectors are the same as for the perspectiveof institutional investors. It would also be practical to start with the governance items that would also be
important for “Creating ’the right internal systems” to respond to the TCFD in the section further below.

Considerations from the perspective of an institutional investor
From the perspective of institutional investors, companies in which they invest needto consider the impacts of climate change. The business of each investee company
may be negatively affected by the physical or transition risks of climate change, or they may also findopportunities.
Basic context

For these reasons, life insurance companies need to consider their own disclosures as described above,
and also, call upon their investees to disclose climate-related information. It is also important to properly
understand the information disclosed by these companies.
Key points of the TCFD
Recommendations

The actions of institutional investors calling on companies in which they
invest to disclose climate-related information may have an impact on
responses to climate change by other companies.

This was already partially covered on page 43, but the TCFD Recommendations cover these points with
an emphasis on the following content.

“

Asset owners sit at the top of the investment chain and, therefore, have an importantrole to play in influencing the organizations in which they invest to provide betterclimate-related financial disclosures.
… Further, climate-related financial disclosures by asset owners may encourage better
disclosures across the investment chain—from asset owners to asset managers to underlying companies—thus enabling all organizations and individuals to make better-informed investment decisions.

”

In other words, as institutional investors, members of the Life Insurance Association of Japan are expected to disclose their own information as well as to encourage investee companies and asset managers to
strive for better information disclosure.
* For the investment aspects of their businesses, life insurance companies are asked to refer to the supplemental guidance
written for asset owners.

64

As shown in Chapter V of this Handbook, the TCFD Recommendations encourage disclosures to be done
so that investors and others can understand the risks and opportunities they face from climate change.
Understandably, it is difficult for a company to do disclosure perfectly on the first attempt, and they are
not expected to simply increase the number of disclosure reports they publish.
As an issue that requires further consideration, the TCFD Recommendations also indicate that desirable
locations for the information to be disclosed are mainstream (public) annual financial filings.
However, for asset owners, based on the idea that “the Task Force recognizes reporting by asset managers
and asset owners to their clients and beneficiaries, respectively, generally occurs outside mainstream
financial filings,” the Recommendations state the following.

“

The financial reporting requirements and practices of asset owners vary widely anddiffer from what is required of organizations with public debt or equity. Some asset
owners have no public reporting, while others provide extensive public reporting. For
purposes of adopting the Task Force’s recommendations, asset owners should use their
existing channels of financial reporting to their beneficiaries and others where relevant
TCFD Recommendations, Reporting by Asset Owners (excerpt)
and feasible.

”

Life Insurance Association of Japan members prepare annual disclosure documents based on legislation.
The Association has also voluntarily formulated its own Disclosure Standards. Some companies also
publish their own CSR and sustainability reports. Thus, if the TCFD recommended information isdisclosed within these conventional types of disclosure documents, they can serve as convenient anduser-friendly media for everyone.

Which location should be used for disclosures?
The TCFD Recommendations encourage organizations to incorporate climate-related disclosures into mainstream
financial reports. However, the TCFD also acknowledges that the circumstances are different in each country.

“

In considering possible reporting venues, the Task Force reviewed existing regimes for climate related
disclosures across G20 countries. While many G20 countries have rules or regulatory guidance that
require climate-related disclosure for organizations, most are not explicitly focused on climate-related
financial information. In addition, the locations of these disclosures vary significantly and range fromsurveys sent to regulators to sustainability reports to annual financial filings.
The Task Force also reviewed financial filing requirements applicable to public companies across G20
countries and found that in most G20 countries, issuers have a legal obligation to disclose material information in their financial reports—which includes material, climate-related information.
… The Task Force recognizes organizations’ concerns about disclosing information in annual financial
filings that is not clearly tied to an assessment of materiality. However, the Task Force believes disclosuresrelated to the Governance and Risk Management recommendations should be provided in annual financial filings. Because climate-related risk is a non-diversifiable risk that affects nearly all sectors, many
investors believe it requires special attention.
“Location of Disclosures and Materiality,” TCFD Recommendations (excerpt)”

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Essential points for life insurers to consider based on the TCFD

Institutional investors also have roles to play in making good use of climate-related information disclosed
by companies in which they have invested and/or provided lending, to evaluate and decide on investments and lending and to enhance corporate value through engagement. However, this requires knowledge and know-how to correctly understand climate-related information.
This chapter provides pointers for life insurance companies to consider from their perspective andposition as institutional investors, by describing how they can engage in information disclosure, and how
the disclosed information can be used.

2 Creating the right internal ’systems
The TCFD Recommendations detail the information that asset owners should disclose as well as important points to note. Below is an introduction to the most important points, as well as a summary of steps
to follow starting from how a company can create its own systems to facilitate disclosures.
A company that is not clear about why responses to the TCFD Recommendation are needed and important may have a tendency to lose momentum or abandon its efforts. A clear understanding within thecompany about the need for these efforts will make it possible to create a system that achieves objectives
and ensures continuity of efforts. For this, it is essential to have an understanding of the underlying
nature of the issue of climate change.
The following steps can be used to create a system that will sustain efforts to respond to TCFD Recommendations.
Step 1

Observe trends and decide on lead department(s) and personnel

Step 2Involve stakeholders within the company and create basic systems
for discussion

Step 3

Decide and implement procedures to ensure company-wide
involvement

Step 4

Establish a company-wide discussion system and consider how tomaintain progress

Starting on the next page is an outline of what to do at each stage.

66

Step 1

Observe trends and decide on lead department(s) and personnel

Companies gather a variety of information in the course of day-to-day business operations, and in that
context, it is important to have someone in the company monitoring trends and developments outside
the company as they relate to climate change. There are many sources of information, and with so many
types of information it may be daunting to know where to begin.
It helps to begin with actions such as reading information published online by public bodies, attending
seminars and other meetings, and so on, on an ongoing basis to find some clue. In the process, it isimportant to look at information from the perspectives outlined in this Handbook in terms of seeking tounderstand the kinds of impacts that might affect one’s own business.
For this kind of information gathering, the regular approach is to assign responsibility to someone.
Because climate change has been traditionally seen as an environmental issue, the information gathering is often handled as part of the duties of the CSR, sustainability, or corporate planning departments.
However, to respond to the TCFD Recommendations the aim is climate-related
financial disclosure. Some important aspects will also be related to ESG investment. Therefore, it is desirable to have the department in charge of corporate
planning be responsible, in coordination with the asset management department. The lead personnel are in a central role and need to first consider how tocreate this collaborative structure.

Step 2

Dept. A
Lead
personnel

Dept. B
Lead
personnel

Involve stakeholders within the company and create basic systems for discussion

Step 2 involves finding more information sources, selecting and gathering the appropriate information,and sharing the information within the company. This work can be tedious and time consuming.
The question of how the lead personnel should communicate this information to the senior
management level is an important topic at this stage. A basic system for consideration needs to be created so that the lead personnel identified in Step 1 are enabled to consider climate-related topics, which
also serves to convey the appropriate information to senior management at the appropriate time.
For this, the lead personnel need to digest the climate change-related information they have gathered,identify what is relevant for the company’s business, and convey it broadly to other departments in thecompany. To attract the attention of busy people, the key is to find ways to point out correlations with
their own areas of interest and responsibility. To do so, it is necessary to create an in-house team topromote TCFD’s recommended disclosures, or a structure to consider basic (initial) responses within
the company, based on the collaborative structure mentioned in Step 1, by attracting the involvementof other relevant departments within the company.
The starting point for information dissemination within the company is likely to be information related toclimate change impacts on human health and mortality. Other recent topics include growing media
coverage about Europe moving toward a decarbonized society, including divestment campaigns. Other
items that could provide important opportunities to attract attention within the company include mainstream media reports, special television programs, declarations and endorsements made by international bodies, and so on.

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Essential points for life insurers to consider based on the TCFD

For example, how should a company view the guidance and policies (e.g., the UN Principles for Responsible Investment) issued by organizations and bodies that are important for the life insurance industry, andhow should a company consider its responses to such policies? Such consideration is an important starting point in terms of awareness of issues, particularly among senior management.
Now it is time to consider which departments should have personnel participating in an in-house team.
Because responses to the TCFD Recommendations are regarded as a corporate management issue andcould have impacts on many corporate departments, it is important to create an inclusive and cross-departmental team that cuts across multiple departments within in a company. It is important to consider
a team composition and structure that is appropriate for each company’s specific circumstances, but thefollowing aspects, for example, may be useful to consider when establishing a team.
GovernanceCorporate planning department, department responsible for sustainability

Strategy

Corporate planning department, asset management department (i.e., incharge of ESG investments)

Risk management

Department responsible for risk management

Metrics and targets

Department responsible for reporting CO2 emissions

General information
disclosure

Public relations department, investor relations department

As initiatives progress, the following departments might also be considered for future participation in the
team.
Insurance products

Product development department (when impacts on insurance payouts
become clearer)

Financial statements

Financial statement preparation department (when coverage in financial
statements becomes clearer)

InfosharingInfosharing

Management

Dept. C
Dept. A
Lead personnel
Info

68

Info

Info

Dept. D

Dept. B
Lead personnel
Info

Info

Info

Step 3

Decide and implement company-wide procedures to ensure company-wide
involvement

Once the number of interested persons begins to increase in Step 2, the next step is to expand the scopeto the entire company. The best way to move ahead at this point—whether to start with senior management or general employees—will likely depend on the company’s distinctive corporate approach andstyle.
The preference should be to start with senior management, whose role is emphasized in the TCFD
Recommendations. To do so, it is important to discuss among the company’s internal stakeholders
what approaches would be most effective for management. For example, the best opportunity might
be a seminar on climate change for all executives jointly held with the board, etc., providing an explanation of current topics and why these themes are important, presented by well-known expert(s). If possible, a series of seminars over the course of half a year would promote deeper understanding.
In many cases the approach of trying to reach senior management may not be easy to achieve. In suchcases, the departments that collaborated during Step 1 should discuss matters and choose approaches
and means that reach across corporate departments. The themes themselves may be similar to what
would have been presented to senior management, but the what is important in this case would be thatthe content is oriented more toward the practical level.
It is important to go beyond internal responses, and provide concrete information to employees who areresponsible for interactions with stakeholders outside the company that arise in the course of business,such as customers and clients, supervisory bodies, asset managers, and/or NGOs, etc. If these employees
are able to see how the issue of climate change can also affect how they do their own day-to-day
work, this awareness can serve as a platform to sustain awareness and action at the practical level.
The key to ensure effectiveness is to incorporate these kinds of procedures into internal routines andsystems for both senior management and operational staff. Rather than ending with just one seminar,
companies are encouraged to create better cycles by circulating new information to constantly promoteawareness of the climate implications for day-to-day business, and also to obtain feedback from thesenior management and operational staff who are receiving that information.
Info
Info
Info

Info gathering

Internal info sharing

Developinternal routines

Meetings

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Essential points for life insurers to consider based on the TCFD

Step 4

Establish a company-wide discussion system and consider how to maintainprogress

Having reached this point, the final step is to create a framework to consider these issues at the company-wide level.
Because of the broad impacts of climate change, responses to the TCFD Recommendations could also
involve nearly all departments of a company, including management, operations, and risks, etc. Publicconcern about the issue of climate change has been rising in part due to the increasing levels of damage
from extreme weather in recent years. In that context, in order to always discuss what needs to be done
based on the latest information, it is essential to establish frameworks for company-wide discussion
and company-wide policies for responses, beyond the level of the lead personnel identified in Step 1.
For the disclosures being called for by the TCFD Recommendations, companies also need to pay carefulattention to create information sharing systems. As efforts are maintained year after year under thesystems that have been established, a body of knowhow will be accumulated to advance a company’s
responses to the TCFD Recommendations in ways that match the company’s own distinct circumstances.

Info sharing

Company-wide
policies

Info

Info

Info
Info gathering

Share info internally

Continue
internal routines
Meetings

Accumulate knowhow

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3 A company’s climate-related disclosures
What kinds of disclosures are expected of life insurance companies?
Below is a description of key points for disclosures that life insurance companies are encouraged to do as
institutional investors involved in asset management. This is based on the overview and four pillars of the
TCFD Recommendations as introduced in Chapter V. For life insurance companies in particular, the main
points here are the same as for institutional investors, because it is considered to be appropriate for themto start with disclosure of items that are in common among all sectors, such as governance, as describedabove.
GovernanceFor governance, the same disclosure content is encouraged across all sectors. This includes the supervisory functions of the board, and the role of senior management in assessing and managing climate-related risks and opportunities. In most companies, environment-related initiatives are probably reported insome form to and/or overseen by senior management. Since climate change responses have for a longtime been handled as a subset of environmental issues, many companies probably have integrated
climate into those processes.
Rather than formalities of procedures, the TCFD Recommendations call on companies to show the actual
situation and effectiveness, in terms of whether or not climate-related initiatives are firmly positioned
under senior management control and oversight. As shown in Chapter V, governance is one of theimportant pillars of the foundations of the TCFD Recommendations overall. In that context, the effectiveness of the role played by top management is a key point from the perspective of evaluating the information disclosed.
Note that the parts referring to ESG factors in Japan’s Corporate Governance Code (amended in 2018)
correspond to the TCFD Recommendations.

“

It has been noted that while the quantitative part of financial statements of Japanese companies
conform to a standard format and therefore excel with respect to comparability, non-financial
information, such as financial standing, business strategies, risks and ESG (environmental, socialand governance) matters, is often boiler-plate and lacking in detail, therefore less valuable. The
board should actively commit to ensure that disclosed information, including non-financial
Japan’s Corporate Governance Code (excerpt)
information, is as valuable and useful as possible.

”

Specific examples
Examples of possible initiatives:➤ Developing policies• Documentation of adopted policies for initiatives on environment and climate change• Documentation of adopted policies for initiatives on ESG investment and lending➤ Reporting to the board (and top management)• Reporting to board of directors regarding responses to climate change issues• Can also consider reporting to the board via committees, where a company has an expert committee on sustainability

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Essential points for life insurers to consider based on the TCFD

Strategy
Strategy is a particularly important theme in the TCFD Recommendations, and the use of scenario analysis is also encouraged, but companies often find some themes or topics to be rather bewildering to deal
with. Thus, to begin with, below are excerpts from the TCFD Recommendations, from supplemental guidance for asset owners, to highlight some key points for a company to note in terms of disclosure.
Strategy: Recommended disclosure (b)Describe the impact of climate-related risks and opportunities on the organization’s business, strategy, andfinancial planning.
Supplemental guidance for asset owners
Asset owners should describe how climate-related risks and opportunities are factored into relevant investment
strategies. This could be described from the perspective of the total fund or investment strategy or individual
investment strategies for various asset classes.

Strategy: Recommended disclosure (c)Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario.
Supplemental guidance for asset owners
Asset owners that perform scenario analysis should consider providing a discussion of how climate-related
scenarios are used, such as to inform investments in specific assets.

When formulating an investment strategy, companies are first encouraged to clarify how they haveconsidered climate-related risks and opportunities with their relevance to individual investment strategies. Also, the fact of whether or not scenarios were used in investment decision-making is listed as an
item for disclosure, but this is worded as “consider describing,” so the guidance is not saying that thisdescription is absolutely necessary. This is because of the fact that many companies are not yet using
climate-related scenarios in formulating strategies, this involves technical difficulties, and scenario analysis results can also include confidential information directly linked to their business strategies.
Specific examples
Examples of possible initiatives:➤ Recognizing climate change risks and opportunities as follows, undertake appropriate risk management,

and be more proactive providing green finance to companies that help the transition to a low-carbon
society
Opportunities• Increased opportunities for investment and lending for companies, technologies or projects that
contribute to the transition to low carbon
Risks• In the insurance business, the risk of increased insurance payouts due to extreme weather, and risks
from rising disease morbidity and mortality due to the rise in average temperatures.
• In asset management, the risk of impaired value of investment assets due to the transition to a low
carbon society.

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Risk management
Regarding risk management as well, the TCFD Recommendations provide supplemental guidance forasset owners.
Risk Management: Recommended disclosure (a)Describe the organization’s processes for identifying and assessing climate-related risks.
Supplemental guidance for asset owners
Asset owners should describe, where appropriate, engagement activity with investee companies to encourage
better disclosure and practices related to climate-related risks to improve data availability and asset owners’ability to assess climate-related risks.

Risk Management: Recommended disclosure (b)Describe the organization processes for managing climate-related risks
Supplemental guidance for asset owners
Asset owners should describe how they consider the positioning of their total portfolio with respect to the transition to a lower-carbon energy supply, production, and use.
This could include explaining how asset owners actively manage their portfolios’ positioning in relation to thistransition.

Specific examples
Examples of possible initiatives:➤ Insurance business• Investigation and research into the impacts of changes in the frequency and scale of natural disasters
on insurance payments and the medium-to-long-term impacts on morbidity and mortality due torising average temperatures.
➤ Asset management• Formulation of investment and lending standards/criteria• Engagement activities with investees (implement climate change-related dialogue)• Analysis of climate change-related impacts on investment and lending assets“Engagement” and “portfolios” are key words that deserve more attention here.
Regarding engagement, as a means of increasing a company’s risk assessment capacity, companies
should describe what they are doing through engagement to encourage disclosure and actions by companies in which they are investing. Regarding portfolios, companies should describe how in particular
their own portfolios are exposed to transition risks, and how they are managing those risks.
Both are important points for institutional investors to show how they are reaching out to the companies
they invest in. These points are important particularly for institutional investors to consider, in combination with the items of how to evaluate the disclosures from the companies in which they invest, as
described further below.

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Essential points for life insurers to consider based on the TCFD

Metrics and targets
The TCFD Recommendations provide the following items in supplemental guidance for asset owners
relating to metrics and targets.
Metrics and targets: Recommended disclosure (a)Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its
strategy and risk management process.
Supplemental guidance for asset owners
Asset owners should describe metrics used to assess climate-related risks and opportunities in each fund orinvestment strategy. Where relevant, asset owners should also describe how these metrics have changed overtime.
Where appropriate, asset owners should provide metrics considered in investment decisions and monitoring.

Metrics and targets: Recommended disclosure (b)Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
Supplemental guidance for asset owners
Asset owners should provide the weighted average carbon intensity, where data are available or can be reasonably estimated, for each fund or investment strategy.
In addition, asset owners should provide other metrics they believe are useful for decision making along with adescription of the methodology used.

Specific examples
Examples of possible initiatives:➤ Disclosure of CO2 emissions associated with business activities (this refers to disclosure of emissions

associated with overall business as a life insurance company)

The TCFD Recommendations say that asset owners should state specifically what data and metrics theyused for their decision making, including the formulation of strategies. Regarding (b) above, the Recommendations provide a table with reference information relating to common carbon footprinting andexposure metrics, including weighted average carbon intensity.
However, the TCFD acknowledges that currently there are various constraints involved. For example, due
to the challenges and limitations of current carbon footprinting metrics, as well as difficulties with data
availability and methodologies, that the TCFD mentions that asset owners may not be able to adequately
report weighted average carbon intensity for all of their investments.
As explained in Chapter VI, there are still not many examples of information disclosure in line with the
TCFD Recommendations. From the reports compiled by the TCFD regarding the state of initiatives
around the world, one can see that companies are making various attempts to move ahead as they deal
with various challenges.
TCFD disclosures are also expanding gradually in the financial industry. The contents that should be
written in disclosure documents are in principle determined in accordance with each company’s initiatives, but readers are encouraged to refer to the examples of other companies shown in Chapter VI(pages 42 to 26).

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The following Japanese life insurance companies are conducting disclosures in line with the TCFD’s
recommended disclosures (as of September 30, 2019).
Examples of disclosures (alphabetical order)• Dai-ichi Life Holdings: Annual Report 2019
• Nippon Life Insurance Company: Nissay Annual Report 2019 (Integrated Report)of climate-related information disclosed
4 Evaluation
by investee companies
What is the preferred/desirable way to evaluate company responses to TCFD?
The TCFD Recommendations provide a framework for the financial sector to appropriately evaluate theimpacts of climate change, which is one of the biggest risks facing companies. Using information
disclosed by investee companies in line with the TCFD Recommendations, life insurance companies—which are institutional investors—can decrease their own portfolio risk, appropriately evaluate thecompanies in which they have invested and provided lending, and through engagement, enhance theirmedium and long-term corporate value.
“Appropriately evaluate” does not simply mean verifying the correctness and accuracy of information
disclosed. It means evaluating—in the context of what the company does as its core business, and interms of its CSR activities—the extent to which the company is properly understanding its climate-related risks and hedging against them, and also, whether it is taking advantage of opportunities and creating
successes.
By examining disclosures that are compliant with the TCFD Recommendations it becomes easier to compare multiple companies in the same industry. Companies that are doing a good job of responding toclimate change will probably be viewed as more desirable investments and borrowers. Companies thatare not doing so well in that regard can be encouraged to try harder, through engagement and dialog. If
as a result the ratings and corporate value of those companies increase, the ultimate result will be anincrease in the returns of institutional investors.
For things to work this way, one requirement is that the party doing the evaluating must properly
understand the impacts of climate change on the companies and industries where the investments
are placed. Of course, an enormous amount of information can be gleaned from reports and disclosuresfrom companies, but the disclosing companies might not necessarily be able to disclose every bit of
information.
The personnel responsible for evaluating disclosures are encouraged to deepen their understanding ofindividual companies and industries, while drawing on the characteristics of climate change impacts ineach industry (Chapter 2) and the examples of leading companies conducting proactive disclosure(Chapter VI).

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Essential points for life insurers to consider based on the TCFD

Useful information online
Scientific information on climate changeIntergovernmental
Panel on Climate
Change (IPCC)• IPCC (English)
https://www.ipcc.ch/• IPCC-related information from Ministry of the Environment (Japan)
http://www.env.go.jp/earth/ondanka/ipccinfo/• National Institute for Environmental Studies, Center for Global
Environmental Studies (information on climate change, in Japanese)
http://www.cger.nies.go.jp/ja/library/qa/qa_index-j.html• Climate Change Adaptation Information Platform
http://www.adaptation-platform.nies.go.jp/index.html

International climate change negotiations, Japanese policy, etc.
United Nations
Framework Convention
on Climate Change(UNFCCC)• Ministry of the Foreign Affairs: Outline of UNFCCC (in Japanese)
https://www.mofa.go.jp/mofaj/gaiko/kankyo/jyoyaku/clm_cnv.html• UNFCCC (English)
https://unfccc.int/

Paris Agreement• Ministry of Foreign Affairs: International history leading to the historic Paris
Agreement (Japanese)
https://www.mofa.go.jp/mofaj/press/pr/wakaru/topics/vol150/index.html• Ministry of the Environment: Basic documents on the Paris Agreement (Japanese)
http://www.env.go.jp/earth/ondanka/cop/shiryo.html

Financial Services
Agency• Financial Authorities and SDGs (Japanese)
https://www.fsa.go.jp/policy/sdgs/FSAStrategyforSDGs_2018.html

Ministry of Economy,
Trade and Industry• Trends in Climate Change-related Disclosures (Japanese)
https://www.meti.go.jp/policy/energy_environment/global_warming/disclosure.html

Ministry of theEnvironment• Scenario analysis support project for climate risks and opportunities in line with
TCFD (Japanese)
https://www.env.go.jp/press/107168.html

Major frameworks and activities responding to climate change
TCFD• Task Force on Climate-related Financial Disclosures (English)
https://www.fsb-tcfd.org/• TCFD Recommendations downloads (English)
https://www.fsb-tcfd.org/publications/final-recommendations-report/* Japanese version of the Recommendations is available from the above site.

• TCFD Consortium
https://tcfd-consortium.jp/• TCFD Summit
https://tcfd-summit.org/

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PRI

• Principles for Responsible Investment (English)
https://www.unpri.org/

CDP• CDP (English)
https://www.cdp.net/ja/

Climate Change Starter's Guide
Impacts and Key Considerations for the Life Insurance Industry

Research and writing

Green Pacific Co., Ltd.
Kazuhito Yamada, Mariko Fujimori

Chief editor

Hideo Harasawa

Based on thirty years of experience to address climate change issues,
Green Pacific Co., Ltd. supports private sector responses to climate change.
http://www.hq-greenpacific.co.jp/
Published November 2019Japanese edition Nov 2019, English edition May 2020

All rights reserved

Separate use of cover photos prohibited.

Impacts and Key Considerations for the Life Insurance Industry

Impacts and Key Considerations for the Life Insurance Industry

Climate Change Starter's Guide

Climate Change Starter's Guide

Life Insurance Association of Japan

Life Insurance Association of Japan

Climate Change
Starter's Guide

Impacts and Key
Considerations for theLife Insurance Industry

Life Insurance Association of Japan