Context of Emerging Risks Impact and Mitigation • The Bank proactively analyzes and identifies the potential risks and opportunities of technological innovations that can help us to better serve value-added solutions to our customers and identify risky customers. Climate change Undoubtedly, climate change will materially impact the earth’s natural environment and trigger adverse impacts on societies and economies across the globe. Climate change has become one of the key agendas of governments, authorities, and international organizations. An increasing number of climate change-related requirements, assessments, and disclosures have been promoted, and to some extent enforced, by these parties to mitigate climate change impacts. Proactive climate risk management is also essential in this regard, which will allow banks to identify and respond to risks in a timely manner. Failing to adopt such practice will put banks at risk for indirect financial and non-financial threats. Generally, banks have been under public scrutiny and are held accountable for negative impacts on the environment and society caused by business borrowers. Financing irresponsible borrowers will not only be a significant source of immediate reputational risk but will also undermine the Bank’s long-term sustainability in both asset value and profitability. Likewise, banks play an integral part in addressing climate change issues and facilitating the transition to a low-carbon economy through financial products and services. • • • • • The Bank implements the Environmental and Social Responsibility (ESR) policy that outlines framework and requirements for managing environmental and social risks in commercial lending. The Bank is in the process of conducting climate risk assessment and scenario analysis. The Bank plans to apply TCFD framework by 2024. The Bank commits to stop financing any new coal-fired power plant projects, activities related to coal mining and exploration projects, oil sands, and commercial logging operations in primary tropical forest, as stated in the Exclusion List of the ESR Policy. The Bank continues to deliver environmentally responsible products such as green loans, sustainability-linked loans, and green bonds. The Bank explores and collaborates with green and sustainable businesses to increase the Bank’s green lending portfolio and assist customers through their green/sustainability transition. 114 TMBThanachart Bank Public Company Limited
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