On June 21, TEJ (Taiwan Economic Journal) held a seminar titled “Sustainable Finance from Dual Perspectives: Climate and Nature”. The seminar focused on sharing practical experiences in “Investing and Financing Carbon Reduction Management – TCFD” and “Coexistence with Nature – TNFD”, providing insights into frameworks and practical experiences.
The seminar invited several distinguished speakers: Mr. Ivan Cheng, Chief Technology Officer of BSI Taiwan; Ms. Sophie Yu, Senior Vice President of Risk Management Department at CTBC Holding; Prof. Shih-Yuan Lin from the Lab for Integrated Socio-Spatial Science and Information at National Chengchi University; Prof. Yu-Yuan Shih, Assistant Professor at the Graduate Institute of Sustainability Management and Environmental Education at National Taiwan Normal University; and Mr. Louis Fang, Assistant Vice President of the Sustainable Development Department at TEJ. They each delivered speeches on TCFD financed emissions management, TNFD analysis, and practical case studies.
Mr. Ivan Cheng, Chief Technology Officer of BSI, delivered a keynote speech on “Developing Sustainable Financial Strategies through TCFD Reports.”
Drawing from BSI’s extensive experience in TCFD report verification. Mr. Cheng advises that regarding climate change and natural issues, boards of directors should not only receive information but also demonstrate management capabilities to monitor climate change issues. He emphasized that after conducting carbon emission scenario analyses, the results should be reflected in strategic planning and align with the ultimate indicator targets. Mr. Cheng highlighted that due to the diverse nature of lending and investment portfolios in the financial industry, carbon inventory is highly challenging. After inventorying, it is crucial to set carbon reduction targets for each lending and investment portfolio to meet science based targets.
Mr. Louis Fang, Assistant Vice President of TEJ, delivered a keynote speech on “TCFD Transition Risk – Challenges in Managing Carbon Emissions for Lending and Investment.”
TEJ integrates corporate carbon emission information and estimates through the “TCFD Financed Emissions Management System. Mr. Fang, shared insights into debunking myths about financed emissions: Absolute carbon emission numbers for businesses are less meaningful, it is advisable to first calculate financed emissions using the PCAF method before making decisions. The assessment method with good data quality may not necessarily be the best solution. Post-investment and post-loan carbon management require detailed analysis of the reasons for changes in financed emissions to achieve actual carbon reduction.
Simultaneously, Mr. Fang analyzed the carbon emission scenario analysis and stress testing faced by the banking, securities, and futures sectors. Quantifying transition risk processes is complex, involving not only carbon emission data and prediction models but also scenario analysis in the second step and the final step of risk quantification, which requires expertise in market risk, credit risk, and climate domains. Effective communication across departments and even disciplines is necessary. Through rigorous carbon emission scenario analysis, stress testing processes, and result analysis, the connection between climate and finance can be strengthened, making sustainable finance more practical.
Dr. Shih-Yuan Lin, the CEO of the Lab for Integrated Socio-Spatial Science and Information at National Chengchi University, shared a keynote speech on “Application and Challenges of Physical Risk Assessment in the Financial Industry.”
Dr. Shih-Yuan Lin, specializing in satellite information interpretation, used the 2023 Dazhi residential building tilting incident to illustrate the process of satellite image processing and disaster data analysis. He explained that by considering spatial data conditions, obtaining map data, converting it to physical conditions, and finally through overlay analysis and network analysis, it is necessary to achieve more detailed spatial resolution as well as more flexible temporal resolution. This allows for more accurate disaster loss assessments, effectively implementing disaster risk management and enhancing TCFD physical risk assessments.
Professor Yu-Yuan Shih shared a keynote speech on “The Importance and Application of TNFD: Key Insights into Nature-related Financial Disclosures.”
Biodiversity is one of the urgent global issues following climate change and net-zero. The aims to address the financial impacts of nature-related risks on businesses through effective data disclosure. Professor Shih suggested that companies should prepare in advance by identifying nature-related risks.
Professor Shih emphasized that companies can develop better corporate governance strategies by aligning with government policies on natural ecological conservation, leveraging their core business strengths to gain competitive advantages, and referencing the TNFD framework. This approach helps reduce their environmental impact and allows them to seize nature-related opportunities.
Ms. Sophie Yu, Vice President of the Risk Management Department at CTBC Holding, shared a keynote speech on “Pioneering Experiences: TNFD Reports.”
CTBC Holding joined TNFD in 2022, collaborating with global financial institutions on nature-related issues. In 2023, it released Taiwan’s first TNFD-compliant report and committed to becoming a early adopter enterprise in TNFD.
Ms. Yu recommends that financial peers start with industry heat maps of nature-related sensitivities to conduct assessments. They should further identify significant nature-related risk factors and corresponding opportunity items, thereby advancing appropriate investments, financing, or offering product services.
Ms. Yu shared that biodiversity is a relatively unfamiliar issue for the financial industry. Initiating risk and opportunity identification poses challenges due to data quality and regional characteristics. As a member of the Pioneering Alliance, CTBC Holding leads the data and risk control working group, working with regulatory authorities to enhance the availability of nature-related physical risk data in Taiwan, promoting data application and analysis in the financial industry.
The seminar attracted numerous experts from the financial industry, with enthusiastic responses, highlighting that climate and nature issues have become emerging topics in the financial industry. TEJ will continue to provide TCFD and TNFD solutions,offering professional data and assessment tools to help companies achieve sustainable development more steadily and further. .
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