Financial institutions regarding the "TCFD Climate-related Information Disclosure Report" summary and writing process process? 

Based on the requirements of the TCFD Climate Finance-related Risk Disclosure Framework and the Guidelines for Climate Change Disclosure for Securities Firms, the following is the overall step-by-step process for writing a climate change disclosure report: 

A. Governance

 A1. Evaluate the role and responsibilities of the board of directors Identify how the board oversees climate-related risks and opportunities. 

A2. Establish a climate-related risk management committee or working group responsible for climate risk management. 

A3. Develop a climate risk management reporting process Design and implement a process for reporting climate-related risks to the board. 

B. Strategy 

B1. Identify climate-related risks and opportunities Analyze and identify short, medium, and long-term climate-related risks and opportunities faced by the company. 

B2. Assess business impacts Assess the impact of climate change on the company's operations, strategy, and finances. 

B3. Develop a resilience strategy Consider strategic resilience under different climate change scenarios, including low-carbon transition plans. 

C. Risk Management 

C1. Establish risk identification and assessment processes and develop processes to identify and assess significant climate risks across products or investment strategies. 

C2. Integrate climate risks into overall risk management Integrate climate-related risk management processes into the company's overall risk management framework. 

C3. Develop risk management strategies and controls : Design and implement climate risk management strategies and controls. 

D. Indicators and Targets 

D1. Identify key indicators and targets , select key indicators for assessing climate-related risks and opportunities, and set corresponding targets. 

D2. Quantify greenhouse gas emissions: Calculate the organization's carbon emissions for Scope 1, 2, and Scope 3. D3. Report and Improve Write a report on the implementation of climate-related indicators and targets, and propose improvement measures based on progress. 

Common activities across all steps (i.e., each KPI requires execution parts) 

1.Data collection and analysis: Provide support for all the above steps, including collecting internal and external data, conducting analysis, and evaluation. 

2.Communication and training: Ensure that all relevant personnel understand TCFD requirements and conduct training based on best practices. 

3.Report preparation: Integrate all the above information to write and publish reports that comply with TCFD requirements. 

This process is designed to help companies comprehensively address climate change-related risks and opportunities, from establishing governance structures, formulating strategies, managing risks, to setting and evaluating key indicators and goals, each step critically impacts financial institutions' ability to respond to climate change 

1. What is TCFD Climate-related Disclosures 

The Task Force on Climate-related Financial Disclosures (TCFD) was established by the International Financial Stability Board (FSB) in 2015 to develop a series of recommendations to promote transparent disclosure of the impact of climate change on their financial positions. The TCFD recommends focusing on four main areas: governance, strategy, risk management, and metrics and objectives, which are designed to help companies provide information about their response to climate risks and opportunities for stakeholders such as investors, lenders, and insurance underwriters to make more informed financial decisions. 

The TCFD's recommendation framework emphasizes four key areas: 

• Governance, Strategy, Risk Management, and Metrics and Targets, aiming to promote effective management of climate change risks and appropriate allocation of capital through transparency. The TCFD's four core recommended elements are governance: Companies should disclose how their boards and management oversee and manage climate-related risks and opportunities.

• Strategy: The potential impact of climate change on the company's business, strategy, and financial planning should be disclosed, including assessed through scenario analysis. 

• Risk Management: Describe in detail how the company identifies, assesses, and manages climate-related risks. 

• Metrics and Targets: Businesses should use specific metrics and targets to measure and manage climate-related risks and opportunities, and track performance and progress. 

2. What is the difference between the TCFD framework in the UK and the climate disclosure guidelines for securities firms in Taiwan 

What is the difference between the TCFD framework proposed by the International Financial Stability Board (FSB) and the climate change information disclosure guidelines for securities firms proposed by the Securities Association of the Republic of China? 

The TCFD framework is an international set of guiding principles that apply to businesses across all industries, with a focus on increasing transparency on climate-related financial risks. The Climate Change Information Disclosure Guidelines for Securities Firms proposed by the Securities Association of the Republic of China are designed for the actual operation of the securities industry in Taiwan, closer to the needs and regulatory environment of the local market, and provide more detailed guidance on how to implement the TCFD recommendations. The TCFD framework proposed by the International Financial Stability Board (FSB) is a global guiding principle aimed at unifying corporate climate-related financial disclosure standards. In contrast, the Taiwan Securities Association's climate change information disclosure guidelines for local market characteristics are more aligned with the operational and regulatory needs of Taiwan's securities industry, incorporating the core elements of the TCFD framework and localizing them to meet the specific needs of domestic companies and investors. While Taiwan's securities industry may not fully comply with all international standards of the TCFD when implementing climate-related financial disclosures, the official guidelines and recommendations provide a practical framework for companies to refer to and screen practices that suit their circumstances. This includes leveraging published guidance on climate change scenario analysis. 

• Global and Local Standards: The TCFD is a global guiding principle, while Taiwan's securities disclosure guidelines are adjusted to address local market characteristics. 

• Scope of application: TCFD applies to all industries, and Taiwan's guidelines are specifically designed for the securities industry. 

• Detailed Guidance: Taiwan's guidelines provide more specific operational details and cases to help local companies implement them. 

3. Composition and key promoters of the securities industry 

Which parts of the securities company should establish climate governance units, and which position is most suitable for the key promoters ? 

Securities companies should establish a dedicated climate governance unit consisting of a board of directors and senior management to ensure that climate-related risks and opportunities are effectively managed. Key sponsors are best served by senior executives with decision-making power and influence, such as the Chief Executive Officer (CEO) or Chief Financial Officer (CFO), to demonstrate the company's importance to climate change issues. 

Governance structure: A dedicated climate governance organization should be established to be supervised by the board of directors.

Key Positions: Chief Executive Officer (CEO), Chief Financial Officer (CFO), or Chief Risk Officer (CRO) is best suited as a key sponsor. 

Terms of Responsibility: The unit shall be responsible for developing, supervising, and evaluating climate-related strategies and risk management measures. 

4. Structure of Writing a Climate-related Disclosure Report 

Begin writing a climate-related disclosure report that should include those report structures or sections 

The climate-related disclosure report should detail how the company identifies, assesses, and manages the risks and opportunities posed by climate change. The report structure should include the way the corporate governance structure governs climate risks, the company's strategy in the face of climate change, risk management processes, and practices for measuring and managing climate risks using specific metrics and targets. 

The climate-related disclosure report should include the following structures or sections: 

• Executive Summary: Outlines the report's key findings and action items. 

• Governance: Outlines how climate-related risks and opportunities are addressed in the corporate governance structure. 

• Strategy: Describes the impact of climate change on the company's strategy and business model, including scenario analysis. 

• Risk Management: Details the process for identifying, assessing, and managing climate-related risks. 

• Metrics and Objectives: Lists key metrics and objectives for measuring and managing climate-related risks and opportunities. 

• Financial Impact Analysis: Analyze the potential impact of climate-related risks and opportunities on financial health. 

• Management Insights and Outlook: Provide management's perspectives and future plans for the company's climate-related strategies and risk management. 

• Executive Summary: Outline how the company manages climate risks and capitalize on related opportunities.

•  Corporate Governance: Elaborate on how the board oversees climate risks and strategies. 

• Risk and Opportunity Assessment: Describe in detail the company's process for identifying, evaluating, and managing climate risks and opportunities. 

• Risk Management Strategy: Describe the company's specific measures to address climate change risks. 

• Metrics and Goals: List key metrics and goals for measuring and managing climate risks and opportunities 

5. What are the two most common scenarios in climate scenario analysis? Why does it mean 

Climate scenario analysis usually includes two main scenarios: the 2°C temperature rise scenario (2°C scenario) and the high emission scenario (High Emission scenario). The 2°C temperature rise scenario corresponds to global efforts to limit temperature rise to 2°C in line with the goals of the Paris Agreement, which helps companies assess the business impact of strict climate policies. The high-emission scenario assumes that existing climate policies continue to fail to effectively control greenhouse gas emissions, allowing companies to assess the potential impacts under a worse climate change scenario. 2°C or lower greenhouse gas concentration scenario and high greenhouse gas emission scenario. The 2°C scenario aligns with the goals of the Paris Agreement and aims to explore the economic and financial implications of limiting global temperature rise to 2°C; The high-greenhouse gas emissions scenario, on the other hand, assumes the persistence of current policies, technologies, and consumption patterns, exploring the economic and financial impacts of significant temperature increases. These two scenarios help companies assess the risks and opportunities of different climate change outcomes.

•  2°C Temperature Rise Scenario: Explore the business implications of global temperature rise within 2°C. 

• High Emission Scenarios: Assess the economic and financial risks of uncontrolled greenhouse gas emissions. 

6. The so-called physical risks and transition risks include those 

• physical risks include natural disasters directly caused by climate change, such as floods, droughts, and extreme weather events, which may lead to the loss of corporate assets and operational disruptions. 

• Transition risks involve legal, technical, market, and reputational risks that may be encountered during the transition to a low-carbon economy, such as carbon price setting, changes in consumer preferences, and the development of new energy technologies. 

• Physical risks refer to the physical impacts directly caused by climate change, such as extreme weather events (floods, storms, droughts) and long-term climate change (rising sea levels, rising temperatures). 

• Transition risks arise from the transition to a low-carbon economy, including changes in policies and laws (carbon prices, emission limits), markets (changes in consumer preferences, competition in low-carbon technologies), technology (development of new energy technologies), and reputation (public perception of corporate climate actions). 

• Physical Risks: Includes direct physical impacts such as extreme weather events (e.g., floods, droughts) and long-term climate change (e.g., sea level rise). 

• Transition risks: With the shift to a low-carbon economy, the economic impact of policy changes, changes in market demand, technological innovation, and reputational risks. 

7. What should be included in the relevant risk management section? 

The risk management section should describe in detail how the enterprise identifies, assesses, monitors, and responds to climate-related risks. This includes establishing cross-departmental risk management processes, determining the scope and severity of risks, developing risk mitigation measures, and regularly reviewing and updating risk assessments. Additionally, the governance structure responsible for overseeing climate risk management, including the roles and responsibilities of the board of directors and specialized committees, should be clearly identified. The risk management section should detail how the company identifys, assesses, monitors, and manages climate-related risks. Specifically, it includes: 

• Risk identification: Identify and classify climate-related physical risks and transition risks faced by companies. 

• Risk Assessment: Assess the severity and likelihood of risks using quantitative and qualitative methods. 

• Risk Management Strategies: Develop response measures and mitigation strategies, including insurance, infrastructure improvements, and business model adjustments. 

• Monitoring and Reporting: Regularly monitor and report to management and stakeholders on risk status. 

• Risk Identification: Systematically identify various risks associated with climate change. 

• Risk Assessment: Conduct quantitative and qualitative analysis of identified risks to assess their potential impact on the enterprise.

•  Risk mitigation: Develop corresponding strategies and measures to reduce risk impacts, such as investing in climate adaptation technologies and establishing emergency preparedness plans. 

• Monitoring and Reporting: Regularly monitor the risk status and the effectiveness of management measures and report to relevant stakeholders. 

8. What are the response strategies?

 The response strategy should be based on the results of the risk assessment, including measures to reduce the impact of physical risks and strategies to prepare for transition risks. This may include investing in infrastructure for climate adaptation and resilience, developing or transitioning to low-carbon products and services, and participating in policy-making processes to influence future climate policies and regulations. 

• Business Model Adjustment: Transition to a low-carbon economy and develop sustainable products and services. 

• Energy Efficiency Enhancement: Improve energy efficiency and reduce carbon footprint through technological innovation and process improvements. 

• Policy Impact: Actively participate in the process of formulating climate policies, strive for favorable conditions for enterprises, and anticipate and respond to risks brought about by policy changes. 

• Risk Diversification: Diversify climate risks through portfolio diversification and geographical distribution optimization. 

9. Setting Goals and Indicators 

Goals and indicators should be defined for the climate-related risks and opportunities of the enterprise and aligned with the company's overall climate strategy and commitments. This includes setting greenhouse gas emission reduction targets, energy efficiency improvement metrics, and other sustainability goals. Companies should regularly track the performance of these metrics and adjust their strategies and goals based on actual progress to ensure continuous improvement and meet climate-related commitments. Through the detailed discussion of these nine chapters, Taiwan's securities industry can gain a deeper understanding and implementation of climate-related financial disclosures, which not only align with international standards but also respond to Taiwan's unique market and regulatory needs. The following is a continuation of the previous discussion: 

• Emission Reduction Targets: Set specific greenhouse gas emission reduction targets that align with international emission reduction agreements or standards.

•  Adaptation indicators: Establish key performance indicators (KPIs) for climate adaptation and resilience, such as reducing water use and improving infrastructure weathering.

•  Monitor progress: Use data and technology to track goal achievement and adjust strategies based on monitoring results. 

• Communication Effectiveness: Report on the progress and effectiveness of climate action to external stakeholders, promoting transparency. 

10. Implementation and Communication Strategies 

After completing the disclosure plan for climate-related risk financial operations, the securities industry should develop effective implementation and communication strategies to ensure that relevant information is effectively communicated to all stakeholders, including investors, customers, employees, and regulators. This may include communication through various channels such as annual reports, corporate sustainability reports, websites, and investor presentations. At the same time, companies should establish feedback mechanisms to listen to external opinions on how to further improve climate risk management and information disclosure. 

• Challenges: Difficulty in obtaining data, complexity of evaluation models, uncertainty in the regulatory environment, and cost pressures to transition from traditional to climate-friendly models. 

• Opportunities: Improving corporate brand and market positioning, meeting investor and consumer demand for green financial products, first-mover advantage, and creating new business opportunities through climate action.

 11. Continuous Assessment and Improvement 

In view of the rapid changes in climate change and related policy environments, securities companies should regularly reassess their climate-related risks and disclosure practices to ensure continued compliance with the latest regulatory requirements and market expectations. This includes regularly reviewing and updating risk assessment models, disclosing content and strategic objectives, and adopting new best practices and technological advancements to improve the efficiency and effectiveness of climate risk management. 

• The Urgency of Climate Action: In the face of the global climate crisis, actively participating in climate-related risk disclosure and management as part of corporate social responsibility is crucial for building a sustainable future. 

• Strategic Transformation: Companies need to undergo strategic transformations, not only to comply with regulatory requirements but also to capitalize on the transformation opportunities brought about by climate change and protect them from future climate risks.

•  Collaboration and Communication: Cross-sector, collaboration between governments and NGOs, and open communication with stakeholders are crucial for enhancing climate resilience and promoting green finance. 

As global concerns about climate change continue to rise, climate-related financial disclosure in the securities industry has become an indispensable part. By following the core elements of the TCFD recommendations and incorporating Taiwan's localization guidelines, the securities industry can enhance its transparency and accountability on climate change issues, thereby enhancing corporate sustainability and maintaining competitiveness in global financial markets. Implementing these disclosures not only helps meet regulatory requirements and investor expectations but is also an important action for companies to combat climate change and protect the future of the planet. By continuously evaluating and adjusting its climate change response strategies, Taiwan's securities industry can play an active role in global efforts to mitigate and adapt to its impacts, contributing to a more sustainable and resilient economy. 

What is the difference between the "Guidelines for Climate Change Information Disclosure of Securities Firms" and the "Guidelines for Climate Change Information Disclosure of Securities Investment Trust Enterprises"? 

The so-called "securities firms" and "securities investment trust enterprises" are both financial institutions, and the competent authorities of both are the Xinrong Supervision and Administration Commission. What are the key requirements for each climate change information disclosure guideline? What is the difference? 

I. Guidelines for Climate Change Information Disclosure by Securities Investment Trust Enterprises (Investment Trust Industry) 

The purpose is to assist the securities investment trust industry in strengthening the disclosure of climate-related financial information. The following is a summary of the main contents of the document:

 1. General 

• Purpose: To assist the investment trust industry in strengthening climate-related financial information disclosure. 

• Scope: The investment trust industry needs to formulate environmental policies including climate change, and incorporate climate change factors into product and service strategies and asset management strategies. 

• Disclosure: Investment trusts should regularly disclose relevant climate change information in sustainability reports or official websites. 

2. Governance 

• Board of Directors Supervision: Including the establishment of committees or groups responsible for climate risk management, as well as the process and frequency of reporting to the board of directors. 

• Management Roles: Clarify the responsibilities of the board-assigned management in assessing and managing climate risks and opportunities. 

3. Strategic 

• Risk and Opportunity Considerations: Based on environmental, climate or ESG policies, consider the impact of business activities on climate change and the transformation and physical risks faced. 

• Climate-related risk identification: Describes the assessment and identification methods of climate-related risks and opportunities in the short, medium, and long term. 

4. Risk Management 

• Risk Assessment Process: Disclose the process for identifying and assessing climate-related risks, including the resources and tools used.

•  Management Process: Explain how to manage the identified material climate risks in your product or investment strategy.

 5. Indicators and Targets 

• Quantitative indicators: Disclose indicators for assessing climate risks and opportunities, and their application in investment decision-making and supervision. 

• Greenhouse Gas Emissions: Includes disclosures of Scope 1, 2 and selected Scope 3 emissions, calculated in accordance with PCAF or other comparable methodologies. 

• Performance Targets: Disclose goals and implementation performance for managing climate-related risks and opportunities.

This guidance emphasizes comprehensive requirements for investment trust businesses in climate change information disclosure, from governance structure, strategy setting, risk management to specific indicators and target setting, aiming to enhance transparency and help investors understand the risks and opportunities faced by companies facing climate change.  

II.The Guidelines for Climate Change Information Disclosure by Securities Firms (Securities Industry) 

are approved by the Financial Supervisory Commission to assist securities firms in strengthening the disclosure of climate-related financial information. The following is a summary of the main contents of the document: 

Chapter 1 General Provisions 

• Purpose: To assist securities firms in strengthening the disclosure of climate-related financial information. 

• Scope of application: All securities firms shall comply with these Guidelines, except for the branches of foreign securities firms in Taiwan and securities firms concurrently operated by other industries. 

• Policies and strategies: Securities firms should formulate environmental policies, including climate change, and incorporate climate change factors into their business and investment strategies. Information Disclosure: Depending on the size of the company, securities firms should prepare sustainability reports and regularly disclose climate change-related information. 

Chapter 2 Governance 

• Board Oversight: Disclose how the board oversees climate-related risks and opportunities, including the establishment of relevant committees or working groups and reporting processes. 

• Management Responsibilities: Describes the role of management assigned to responsibilities such as climate-related risk and opportunity assessment, strategy, financial impact analysis, and more. 

Chapter 3 Strategic 

• Climate Change Impacts: Securities firms should consider the direct impact, transition risks, and physical risks of climate change on their businesses, and formulate corresponding strategies.

•  Risk and Opportunity Assessment: Securities firms need to assess climate-related risks and opportunities in the short, medium, and long terms, and disclose assessment methods. 

Chapter 4 Risk Management

•  Risk Assessment Process: Securities firms should disclose how to identify and assess significant climate-related risks in each product or investment strategy. 

• Risk Management Processes: Describe the specific processes for managing climate-related risks, including management methods within various products or investment strategies.

 Chapter 5 Indicators and Targets 

• Climate-related Indicators: Securities firms should disclose the indicators used to assess climate-related risks and opportunities, including their application in investment decision-making and monitoring. 

• Greenhouse Gas Emissions Disclosure: The organization needs to disclose its Scope 1 and Scope 2 carbon emissions, and provide relevant information on Scope 3 when possible. 

• Performance Targets: Disclose goals and implementation performance for managing climate-related risks and opportunities. 

This guidance emphasizes the comprehensive requirements for the securities industry in climate change information disclosure, from governance structure, strategy setting, risk management to specific indicators and target setting, aiming to improve transparency and help the securities industry understand the risks and opportunities faced by companies facing climate change.  

III.Differences between the "Guidelines for Climate Change Information Disclosure by Securities Firms" and the "Guidelines for Climate Change Information Disclosure of Securities Investment Trusts": 

These two documents are one on the Guidelines for Climate Change Information Disclosure by Securities Firms, and the other is on the Guidelines for Climate Change Information Disclosure by Securities Investment Trust Enterprises. 

1.The following will summarize and compare the common regulatory content of the two documents and the differences between them: 

• Purpose and scope of application of the common regulations : Both guidelines aim to assist relevant financial institutions in strengthening the disclosure of climate-related financial information and improving transparency and risk management capabilities.

• Policy and Strategic Considerations: Operators are required to formulate overall environmental policies, consider issues such as climate change, and incorporate climate change-related factors into their products, services, and asset management strategies. 

• Climate-related Risk and Opportunity Management: Businesses need to establish internal regulations and mechanisms to regularly review the management of climate-related risks and opportunities. 

• Governance Structure: Emphasizes the board's oversight responsibility for climate-related risks and opportunities, including the establishment of special committees or working groups. 

2. difference part 

• Applicable Objects: 

• The Securities Firm Guidelines target securities firms, excluding foreign securities firms' branches in Taiwan and securities firms concurrently operated by other industries. 

• The Investment Trust Guidelines target securities investment trust enterprises, specifically mentioning the applicability of investment trust enterprises that are group or financial holdings. 

• Strategy and Risk Management Considerations: 

• The Securities Firm Guidelines focus more on the direct impact of business activities, transition risks, and physical risks. 

• The Securities Firm Guidelines emphasize the importance of integrating climate change factors into product and service strategies and investment strategies. The Investment Trust Guidelines specifically mention additional considerations for large investment trust companies with assets under management of NT$600 billion or more. 

• Greenhouse Gas Emissions Disclosure Requirements: 

• The Securities Investment Trust Guidelines have more detailed disclosure requirements for greenhouse gas emissions, especially for Scope 3 emissions.

•  Indicators and Target Setting:

•  The Investment Trust Guidelines regulate the disclosure requirements for greenhouse gas emissions in more detail, including Scope 1, 2, and selected Scope 3 emissions. 3.

3. Summary and Comparison

 These differences reflect the different challenges and needs that the two types of financial institutions may face in climate change information disclosure. As an important participant in the financial market, securities firms' strategies and investment decisions directly affect market structure and capital flows, making the integration of climate change factors crucial. As an important part of asset management, the management and disclosure of greenhouse gas emissions not only demonstrates its commitment to environmental responsibility but also provides investors with important risk assessment information. The two guidelines are highly consistent in purpose and basic structure, both aiming to enhance the identification, management, and disclosure of climate change risks in the financial industry. The differences mainly lie in the specific applicable objects, detailed descriptions of strategies, and specific requirements for greenhouse gas emission disclosure. This reflects the special challenges and needs that different types of financial institutions may face at the operational level. 

What should financial institutions disclose about their greenhouse gas "Scope 3: Category 15"? 

Reasonable estimates of financial institutions' contribution to climate change 

Scope 3 Category 15 refers to greenhouse gas emissions reports that cover sources of emissions related to the company's activities but not directly controlled by the company. Specifically, this includes the weighted average carbon emission intensity of assets, commodities, or investments managed by the company. The calculation and reporting of such emissions are intended to provide transparency into the carbon emissions risks and impacts involved in the company's investment decisions. Greenhouse gas emissions should be calculated in accordance with the Global GHG Accounting and Reporting Standard for the Financial Industry developed by the Partnership for Carbon Accounting Financials (PCAF) or other comparable methodologies. 

Scope 3 Category 15 focuses on an organization's indirect carbon emissions, particularly those derived from assets, goods or investments managed by the organization. This category allows organizations to assess and report on the contribution of their financial investment activities (such as stocks, bonds, loans, etc.) to climate change. According to the regulations, companies should provide the weighted average carbon emission intensity of these investments when data is available or reasonably predictable, which helps assess the carbon footprint of the company's portfolio and its possible impact on climate change. The methodology for calculating Scope 3 Category 15 emissions should follow the Global GHG Accounting and Reporting Standard for the Financial Industry developed by the Partnership for Carbon Accounting Financials (PCAF) or other comparable methodologies. 

PCAF's methodology provides a unified framework for financial institutions to quantify and report on greenhouse gas emissions from their financing activities and portfolios. This includes a full range of carbon emissions calculations from direct investments (such as equity and debt investments) to indirect investments (such as investment funds). According to these regulations, companies need to collect carbon emission data from relevant assets or investments, calculate their weighted average carbon emission intensity, and disclose this information in climate-related financial reports. This approach not only enhances transparency but also helps investors and stakeholders better understand and assess the risks and opportunities faced by companies in the face of climate change. 

What are the specific details of the Global GHG Accounting and Reporting Standard for the Financial Industry developed by the Partnership for Carbon Accounting Financials (PCAF)? How should the contribution to climate change be calculated in the case of a reasonable estimate? 

The Global GHG Accounting and Reporting Standard for the Financial Industry, developed by the Partnership for Carbon Accounting Financials (PCAF), is a set of greenhouse gas (GHG) accounting and reporting standards designed for financial institutions. The standard aims to provide a methodological framework that enables financial institutions to quantify and report on the carbon footprint of their loans and portfolios. The following is an overview of some of the core elements and calculation methods of the standard:

 1. Core Element 

• Scope: The PCAF standard covers various financial asset classes, including but not limited to corporate loans and bonds, project financing, real estate loans, mortgages, public loans, equity investments, etc. 

• Accounting Principles: Ensure transparency, consistency, comparability, and accuracy in accounting efforts. 

• Methodology: Provides detailed steps and guidelines to help financial institutions determine greenhouse gas emissions data related to their assets. 

2. Specific Calculation Methods 

In calculating a reasonable estimate of a financial institution's contribution to climate change, the following steps and methods should be followed:

•  Asset Class Identification: First, identify and classify the asset classes in the portfolio to determine the applicable calculation method. This is the first step in the process and involves identifying and categorizing asset classes within a portfolio to determine the applicable calculation methodology. This stage can take about a month to complete.

•  Data collection: Collect direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions data on investee entities (e.g., companies or projects). When this data is not available, industry average data or other estimation methods may be used. After identifying the asset class, the next step is to collect direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions data on the investee entity. This can take longer because data needs to be collected from multiple sources. When this data is not available, industry average data or other estimation methods can be used. This stage can take about 45 to 60 days. 

• Emission Allocation: Allocate corresponding carbon emissions to individual investments or loans based on the financial institution's equity ratio or loan balance in the investee entity. Finally, the corresponding carbon emissions are allocated to each investment or loan based on the financial institution's equity ratio or loan balance in the investee entity. This stage can take about 30 days. 

• Weighted Average Carbon Intensity Calculation: Calculate the weighted average carbon intensity, which is typically based on carbon emissions per $10,000 of investments or loans. Calculate the carbon emissions per ten thousand dollars of investment or loan, which is a key metric to measure the carbon intensity of a portfolio or loan portfolio. 

This calculation aims to quantify the carbon intensity of a financial institution's portfolio or loan portfolio. This is usually calculated by dividing the carbon emissions associated with the investment or loan (in metric tons) by the corresponding investment or loan amount (in tens of thousands of dollars). The calculation formula is as follows: 

5. Reporting: 

According to the requirements of the Global Carbon Accounting Standard (PCAF), financial institutions are required to prepare and publish greenhouse gas emissions reports. 

• This report should detail the following: Methodology Employed: Describe the specific methodology used to calculate carbon emissions, including asset class identification, data collection methods, and emission allocation strategies. 

• Data Sources: List the data sources used for the calculation, including sources for direct and indirect emissions data, as well as industry average data or estimation methods used. 

• Calculation results: The report should include the calculation results of the weighted average carbon emission intensity and the carbon emissions of each type of asset. 

• Contribution Assessment to Climate Change: Analyze and evaluate the potential impact of a financial institution's portfolio or loan portfolio on climate change, both positive and negative. 

These steps are crucial for promoting transparency and accountability among financial institutions regarding their climate impact and contributing to sustainable development and the achievement of net-zero carbon goals.

How financial institutions should conduct climate change scenario analysis. The following are summaries and suggestions: (Refer to the source source/Securities Investment Trust and Consulting Association of the Republic of China/Climate Change Scenario Analysis Practical Manual and Examples) and compile a summary for free reference for those who need it.

 1 . Basic framework of the summary : 

• Financial institutions conducting climate change scenario analysis basically include setting scenarios, parameters, and models to increase the quality of climate change information disclosure.

•  References: Designed based on the recommendations of the Financial Stability Board's (FSB) Task Force on Climate-related Financial Disclosures (TCFD).

 2.Scenario Analysis Operation: 

•  Purpose :Based on scenario analysis, it is an important foundation for climate change information disclosure, aiming to set scenarios, parameters, and models to improve the quality of climate change information disclosure.

•  Principle Explanation: Scenario analysis is an important tool for understanding climate-related risks and opportunity strategies, and assessing strategic resilience under different climate scenarios.

•  Scenario analysis process: 

1.Assess the materiality of climate-related risks. 

2.Select the scenario type and parameter range.

3. Business impact assessment. 

4.Formulate countermeasures. 

3. Reference examples 

• The following can be used as a reference for specific practices for each step, including but not limited to: 

1.listing climate-related risk items (factors). 

2.Identify the impact of climate risks on the business. 

3.The importance of assessing climate-related risks. 

4.Select the scenario type and parameter range. 

5.Business impact assessment. 

6.Formulate countermeasures. 

4. Management and Disclosure 

• emphasize the importance of continuously improving the scenario analysis process, including regularly confirming the use of climate scenarios, models, and data updates. 

• Advocate for public disclosure of scenario analysis results to enhance transparency, including in publicly accessible methods such as sustainability reports, official websites, and annual reports. Overall, this handbook provides a systematic approach for securities investment trusts to conduct climate change scenario analysis, aiming to help them better understand and manage the risks and opportunities brought about by climate change, while also aligning with international trends and requirements for climate-related financial disclosures. 

5. Climate Scenario Analysis Operation Steps 

To complete the climate scenario analysis, the following steps can be followed, and the main contents and operation methods of each step are as follows: 

Step 1: Assess the materiality of climate-related risks 

• List climate-related risk items (factors): Identify and collect risk items that may have an impact on the company's finances, strategy, operations, products, and reputation from transition risks (such as policy and regulatory risks, technology risks, market risks, reputational risks) and physical risks (such as immediate and long-term risks). 

• Identify the impact of climate risks on the business: Evaluate how these risk items affect the company's business, including their potential impact on financial performance, operating model, and market position. 

• Importance of assessing climate-related risks: Based on the assessment of the scale of the company's business impact, each risk and opportunity is classified as large, medium, small, or high, medium, or low to identify significant risks and opportunities. 

Step 2: Scenario Type and Parameter Range 

• Select Scenario Type: Choose a suitable scenario model based on the types of climate-related risks and opportunities, such as NGFS and IPCC scenarios. 

• Select Risk-Related Parameters as Forecast Information: Select parameters related to the selected scenario, such as carbon prices, greenhouse gas emissions, etc., as the basis for analysis. 

Step 3: Business Impact Assessment 

• Identify potential financial indicators affected by risks and opportunities: Determine the financial indicators of climate change impacting your business, such as revenue, costs, asset value, etc.

•  Choose Calculation Formula and Estimate Financial Impact: Utilize the selected parameters and internal data to employ appropriate formulas to estimate the impact of climate change on these financial metrics.

•  Pay attention to the gap between future prospects and greenhouse gas emissions baseline (BAU): Analyze and understand the difference between expected financial performance and existing business model (BAU) expectations under different scenarios. 

Step 4: Develop countermeasures 

• Understand the company's current risk management and opportunities: Analyze how the company currently manages these risks and opportunities, and seek ways to improve. 

• Develop climate-related risk management and response measures to seize opportunities: Based on the results of risk and impact assessments, formulate specific response strategies, such as adjusting business models and investing in new technologies. 

• Establish Action Plans and Organizational Structures: Plan specific action plans and adjust organizational structures based on the developed response strategies to implement these measures effectively. 

The entire process of climate scenario analysis is iterative and progressive, requiring continuous adjustment and optimization based on new data, policy changes, and market trends. Through these steps, operators can better identify and manage the risks and opportunities posed by climate change, while improving the quality of their climate-related financial disclosures.