Climate Strategy | Strengthening Climate Resilience | Low Carbon Future | Shin Kong Life Sustainability

Low Carbon Future
Strengthening Climate Resilience
Climate Strategy

Strengthening Climate Resilience

Facing the challenges of climate change, SKL actively responds to climate-related risks and opportunities as well as develops low carbon transition strategies. In addition to planning climate mitigation and adaptation measures, SKL also continues to seek new climate-related opportunities through investing and financing, and product development.

Climate Action

Climate Governance

Climate Strategy

Climate Risk Management

Climate Metrics and Targets

Climate Strategy

To understand the impacts of climate change on SKL, we consolidate domestic and international climate-related issues and industry trends, referencing the climate-related risk and opportunity categories recommended by the TCFD framework and considering the applicability of disclosure topics under IFRS S2. Based on the nature of our business activities, we identified eight climate-related risks and six climate-related opportunities, and assessed their impacts across the value chain, including suppliers, our own operations (including real estate), investments, collateral, and insured parties. The identification process prioritizes risks and opportunities based on two dimensions: “likelihood of occurrence” and “degree of impact.” The size of each bubble represents the Company's level of controllability, indicating the ability to manage and respond to the respective risk or opportunity. The assessment further evaluates impacts across different time horizons, namely short term (within one year), medium term (within three years), and long term (more than three years), throughout the value chain.

Climate-Related Risks

SKL Climate-related Risk Matrix

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Overview

Physical risks

Transition Risk

氣候風險矩陣-總覽
氣候風險矩陣-實體風險
氣候風險矩陣-轉型風險

Material Climate Risk Issues

1

Transition Risk

Short- and medium-term

Increase in climate-related regulations

  • As climate-related policies and regulations continue to evolve domestically and internationally (such as the implementation of carbon fees and carbon taxes) companies may incur additional compliance costs associated with climate-related regulatory requirements.
  • External consulting expenses for conducting climate transition risk scenario analyses on investment portfolios.
  • Costs associated with conducting financed emissions inventories for financial assets, including the purchase of public reports and internal personnel expenses required for implementation.

Response Measures
  • Conduct climate scenario analyses for lending and investment portfolios, identify industry carbon emission intensity and concentration risks, and assess the climate resilience of investment and financing portfolios.
  • Perform ESG risk due diligence on high-carbon-emitting industries as a basis for investment decision-making, differentiated management, and engagement, while allocating resources to climate transition risk training programs.
  • Adjust procurement targets or investment strategies accordingly for companies that show no improvement.

2

Physical risks

Medium- and long-term

Increased frequency and severity of natural disasters

  • The increasing frequency and severity of natural disasters (such as extreme rainfall and drought-induced water shortages) may lead to operational disruptions affecting suppliers and the Company's own operations, interruptions to the business activities of investment and financing customers, and damage to collateral assets.
  • Maintain the business continuity management framework, including backup system environment maintenance and natural disaster response drills, and conduct inspections and maintenance of electromechanical equipment and data center facilities
  • Implement climate resilience management measures, including outsourced consulting services for scenario analysis, property appraisal costs for loan applications, and periodic reappraisal costs for approved loan cases.

Response Measures
  • Implement the business continuity management policy.
  • Conduct physical risk scenario analyses for the Company's operating locations, supplier sites, and the operating locations of investment and financing counterparties.

Climate-Related Opportunities

Climate Opportunities Matrix

Material Climate Opportunities

1

Market

Short-term

Green banking products and services

  • In response to international and market trends, we actively expand our portfolio of green financial products and services, including green lending, the underwriting of low-carbon assets, and green bond issuances, to drive revenue growth and enhance our overall performance in sustainable finance.
  • Invest in renewable energy power generation projects, such as solar photovoltaic power plants.
  • Invest in green bonds and the green energy and renewable energy sector under the six core strategic industries initiative, including equity and bond investments.

Response Measures
  • SKL actively develops digital financial services and continues to promote digital account opening, electronic trading, and account processing services to reduce the use of paper and energy and lower operating costs.
  • In terms of investment, SKL allocates capital to renewable energy funds, power generation projects, and green energy strategic industries. We also participate in green bond investments, support green buildings and leasing initiatives, and deploy dedicated personnel and consulting resources to enhance our capacity in evaluating and managing climate-related investments and financing.

Climate Scenario Analyses and Stress Tests

To further identify the impact of climate change risks on SKL, we use climate scenario analysis to measure risk exposure under various climate scenarios for physical and transition risks and actively implement relevant management actions and countermeasures to strengthen climate resilience. The scenarios used are based on the scenarios set by the Fifth and Sixth Assessment Reports (AR5 & AR6) of Intergovernmental Panel on Climate Change (IPCC) and the “Network for Greening the Financial System” (NGFS). The scenarios used for each application and risk category are as follows, and the definitions of each scenario will be explained one by one in the following chapters:

Analysis target Scope of Target Analyze results

Real estate

 Operating locations and investment properties (Post-merger)
  • As of 2025, SKL owned a total of 198 real estate assets across Taiwan. Under the RCP 2.6 and RCP 8.5 scenarios, the estimated financial impact during the period from 2030 to 2050 is approximately NT$300 million to NT$500 million. Among the physical risks assessed, land subsidence caused by drought is expected to have the most significant impact on asset values. By 2100, six to seven operating locations are projected to face relatively high climate change risks (with a maximum Climate Value-at-Risk exceeding 1%) and are therefore classified as high climate risk areas.
  • Based on flooding data from the Platform, the ratio of expected losses to the total asset value of operating locations in 2050 is estimated to range from 0.25% to 0.55% under the four SSP scenarios. For investment properties, the ratio is estimated to range from 0.20% to 0.55%.

Supplier

 Suppliers that comply with the "Regulations Governing Internal Operating Systems and Procedures for the Outsourcing of Insurance Enterprise Operation"
  • Based on flooding data from the Platform, and under the four SSP scenarios for 2050, the number of high-risk suppliers is estimated to range from one to two, representing 0% of total procurement expenditure. The number of medium-high-risk suppliers is estimated to range from six to eight, representing approximately 50% to 70% of total procurement expenditure.

Real estate collateral

 Corporate and personal real estate collateral (Post-merger)

Corporate real estate collateral:

  • Under the RCP 2.6 and RCP 8.5 scenarios, the majority of collateral assets fall within the medium climate risk category (Climate Value-at-Risk between 0.2% and 1%). Under the most severe scenario, RCP 8.5, only two collateral assets are projected to be classified as high climate risk areas (Climate Value-at-Risk exceeding 1%) by 2100.
  • Based on flooding data from the Platform, and under the four SSP scenarios for 2050, the number of high-risk collateral assets is estimated to range from zero to one, representing approximately 0% to 1% of the total outstanding collateral balance. The number of medium-high-risk collateral assets is estimated to range from 8 to 17, representing approximately 19% to 54% of the total outstanding collateral balance.

Personal real estate collateral:

  • Under the RCP 2.6 and RCP 8.5 scenarios projected for 2050, the vast majority of personal real estate collateral assets are categorized as medium risk.

Investment and Financing

 Operating locations of domestic stock, bond, and financing investment targets (Post-merger)
  • Under the RCP 2.6 and RCP 8.5 scenarios, the majority of operating locations of domestic investment targets fall within the medium climate risk category (Climate Value-at-Risk between 0.2% and 1%).
  • Based on flooding data from the Platform:
    • For the operating locations of domestic stock investment targets in 2050, under the four SSP scenarios, the number of high-risk locations is estimated to range from two to six, representing approximately 0% to 1% of the total carrying value of holdings. The number of medium-high-risk locations is estimated to range from 15 to 40, representing approximately 7% to 60% of the total carrying value of holdings.
    • For the operating locations of domestic bond investment targets in 2050, under the four SSP scenarios, the number of high-risk locations is estimated to range from one to three, representing approximately 0% to 1.5% of the total carrying value of holdings. The number of medium-high-risk locations is estimated to range from five to twenty, representing approximately 15% to 50% of the total carrying value of holdings.
    • For the operating locations of domestic financing targets in 2050, under the four SSP scenarios, the number of high-risk locations is estimated to range from 0 to 1, representing approximately 0% to 1.5% of the total carrying value of holdings. The number of medium-high-risk locations is estimated to range from 2 to 3, representing approximately 8.5% to 9.5% of the total carrying value of holdings.
Personal insurance thermal injury claims expenses
  • Under the four SSP scenarios, warming will increase the Company's estimated personal insurance thermal injury claims expenses by no more than NT$10 million, and the financial impact on insurance claims was not material.

SDGs

For complete information, please refer to the Sustainability Report

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