Implementing TCFD Guidance
Recognizing the Possible Consequences of Climate Change Risks
Climate change is primarily caused by the excessive emission of greenhouse gases. Climate change poses severe risks to the impacting all sectors. To drive business growth while addressing this challenge, our company utilizes the Science-Based Targets Initiative (SBTi) to analyze financial impacts. We have developed strategies to effectively manage climate-related risks, aiming to maximize effectiveness. This includes setting short, medium, and long-term goals to reduce carbon emissions, aligned with scenario analysis to control global temperature rise within 1.5 degrees. Moreover, we enhance financial disclosure practices related to climate change following TCFD standards and establish a task force to review and develop our business plans, both direct and indirect, considering the potential systemic impacts of climate change in line with our company's guidelines and policies.
1. Governance Structure
Board of Directors
Oversee, monitor, and follow up on the implementation of climate-related risk to ensure compliance with the company's policies
Corporate Governance and Sustainability Committee
Monitor climate-related issues that impact the company, such as internal energy consumption and greenhouse gas reduction targets. Report directly to the company's board of directors
Risk Management Committee
Establish risk management guidelines, policies, frameworks. Provide risk recommendations to each department
Executive Committee
Develop a sustainable development policy and create an appropriate plan for the working group to comply with the policies and practices set by the board of directors
Sustainability Department
Be responsible for preparing and presenting reports to management to update on the progress of operational activities at least twice a year
Working Group
Collect and analyze data that is relevant and consistent with the company's sustainability policy
2. Risks and Opportunity Management
The company integrates the identification and assessment of climate-related risks into its overall risk management process, considering both physical and transition risks. Establish appropriate procedures for comprehensive risk assessment within the organization, including identification, assessment and alleviation of potential impacts on customers, employees and the business. This is conducted regularly at least twice a year, to stay abreast of evolving trends and potential impacts. The company categorizes climate-related risks such as strategic, legal, financial, and technology risks by timeframe(short, medium and long term). Monitors the result of these risks using Key Performance Indicators (KPIs) linked to the identified risks, enabling ongoing evaluation and assessment of risk management plans.
Processes of Climate-related Risk Consideration
- Risk Identification: Every department actively participates in identifying risks related to climate conditions, including physical risks and transition risks. The sustainability department oversees the process, collecting risk information and monitoring outcomes.
- Risk Assessment: Considering the prioritization based on the severity of impacts and the likelihood of occurrences, divided into four levels : low, moderate, high and critical.
- Risk Mitigation: Implementing flexible risk mitigation measures and contingency plans tailored to appropriateness and specific circumstances.
In 2023, the company participated in the Climate Change Management Role Model with SET and ERM to drive business resilience and adaptability to various scenarios arising from climate change. It ensured appropriate risk management practices were in place, developing risk management plans aligned with global temperature rise concerns. The analysis summarized the risks and opportunities as follows :
| Risks | Impacts | Risk assessment | Timeframe | Risk Mitigation | KRI | ||
| Impacts | Likelihood | ||||||
|
Physical Risks |
Acute Natural Disasters |
|
5 | 1 | Short-long term |
|
Value of damages not exceeding 1 million Baht |
| Chronic Natural Disasters | 3 | 2 | Long term | Value of damages not exceeding 1 million Baht | |||
| Transition Risks | Legal and Policy-relatedRisk |
|
2 | 3 | Short-long term |
|
Increased expenses due to environmental regulatory compliance not exceeding 1 million baht |
| Technology-related Risk |
|
1 | 3 | Medium-long term |
|
Expenditure on alternative energy use not exceeding 1 million baht | |
| The reduced ability to repay debts due to climate change |
|
5 | 2 | Short-long term |
|
NPL not exceeding 5%. | |
| The risk of not achieving the Net Zero Company target |
|
3 | 3 | Long term |
|
Greenhouse gas emissions have decreased by 10%. | |
| Opportunities | Definitions of Opportunities | Benefits | Timeframe | Adaptation and Respond to Opportunities (Present - 5 Years Ahead) | |
| Opportunity | Products/Services | Issuing credit for low-carbon products and services to help mitigate the impact of climate change |
|
Short-long term |
|
| Energy Source | The increase in renewable energy sources which have minimal environmental impact such as solar energy, wind energy, hydroelectricity |
|
Medium-long term |
|
3. Climate-related Scenario Analysis
Operating a business in a climate of uncertainty regarding the weather is a critical aspect that should not be overlooked. It can directly impact the operations of the company due to its connection to global situations and pressures from various changes. Therefore, conducting climate-related scenario analysis becomes important. This allows businesses to plan and adapt efficiently at the appropriate time, both qualitatively and quantitatively.
| Financial Impact (Million Baht) |
|||||||
| Category | Risks | Scenario | Assumption | 2030 | 2040 | 2050 | |
|
Physical Risks |
Acute | Flood | Achieving Net Zero Carbon Emissions by 2050 (SSP1-2.6) |
% Change in rain average largest
5-day cumulative precipitation =
% NPL impact due to disaster |
3,587 | 3,628 | 3,669 |
| Doubling Carbon Dioxide Emissions by 2050 (SSP5-8.5) |
% Change in rain average largest 5-day cumulative precipitation = % NPL impact due to disaster |
3,658 | 3,726 | 3,793 | |||
|
Transition Risks |
Legal and Policy | Carbon Tax | Stated Policies Scenario (STEPS) | Thai’s implementation of taxing carbon emission will be done in the next 17 year (by 2040) for all sectors in line with Singapore’s carbon tax structure | - | 198.7 | 445.1 |
| Net-Zero Emission Scenario (NZE) | Thai’s implementation of taxing carbon emission will be done in the next 7 year (by 2030) for all sectors in line with Singapore’s carbon tax structure | 78.9 | 238.5 | 498.5 | |||
