The Intergovernmental Panel on Climate Change (IPCC) forecast that average global temperatures would increase by 1.5°C or more by 2030 at the earliest. China Life recognizes the extreme impact of climate change and considers it to be one of the most important business issues we face. In 2019, we became one of official TCFD supporters with the aim of using insurance industry strengths to mitigate and adapt to climate change.

To strengthen our response capabilities to climate change, properly disclose our achievements and actions, and act in accordance with international trends, we use TCFD standards to show the impact of climate change on our operations and value chain. TCFD guidance focuses on four main areas: governance, strategy, risk management, and metrics and targets. We also include factors associated with guidelines that are important to our industry, namely insurance and property ownership. Using this framework, we strengthen the Company’s climate change governance and devise systematic methods to identify climate change risks and opportunities. By setting and tracking goals, we successfully lower potential impacts and prepare for future opportunities. At the same time, we respond to the climate change management expectations of our external stakeholders by obtaining the highest "Level-5: Excellence," for our maturity model for the Climate-related Financial Disclosures following the BSI TCFD conformity check procedures.

Climate risk and strategy

Governance

China Life adopts TCFD’s recommended framework to promote the supervision and management of actions that mitigate climate change via top-down approaches from the board of directors, CSR Committee, accountable departments, and administrative units. By doing so, the Company has effectively incorporated climate issues into organizational operation and executed accordingly.

Structure and Responsibilities of Committee for TCFD

The Company formulated the Environmental Protection Policies to promote environmental protection and build a low carbon corporate environment. In 2014, we established the Environmental Protection Committee, which consists of nine Company managers responsible for after-sales service, information, administrative support, and other important duties. The committee has one chairperson, one deputy chairperson, and seven other members (one of whom concurrently serves as the executive secretary to oversee the committee’s overall administration and meeting communication). In addition to formulating and revising committee rules and environmental protection policies, the committee monitors implementation of energy conservation and carbon reduction, waste management, environmental and health issues, and environmental protection.

Environmental Protection Committee Organizational Framework

In 2020, the committee convened twice to review implementation of environmental protection measures and establish environmental protection goals and guidance for 2021. The committee also reviewed and revised our Environmental Protection Policies to enhance environmental protection duties and improve the existing environmental performance management guidelines.

Strategy and Risk Management

When identifying climate change risks and opportunities, China Life simulated RCP 2.6 and RCP 8.5 scenarios proposed by the IPCC for physical risks, and 2DS and 6DS climate scenarios proposed by the International Energy Agency (IEA) for transition risks. By comparing the results of RCP 2.6/ 2DS scenarios, where active carbon reduction and sustainable energy system development are conducted, with RCP 8.5 /6DS scenarios, and where technology development is relatively limited due to current policies, the Company is able to assess the climate's potential impacts on sales, strategies, finance, and investment under different climate scenarios.

China Life gathers various units to evaluate climate change’s impacts on operations and our value chain. We identify climate-related risks and opportunities then assess the impacts on the Company’s revenues, costs, and continuing operations. Each unit must analyze the probability of occurrence of various scenarios as well as the potential financial, operational, and strategic impacts. This information is used as a reference for determining associated risks and opportunities then crafting response strategies and action plans. Implementation and assessments follow. We must effectively control or reduce climate-related risks and take advantage of related opportunities in order to meet the expectations of stakeholders.

Climate Risk Evaluation Results

Each unit considered “probability of occurrence” and “degree of impact” then used these data points to determine three of China Life’s major climate risks. Strategists crafted responses based on risk characteristics, with the goal of adopting early management to reduce potential impact.

Climate Opportunity Evaluation Results

Each unit considered “probability of occurrence” and “degree of impact” then used these data points to determine three major opportunities related to climate change. We poured resources into designing action plans for taking advantage of the opportunities that climate change may potentially bring.

Metrics and Targets

To effectively implement climate change management mechanisms, China Life includes climate change management targets in the Company’s annual ESG objectives and checks progress twice annually.