Para 6. Governance: board oversight and management’s role
An entity must identify the body or individual responsible for climate-related oversight, and disclose how their mandate, skills, information cadence, transaction-decision integration, and target oversight reflect that responsibility. Para 6(b) covers the management-level position or committee that handles day-to-day climate management, and how it integrates with other internal controls.
Standard text (verbatim, IFRS S2 Para 6)
To achieve this objective, an entity shall disclose information about:
(a) the governance body(s) (which can include a board, committee or equivalent body charged with governance) or individual(s) responsible for oversight of climate-related risks and opportunities. Specifically, the entity shall identify that body(s) or individual(s) and disclose information about:
(i) how responsibilities for climate-related risks and opportunities are reflected in the terms of reference, mandates, role descriptions and other related policies applicable to that body(s) or individual(s);
(ii) how the body(s) or individual(s) determines whether appropriate skills and competencies are available or will be developed to oversee strategies designed to respond to climate-related risks and opportunities;
(iii) how and how often the body(s) or individual(s) is informed about climate-related risks and opportunities;
(iv) how the body(s) or individual(s) takes into account climate-related risks and opportunities when overseeing the entity’s strategy, its decisions on major transactions and its risk management processes and related policies, including whether the body(s) or individual(s) has considered trade-offs associated with those risks and opportunities;
(v) how the body(s) or individual(s) oversees the setting of targets related to climate-related risks and opportunities, and monitors progress towards those targets (see paragraphs 33-36), including whether and how related performance metrics are included in remuneration policies (see paragraph 29(g)).
(b) management’s role in the governance processes, controls and procedures used to monitor, manage and oversee climate-related risks and opportunities, including information about:
(i) whether the role is delegated to a specific management-level position or management-level committee and how oversight is exercised over that position or committee;
(ii) whether management uses controls and procedures to support the oversight of climate-related risks and opportunities and, if so, how these controls and procedures are integrated with other internal functions.
The Board of Directors holds ultimate accountability for oversight of climate-related risks and opportunities. The Board has established a dedicated Group Climate Council reporting to it, with quarterly cadence; climate is a standing agenda item at the Audit & Risk Committee (six meetings per year) and at the Compensation & HR Committee. [IFRS S2.6(a)(i), (iii)]
Board skills. Two of twelve directors have prior climate-finance experience (one supervisor-side, one risk-modelling). The Board has commissioned an external skills review and has scheduled climate-specific training for the full Board in two of the next four quarters. [IFRS S2.6(a)(ii)]
Major-transaction oversight. All M&A transactions above CU 200m and all credit-portfolio acquisitions above CU 500m must include a climate-risk memo covering both transition and physical exposure of the underlying assets, prepared by the Group Climate Council and reviewed by Audit & Risk. The Board has declined two transactions in the past two years on climate-risk grounds. [IFRS S2.6(a)(iv)]
Target oversight. Sectoral financed-emissions reduction targets and operational net-zero target progress are reviewed quarterly. Performance against the residential mortgage book physical-risk vulnerability metric is reviewed annually. [IFRS S2.6(a)(v); 33–36]
Management. The Group Chief Risk Officer is the executive accountable for climate-related risks. The Group Climate Council, chaired by the Chief Sustainability Officer and including the heads of credit risk, retail banking, commercial banking and treasury, manages day-to-day delivery and reports to the Group Risk Committee. Three first-line risk teams (climate-credit, climate-operational, climate-conduct) embed in the divisions. [IFRS S2.6(b)(i)–(ii)]
Illustrative governance structure.
Cohort findings: what reporters typically skip on Para 6
Typically skipped. Specific thresholds for transaction-level climate review and declined-transaction counts. Most bank disclosures describe a principle of integrating climate into M&A and lending decisions but do not name the cut-offs that trigger formal review. Without thresholds, Para 6(a)(iv) is described rather than disclosed.
What good looks like. Numeric thresholds, named approval bodies, count of transactions reviewed and declined, change in risk-tier classification over time, and explicit cross-reference to remuneration linkage and target oversight.
Para 7. Avoiding governance duplication with IFRS S1
Para 7 permits — but does not require — integrating climate governance with broader sustainability governance under IFRS S1’s B42(b) integration permission. The disclosure should be explicit about the integration choice and surface the climate-specific governance elements that survive integration as a separate, named list.
Standard text (verbatim, IFRS S2 Para 7)
In preparing disclosures to fulfil the requirements in paragraph 6, an entity shall avoid unnecessary duplication in accordance with IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) (see paragraph B42(b) of IFRS S1). For example, although an entity shall provide the information required by paragraph 6, if oversight of sustainability-related risks and opportunities is managed on an integrated basis, the entity would avoid duplication by providing integrated governance disclosures instead of separate disclosures for each sustainability-related risk and opportunity.
The governance disclosures in Para 6 above are integrated with the Group’s broader sustainability-related governance disclosures under IFRS S1. Sustainability-related risks and opportunities — including climate, nature, social, and governance themes — are managed through the same Board, the same Sustainability Committee, and the same management structures. Climate is treated as a thematic priority within that integrated framework, not as a separate governance regime. [IFRS S2.7; IFRS S1 B42(b)]
Where this report uses cross-references rather than repeating disclosures, the cross-reference is to the corresponding section of the Group’s IFRS S1 Sustainability Disclosure or annual Corporate Governance Statement. Climate-specific elements (skills matrix, climate-related transaction thresholds, climate-targeted remuneration linkage) are provided in this report directly.
Disclosure approach consistent with IFRS S1 paragraph B42(b) integration permission.
Cohort findings: what reporters typically skip on Para 7
Typically skipped. Explicit statement of which approach the entity has chosen (integrated vs. separate). Many disclosures default to integration without saying so, leaving the reader to infer.
What good looks like. A short paragraph stating the choice and pointing to the integrated location, with climate-specific elements still surfaced in the climate report.
Para 10. Climate-related risks and opportunities: identification, classification, time horizons
The entity must describe its identified climate-related risks and opportunities, classify each risk as physical or transition, specify the time horizon over which each could affect the entity, and define what ‘short, medium, long term’ mean in the entity’s planning context. Time-horizon definitions must link to actual strategic-decision horizons.
Standard text (verbatim, IFRS S2 Para 10)
An entity shall disclose information that enables users of general purpose financial reports to understand the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. Specifically, the entity shall:
(a) describe climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects;
(b) explain, for each climate-related risk the entity has identified, whether the entity considers the risk to be a climate-related physical risk or climate-related transition risk;
(c) specify, for each climate-related risk and opportunity the entity has identified, over which time horizons (short, medium or long term) the effects of each climate-related risk and opportunity could reasonably be expected to occur;
(d) explain how the entity defines ‘short term’, ‘medium term’ and ‘long term’ and how these definitions are linked to the planning horizons used by the entity for strategic decision-making.
The Group’s identification of climate-related risks and opportunities is anchored in the lending portfolio, the trading book, and the Group’s own operations. Each risk is classified as physical or transition; each is mapped to a time horizon defined relative to the Group’s strategic-planning cycle (short term: 1–3 years; medium term: 3–10 years; long term: 10–30 years). [IFRS S2.10(a)–(d)]
| Risk / opportunity | Type | Time horizon |
|---|---|---|
| Mortgage-portfolio physical-risk-driven credit losses (flood, wildfire, tropical cyclone) | Physical | Short to long |
| Commercial real-estate stranded-asset risk (low-energy-rated office in regulated jurisdictions) | Transition | Medium to long |
| Lending-book concentration in carbon-intensive sectors (coal, oil & gas, power) | Transition | Short to medium |
| Sustainable-finance origination growth (green bonds, transition lending) | Opportunity | Short to long |
| Operational sites: extreme-weather business interruption | Physical | Short to long |
| Reputational and conduct risk from greenwashing claims | Transition | Short to medium |
The short-, medium-, and long-term horizons are aligned with the Group’s three-year financial plan, ten-year strategic plan, and longest-tenor mortgage product (30 years). [IFRS S2.10(d)]
Illustrative risk universe drawn from sector practice.
Cohort findings: what reporters typically skip on Para 10
Typically skipped. The link between time-horizon definitions and the entity’s actual planning horizons (Para 10(d)). Many bank disclosures use ‘short / medium / long’ without saying what those mean to the bank’s own decision-making.
What good looks like. A risk-and-opportunity table with explicit physical/transition classification, time-horizon assignment, and a paragraph linking each horizon to a planning artefact (annual budget, strategic plan, longest-tenor product).
Para 13. Effects of climate-related risks and opportunities on the business model and value chain
Disclose the current and anticipated effects of climate-related risks and opportunities on the business model and value chain, and where in the value chain those risks and opportunities are concentrated — by geography, facility, asset type. Concentration disclosure is the load-bearing element; high-level narrative without geography or asset specificity does not satisfy the standard.
Standard text (verbatim, IFRS S2 Para 13)
An entity shall disclose information that enables users of general purpose financial reports to understand the current and anticipated effects of climate-related risks and opportunities on the entity’s business model and value chain. Specifically, the entity shall disclose:
(a) a description of the current and anticipated effects of climate-related risks and opportunities on the entity’s business model and value chain;
(b) a description of where in the entity’s business model and value chain climate-related risks and opportunities are concentrated (for example, geographical areas, facilities and types of assets).
The Group’s business model is exposed to climate-related risks and opportunities primarily through the lending portfolio (CU 480bn carrying amount), the capital-markets and underwriting activity, the asset-management and treasury functions, and the operational footprint (1,200 branches and 8 data centres). The dominant channel is the lending portfolio. [IFRS S2.13(a)–(b)]
Concentration of climate-related risks.
| Value chain segment | Concentration |
|---|---|
| Residential mortgages | CU 280bn (58% of loan book); concentrated in coastal and riverine flood zones in two home-market regions |
| Commercial real estate | CU 65bn (14%); concentrated in two major metropolitan centres with elevated heat-island exposure and energy-rating regulatory tightening |
| Energy and power lending | CU 38bn (8%); concentrated in conventional power generation, with declining thermal-coal exposure (1.2% of book, target zero by 2028) |
| Agribusiness | CU 22bn (5%); concentrated in drought-exposed dryland farming and cyclone-exposed coastal aquaculture |
| Operational footprint | 1,200 branches; 14 branches in 1-in-100-year flood zones; 2 data centres in elevated-cyclone-risk coastal areas (mitigation in place) |
Anticipated effects. The Group anticipates that the residential mortgage and commercial real-estate sub-portfolios will experience the largest physical-risk-driven credit-loss impact under SSP2-4.5 and SSP5-8.5 scenarios; the energy-and-power and agribusiness sub-portfolios will experience the largest transition-risk-driven write-down impact under aggressive-mitigation scenarios. The operational footprint exposure is small in financial terms but operationally material under acute events. [IFRS S2.13(a)]
Illustrative concentration figures.
Cohort findings: what reporters typically skip on Para 13
Typically skipped. The geographic and sub-portfolio concentration in carrying-amount terms. Many banks disclose the loan-book composition by sector but stop short of the climate-conditioned concentration that Para 13(b) calls for.
What good looks like. A table that names the sub-portfolios, the carrying amounts, and the concentration drivers in climate terms (which hazards, which geographies, which regulatory exposures).
Para 14. Strategy and decision-making, including transition plan
Disclose how the entity has responded to and plans to respond to climate-related risks in its strategy and decision-making — including business-model changes, direct and indirect mitigation and adaptation efforts, and any transition plan with its assumptions and dependencies. Disclose how the entity is resourcing these activities and progress against prior-period plans.
Standard text (verbatim, IFRS S2 Para 14)
An entity shall disclose information that enables users of general purpose financial reports to understand the effects of climate-related risks and opportunities on its strategy and decision-making. Specifically, the entity shall disclose:
(a) information about how the entity has responded to, and plans to respond to, climate-related risks and opportunities in its strategy and decision-making, including how the entity plans to achieve any climate-related targets it has set and any targets it is required to meet by law or regulation. Specifically, the entity shall disclose information about:
(i) current and anticipated changes to the entity’s business model, including its resource allocation, to address climate-related risks and opportunities (for example, plans to manage or decommission carbon-, energy- or water-intensive operations; resource allocations resulting from demand or supply-chain changes; resource allocations arising from business development through capital expenditure or research and development; and acquisitions or divestments);
(ii) current and anticipated direct mitigation and adaptation efforts (for example, through changes in production processes or equipment, relocation of facilities, workforce adjustments, and changes in product specifications);
(iii) current and anticipated indirect mitigation and adaptation efforts (for example, through working with customers and supply chains);
(iv) any climate-related transition plan the entity has, including information about key assumptions used in developing its transition plan, and dependencies on which the entity’s transition plan relies;
(v) how the entity plans to achieve any climate-related targets, including any greenhouse gas emissions targets, described in accordance with paragraphs 33-36.
(b) information about how the entity is resourcing, and plans to resource, the activities disclosed in accordance with paragraph 14(a).
(c) quantitative and qualitative information about the progress of plans disclosed in previous reporting periods in accordance with paragraph 14(a).
The Group’s strategic response to climate-related risks and opportunities is structured around three pillars: portfolio re-balancing toward sustainable finance growth, climate-risk mitigation through underwriting and pricing discipline, and operational decarbonisation. [IFRS S2.14(a)]
Business model changes (Para 14(a)(i)). The Group is reducing its absolute exposure to thermal-coal financing (target zero by 2028) and managing down its conventional power-generation book by 4–6% per year while expanding renewable-energy financing. Mortgage-portfolio underwriting now incorporates climate-adjusted credit-risk parameters at origination for new loans in flood-exposed postcodes. Resource allocation: CU 1.5 trillion sustainable-finance origination commitment by 2030 (cumulative).
Direct mitigation and adaptation (Para 14(a)(ii)). Operational footprint: 100% renewable electricity by 2025 (achieved); branch-network rationalisation in the most-flood-exposed postcodes; data-centre relocation completed for two of three legacy sites.
Indirect mitigation (Para 14(a)(iii)). Customer engagement: green-mortgage discount programme for energy-rated homes; sustainability-linked-loan structures for commercial customers with verified transition plans; supplier engagement for Scope 3 Category 11 (financed-emissions) data quality.
Transition plan (Para 14(a)(iv)). The Group has published a transition plan covering Scope 1+2+3 emissions through 2050, with sectoral interim targets at 2030. Key assumptions: government policy remains supportive of decarbonisation, customer demand for green products grows in line with NGFS NDC pathway, low-emissions technologies become commercially viable on the IEA Net Zero Emissions sectoral pathways and SBTi Financial Sector Standard reference scenarios. Key dependencies: regulatory clarity on financed-emissions methodology, availability of customer data, supervisor stress-test calibration.
Resourcing (Para 14(b)). CU 312m of capital deployed during the period (see Para 29(e)), of which CU 165m sustainable-finance origination capacity, CU 70m operational adaptation, and CU 77m climate-data and analytics infrastructure.
Progress against prior-period plans (Para 14(c)). Prior-period commitments to reduce thermal-coal exposure (delivered: down 31% YoY); 100% renewable operational electricity (delivered); financed-emissions baseline disclosure (delivered for residential mortgage and CRE; aviation, oil & gas, agribusiness in progress).
Illustrative response framework drawn from sector practice.
Cohort findings: what reporters typically skip on Para 14
Typically skipped. The transition-plan dependencies. Banks routinely publish transition plans but rarely list the dependencies (regulatory clarity, customer data availability, supervisor stress-test calibration) that would have to fail before the plan does. Without dependencies, the plan is description rather than disclosure.
What good looks like. Five bullets each on assumptions and dependencies, with named regulatory and methodology references.
Para 15–21. Anticipated financial effects on financial position, performance and cash flows
Disclose how climate-related risks and opportunities have affected financial position, performance, and cash flows for the reporting period (current effects), and anticipated effects over short, medium, and long term. Para 19-21 permit qualitative-only disclosure where quantification is not separately identifiable, measurement uncertainty is too high, or the entity lacks skills and resources — but the qualitative substitute must explain the omission and identify affected line items.
Standard text (verbatim, IFRS S2 Para 15–21)
An entity shall disclose information that enables users to understand:
(a) the effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (current financial effects);
(b) the anticipated effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows over the short, medium and long term (anticipated financial effects).
Specifically, an entity shall disclose quantitative and qualitative information about:
(a) how climate-related risks and opportunities have affected its financial position, financial performance and cash flows for the reporting period;
(b) the climate-related risks and opportunities identified in paragraph 16(a) for which there is a significant risk of a material adjustment within the next annual reporting period to the carrying amounts of assets and liabilities reported in the related financial statements;
(c) how the entity expects its financial position to change over the short, medium and long term, given its strategy to manage climate-related risks and opportunities, taking into consideration:
(i) its investment and disposal plans, including plans the entity is not contractually committed to;
(ii) its planned sources of funding to implement its strategy;
(d) how the entity expects its financial performance and cash flows to change over the short, medium and long term, given its strategy to manage climate-related risks and opportunities.
In providing quantitative information, an entity may disclose a single amount or a range.
In preparing disclosures about the anticipated financial effects of a climate-related risk or opportunity, an entity shall:
(a) use all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort;
(b) use an approach that is commensurate with the skills, capabilities and resources that are available to the entity for preparing those disclosures.
An entity need not provide quantitative information about the current or anticipated financial effects of a climate-related risk or opportunity if the entity determines that:
(a) those effects are not separately identifiable; or
(b) the level of measurement uncertainty involved in estimating those effects is so high that the resulting quantitative information would not be useful.
In addition, an entity need not provide quantitative information about the anticipated financial effects of a climate-related risk or opportunity if the entity does not have the skills, capabilities or resources to provide that quantitative information.
If an entity determines that it need not provide quantitative information about the current or anticipated financial effects of a climate-related risk or opportunity applying the criteria set out in paragraphs 19-20, the entity shall:
(a) explain why it has not provided quantitative information;
(b) provide qualitative information about those financial effects, including identifying line items, totals and subtotals within the related financial statements that are likely to be affected, or have been affected, by that climate-related risk or opportunity;
(c) provide quantitative information about the combined financial effects of that climate-related risk or opportunity with other climate-related risks or opportunities and other factors unless the entity determines that quantitative information about the combined financial effects would not be useful.
Climate-related risks and opportunities have current financial effects on the Group’s financial position, financial performance, and cash flows, with anticipated effects over the short, medium, and long term. Quantitative information is disclosed as a range under Para 17. [IFRS S2.15–17]
Current financial effects (reporting period; Para 16(a)). The climate-attributable component of expected credit losses on the residential mortgage portfolio: CU 18m (range CU 12–25m). Operational-resilience capex (flood defences, branch relocation): CU 23m. Insurance-premium increase attributable to climate exposure on owned properties: CU 4m. Sustainable-finance origination revenue uplift: CU 31m.
Significant risk of material adjustment (Para 16(b)). Two sub-portfolios are flagged for material adjustment risk in the next reporting period: (i) the highest-vulnerability decile of the residential mortgage book in two coastal regions (CU 9.5bn carrying amount; provisioning uplift could range CU 30–110m); (ii) the conventional power-generation lending book under accelerated low-carbon transition policy (CU 38bn carrying amount; potential write-down range CU 50–180m).
Anticipated effects on financial position (Para 16(c)). Capex plans include CU 312m climate-related deployment in the current year, growing to CU 480m by 2027 and CU 600m by 2030 (cumulative). Funding sources: 60% organic earnings, 30% sustainability-linked bond issuance, 10% government and supranational facilities.
Anticipated effects on financial performance and cash flows (Para 16(d)). Short term (1–3 years): incremental sustainable-finance revenue CU 30–80m per year; incremental ECL provisioning CU 20–60m per year. Medium term (3–10 years): commercial-real-estate stranded-asset write-down range CU 60–200m cumulative under SSP2-4.5 / NGFS NDC; sustainable-finance origination contribution CU 1.0–1.5bn cumulative. Long term (10–30 years): residual-mortgage-portfolio physical-risk-driven credit losses CU 0.4–1.4bn cumulative under SSP2-4.5; CU 0.9–2.6bn under SSP5-8.5.
Para 17 use of range. The Group has elected to disclose anticipated effects as ranges given measurement uncertainty in scenario inputs and counterparty data quality.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 15–21
Typically skipped. Range disclosure under Para 17. Banks often retreat to qualitative statements (“not separately identifiable”, “high measurement uncertainty”) under Para 19, even when reasonable ranges are available. The Para 17 permission is under-used.
What good looks like. Range disclosure across at least two horizons and at least two scenarios, with explicit linkage to ECL provisioning, impairment indicators, and capex plans.
Para 22. Climate resilience: scenario analysis disclosure ★
Para 22 requires the entity to assess and disclose how resilient its strategy and business model are to climate-related changes, using climate-related scenario analysis. The standard calls for a ‘diverse range’ of scenarios including one aligned with the latest international climate agreement, with disclosure covering scenario inputs, key assumptions, time horizons, and the entity’s capacity to adapt. This is the load-bearing strategy paragraph.
Standard text (verbatim, IFRS S2 Para 22)
An entity shall disclose information that enables users of general purpose financial reports to understand the resilience of the entity’s strategy and business model to climate-related changes, developments and uncertainties, taking into consideration the entity’s identified climate-related risks and opportunities. The entity shall use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with the entity’s circumstances (see paragraphs B1-B18). In providing quantitative information, the entity may disclose a single amount or a range. Specifically, the entity shall disclose:
(a) the entity’s assessment of its climate resilience as at the reporting date, which shall enable users to understand:
(i) the implications, if any, of the entity’s assessment for its strategy and business model, including how the entity would need to respond to the effects identified in the climate-related scenario analysis;
(ii) the significant areas of uncertainty considered in the entity’s assessment of its climate resilience;
(iii) the entity’s capacity to adjust or adapt its strategy and business model to climate change over the short, medium and long term, including:
(1) the availability of, and flexibility in, the entity’s existing financial resources to respond to the effects identified in the climate-related scenario analysis, including to address climate-related risks and to take advantage of climate-related opportunities;
(2) the entity’s ability to redeploy, repurpose, upgrade or decommission existing assets;
(3) the effect of the entity’s current and planned investments in climate-related mitigation, adaptation and opportunities for climate resilience;
(b) how and when the climate-related scenario analysis was carried out, including:
(i) information about the inputs the entity used, including:
(1) which climate-related scenarios the entity used for the analysis and the sources of those scenarios;
(2) whether the analysis included a diverse range of climate-related scenarios;
(3) whether the climate-related scenarios used for the analysis are associated with climate-related transition risks or climate-related physical risks;
(4) whether the entity used, among its scenarios, a climate-related scenario aligned with the latest international agreement on climate change;
(5) why the entity decided that its chosen climate-related scenarios are relevant to assessing its resilience to climate-related changes, developments or uncertainties;
(6) the time horizons the entity used in the analysis;
(7) what scope of operations the entity used in the analysis (for example, the operating locations and business units used in the analysis);
(ii) the key assumptions the entity made in the analysis, including assumptions about:
(1) climate-related policies in the jurisdictions in which the entity operates;
(2) macroeconomic trends;
(3) national- or regional-level variables (for example, local weather patterns, demographics, land use, infrastructure and availability of natural resources);
(4) energy usage and mix;
(5) developments in technology;
(iii) the reporting period in which the climate-related scenario analysis was carried out (see paragraph B18).
The Group assessed the resilience of its strategy and business model to climate-related changes by running portfolio-level scenario analysis on the lending book and operations at the reporting date. The analysis was carried out in Q3 of the reporting year, with results integrated into the corporate-planning cycle. [IFRS S2.22; B1–B18]
Scenarios used. Three pairings of physical and transition scenarios are presented together as the disclosure base; the reader sees results across all three, not for one selected scenario.
| Scenario | Source | Key assumptions | Time horizon | Physical risk magnitude | Transition risk magnitude | Resilience implication |
|---|---|---|---|---|---|---|
| Aggressive mitigation | NGFS Net Zero 2050 + IPCC SSP1-2.6 | Strong policy continuation; renewable-electricity scale-up; carbon pricing CU 130/t by 2030 in regulated jurisdictions | 2030 / 2050 | Mild (limited acute increase; chronic stress moderate) | Elevated near-term (transition-risk write-downs in conventional power, oil & gas, carbon-intensive real estate) | Manageable; capital ratios remain > minimum + buffer; sustainable-finance origination growth offsets transition write-downs |
| Current pledges | NGFS NDC + IPCC SSP2-4.5 | NDC commitments fall short of Paris pathway; physical-risk frequency and severity continue to rise | 2030 / 2050 | Moderate by 2030; elevated by 2050 | Moderate (slower transition; gradual policy tightening) | Manageable through 2030; physical-risk-driven credit losses become material in residential mortgage book by 2040–2050; sub-portfolio re-pricing required |
| Limited action | NGFS Current Policies + IPCC SSP5-8.5 | Little or no new climate policy; high warming pathway; chronic physical risks dominate | 2030 / 2050 | Severe (acute frequency-and-intensity rise materially; insurability stress in highest-exposure regions) | Low regulatory but elevated litigation and stranded-asset risk if policy reversal materialises | Stress on residential mortgage book in coastal regions becomes material by 2040; collateral-haircut adjustments required; insurance-availability risk on owned operational sites |
Resilience assessment (Para 22(a)(i)–(iii)). Under aggressive-mitigation, modelled increase in expected loss on the residential mortgage portfolio attributable to physical hazards is CU 40–85m per year by 2050, absorbed within current capital buffers. Under SSP5-8.5, the same range expands to CU 150–280m and would require revised collateral haircuts in highest-exposure sub-portfolios. The Group’s existing capital position (CET1 ratio 12.4%) and provisioning approach absorb the central case under both moderate-action and current-pledges scenarios; aggressive-action capital allocation requires sustainable-finance growth to deliver per business plan. Areas of significant uncertainty: customer transition-plan implementation rate, supervisor stress-test calibration, secondary-market pricing of climate-vulnerable mortgage books. [IFRS S2.22(a)(ii)]
Scope of operations (Para 22(b)(i)(7)). All loan-book geographies; deepest analysis in home-market mortgage portfolio. Reporting period (Para 22(b)(iii)): analysis carried out during the current reporting period.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 22
Typically skipped. Resilience-implication numbers under each scenario. Most first-wave bank disclosures describe the scenario-analysis exercise (which models, which time horizons) but stop short of the resilience-implication numbers required by Para 22(a)(i)–(iii). The portfolio-level financial impact under each scenario is the part that disappears.
What good looks like. A side-by-side scenario table with named sources, key assumptions, time horizons, physical and transition risk magnitudes, and resilience implications including capital-position bridge.
Para 25. Risk management: processes for identifying, assessing, prioritising and monitoring climate-related risks
Disclose the processes the entity uses to identify, assess, prioritise, and monitor climate-related risks (and separately, opportunities) — including data sources, scope of operations covered, scenario-analysis use in identification, materiality criteria, and how climate-risk processes integrate into the overall risk-management framework. Disclose any process changes from the prior reporting period.
Standard text (verbatim, IFRS S2 Para 25)
To achieve this objective, an entity shall disclose information about:
(a) the processes and related policies the entity uses to identify, assess, prioritise and monitor climate-related risks, including information about:
(i) the inputs and parameters the entity uses (for example, information about data sources and the scope of operations covered in the processes);
(ii) whether and how the entity uses climate-related scenario analysis to inform its identification of climate-related risks;
(iii) how the entity assesses the nature, likelihood and magnitude of the effects of those risks (for example, whether the entity considers qualitative factors, quantitative thresholds or other criteria);
(iv) whether and how the entity prioritises climate-related risks relative to other types of risk;
(v) how the entity monitors climate-related risks;
(vi) whether and how the entity has changed the processes it uses compared with the previous reporting period;
(b) the processes the entity uses to identify, assess, prioritise and monitor climate-related opportunities, including information about whether and how the entity uses climate-related scenario analysis to inform its identification of climate-related opportunities;
(c) the extent to which, and how, the processes for identifying, assessing, prioritising and monitoring climate-related risks and opportunities are integrated into and inform the entity’s overall risk management process.
The Group’s process to identify, assess, prioritise, and monitor climate-related risks is embedded in the enterprise-wide Risk Management Framework approved by the Board Risk Committee. [IFRS S2.25]
Identification (Para 25(a)(i)). Climate-related credit-risk drivers are identified at the borrower and collateral level using address-level hazard screening (twelve physical hazards: flood, wildfire, tropical cyclone, extreme heat, drought, water stress, hail, landslide, sea-level rise, subsidence, extreme rainfall, storm surge) and counterparty-industry exposure mapping. Hazard screening runs quarterly across the residential mortgage book; at origination plus annual review for commercial and project finance. Inputs: public hazard datasets, third-party climate data providers, internal collateral data.
Use of scenario analysis (Para 25(a)(ii)). Para 22 scenario outputs feed climate-adjusted credit-risk parameters used in expected-loss modelling. The Group does not yet use scenario outputs in pricing for new originations; the pricing-integration roadmap is owned jointly by CRO and CFO and runs on a two-year horizon.
Assessment (Para 25(a)(iii)). Quantitative thresholds (modelled expected loss above 5 basis points of a sub-portfolio’s carrying amount triggers escalation; a single-borrower physical-risk-driven Probability of Default uplift above 50 bps triggers covenant review). Qualitative factors include concentration in single hazard zones, tenor, presence of insurance, counterparty transition-plan credibility.
Prioritisation (Para 25(a)(iv)). Climate is a Tier 2 risk in the current Risk Appetite Statement, having been promoted from Tier 3 in the prior year, and reviewed alongside credit, market, operational and conduct risks.
Monitoring (Para 25(a)(v)). Quarterly residential-mortgage hazard re-screening; annual independent review of top-decile-vulnerability sub-portfolio; continuous monitoring through the Group risk management system; reports to the Board Risk Committee at every cycle.
Process changes (Para 25(a)(vi)). The 5 bps threshold was added in the current period (previously qualitative-only). The hazard list was expanded from eight to twelve hazards; subsidence and storm surge were added.
Integration (Para 25(c)). Climate is integrated into the Group’s enterprise risk taxonomy and reported through the same governance committees as credit, market, and operational risk.
Illustrative process drawn from sector practice.
Cohort findings: what reporters typically skip on Para 25
Typically skipped. Numeric thresholds and process-change disclosure. Most bank disclosures describe a ‘climate risk integrated into our enterprise risk framework’ without specifying the trigger that escalates a sub-portfolio. Without thresholds, Para 25(a)(iii) is not actually disclosed.
What good looks like. Specific thresholds, escalation pathway when triggered, trajectory of climate-risk priority over time, and named process changes year-over-year.
Para 29(a). Greenhouse gas emissions: Scope 1, 2, 3 (with financed-emissions limitation 29A-C)
Disclose absolute gross GHG emissions in CO2-equivalent for Scope 1, 2, and 3, measured per the GHG Protocol Corporate Standard. For Scope 1 and 2, disaggregate consolidated group from associates, joint ventures, and unconsolidated subsidiaries. For Scope 2, disclose location-based emissions plus contractual-instrument detail. For Scope 3, disclose categories per the GHG Protocol Value Chain Standard, with additional financed-emissions detail for asset managers, banks, and insurers (Para 29A-C optional limitation applies).
Standard text (verbatim, IFRS S2 Para 29(a))
Greenhouse gases. The entity shall:
(i) disclose its absolute gross greenhouse gas emissions generated during the reporting period, expressed as metric tonnes of CO2 equivalent, classified as:
(1) Scope 1 greenhouse gas emissions;
(2) Scope 2 greenhouse gas emissions;
(3) Scope 3 greenhouse gas emissions;
(ii) measure its greenhouse gas emissions in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) unless the entity is required, in whole or in part, by a jurisdictional authority or an exchange on which it is listed to use a different method for measuring its greenhouse gas emissions;
(iii) disclose the approach it uses to measure its greenhouse gas emissions, including:
(1) the measurement approach, inputs and assumptions the entity uses;
(2) the reason why the entity has chosen those;
(3) any changes the entity made to the measurement approach, inputs and assumptions during the reporting period and the reasons for those changes;
(iv) for Scope 1 and Scope 2 greenhouse gas emissions, disaggregate emissions between:
(1) the consolidated accounting group;
(2) other investees excluded from paragraph 29(a)(iv)(1) (associates, joint ventures and unconsolidated subsidiaries);
(v) for Scope 2 greenhouse gas emissions, disclose its location-based Scope 2 greenhouse gas emissions, and provide information about any contractual instruments that is necessary to inform users’ understanding of the entity’s Scope 2 greenhouse gas emissions;
(vi) for Scope 3 greenhouse gas emissions disclose:
(1) the categories included within the entity’s measure of Scope 3 greenhouse gas emissions, in accordance with the Scope 3 categories described in the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011);
(2) additional information about the entity’s financed emissions (which are part of Category 15 greenhouse gas emissions), if its activities include asset management, commercial banking or insurance. Paragraphs 29A-29C govern an optional limitation of Category 15 to financed emissions.
The Group’s gross greenhouse-gas emissions for the reporting period are disclosed below in metric tonnes of CO2 equivalent, measured per the GHG Protocol. Operational emissions are small relative to financed emissions; the bank’s primary emissions footprint is in Scope 3 Category 15 (financed emissions). [IFRS S2.29(a)]
| Scope | Emissions (tCO2e) | YoY change |
|---|---|---|
| Scope 1 (operational, direct) | 4,200 | −18% |
| Scope 2 (market-based) | 1,100 | −86% (renewable-electricity completion) |
| Scope 2 (location-based) | 14,300 | −4% |
| Scope 3 Category 15 (financed emissions, absolute) | 14.2 million | +2% (loan-book growth) |
| Scope 3 other categories (operational supply chain, employee commute) | 34,200 | −6% |
Application of the Scope 3 Category 15 limitation (Para 29A–C, effective for the current reporting period). The Group has elected to limit Scope 3 Category 15 to financed emissions only, in accordance with Para 29A. Items treated as derivatives and excluded under Para 29B include FX forwards, interest-rate swaps, and exchange-traded futures held in the trading book. The total Category 15 reported equals the financed-emissions subtotal at 14.2 MtCO2e (Para 29C).
Approach (Para 29(a)(iii)). Scope 1 and Scope 2 measured per GHG Protocol Corporate Standard. Financed emissions measured per UNEP FI Guidance v4 attributed at the loan-balance-as-share-of-borrower-EVIC basis. Inputs: customer-reported emissions where available (62% of book by carrying amount), modelled emissions for the remainder using sector-and-geography intensity factors. Changes from prior period: 8 borrower-reported updates received in period; sector-intensity factors updated to PCAF 2.0.
Disaggregation (Para 29(a)(iv)). Scope 1+2 disaggregated: 92% consolidated accounting group; 8% other investees (associates, joint ventures).
Scope 3 categories included (Para 29(a)(vi)(1)). Categories 1, 5, 6, 7 (operational supply chain), and 15 (financed). Categories 11, 12, 13, 14 not material to the bank’s business model.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(a)
Typically skipped. Scope 3 financed-emissions data quality. Banks routinely disclose the absolute number but rarely surface what fraction is borrower-reported vs. modelled. Without that fraction, the absolute number is uninterpretable.
What good looks like. Both market-based and location-based Scope 2; disaggregated Scope 1+2 (Para 29(a)(iv)); reported-vs-modelled split for financed emissions; explicit application of Para 29A limitation; named methodology (PCAF, UNEP FI).
Para 29(b). Climate-related transition risks: assets and business activities vulnerable
The amount and percentage of assets or business activities vulnerable to climate-related transition risks. Vulnerability must be defined against named transition-risk drivers (carbon pricing, technology shifts, demand decline, regulation tightening) under specified scenarios. Without a defined threshold and named scenario, the percentage figure is unverifiable.
Standard text (verbatim, IFRS S2 Para 29(b))
Climate-related transition risks. The amount and percentage of assets or business activities vulnerable to climate-related transition risks.
The Group discloses the carrying amount and percentage of its lending portfolio classified as vulnerable to climate-related transition risks under each of the three scenarios in the Para 22 set, as at the reporting date. Vulnerability is defined as exposure to a sector, technology, or geography where the entity’s modelled probability of default uplift under the scenario exceeds 50 basis points relative to the central case. [IFRS S2.29(b); 30]
| Sub-portfolio | SSP1-2.6 (CU bn) | SSP2-4.5 (CU bn) | SSP5-8.5 (CU bn) | Dominant transition driver |
|---|---|---|---|---|
| Conventional power generation | 2.4 | 1.5 | 0.4 | Carbon pricing; demand decline for thermal generation |
| Oil & gas (upstream and midstream) | 1.1 | 0.7 | 0.1 | Demand-side commodity-mix shift |
| Carbon-intensive manufacturing (cement, steel) | 0.5 | 0.4 | 0.1 | Carbon-pricing exposure; technology-replacement capex |
| Commercial real estate (low-energy-rated office) | 0.6 | 0.2 | 0.0 | Energy-rating regulation; tenant-attribution risk |
Vulnerability is greater under aggressive-mitigation scenarios (the policy and pricing accelerate); the figure is gross of borrower-led adaptation (transition plans, capex). Para 30 reasonable-and-supportable disclosure: counterparty data quality varies by sub-portfolio; the figure is sensitive to assumptions about carbon-price level and pace.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(b)
Typically skipped. Scenario-conditioning. Many banks disclose a single transition-risk-exposure number without specifying the scenario under which it was calculated, which makes the number incomparable across reporters and uninterpretable in isolation.
What good looks like. Three-scenario presentation (aggressive / current pledges / limited action) with sub-portfolio breakdown and named transition drivers.
Para 29(c). Climate-related physical risks: assets and business activities vulnerable ★
The amount and percentage of assets or business activities vulnerable to climate-related physical risks. The most-skipped disclosure across every first-wave reporter cohort globally — about a third to a half of reporters either omit the quantitative figure or substitute a qualitative hedge. The amount-and-percentage form is the load-bearing element; vulnerability threshold, scenario, and time horizon must be disclosed alongside. Iris unpacks the four definitional ambiguities buried in the standard’s amount-and-percentage language in a separate Para 29(c) deep-dive.
Standard text (verbatim, IFRS S2 Para 29(c))
Climate-related physical risks. The amount and percentage of assets or business activities vulnerable to climate-related physical risks.
The Group discloses the carrying amount and percentage of its lending portfolio vulnerable to climate-related physical risks, by sub-portfolio and dominant hazard, as at the reporting date. Vulnerability is defined as exposure to a hazard intensity exceeding the Group’s threshold for an acute or chronic physical hazard under the named scenario. The figure is gross of borrower-led adaptation. [IFRS S2.29(c); 30]
| Sub-portfolio | Vulnerable amt under SSP2-4.5 (CU bn) | Vulnerable amt under SSP5-8.5 (CU bn) | Dominant hazard |
|---|---|---|---|
| Residential mortgages | 1.78 | 3.20 | Riverine flood, wildfire |
| Commercial real estate | 0.41 | 0.62 | Coastal flood, tropical cyclone |
| Project finance (infrastructure) | 0.15 | 0.28 | Extreme heat, water stress |
Vulnerability is determined at the underlying-asset level for collateralised lending and at the project-site level for project finance. The Group does not net adaptation actions taken by counterparties. The threshold for a property to be classified as vulnerable is exposure to a hazard at a return period of 1-in-100 years or more frequent under the chosen scenario, or chronic exposure exceeding the asset-class adaptation threshold (for the residential mortgage book: annual extreme-heat days above 35°C exceeding 30 in a typical year, prolonged drought driving foundation-subsidence risk on heavy-clay soils, or sustained insurance-availability stress for the postcode). For commercial real-estate collateral, the threshold uses the equivalent CRE adaptation thresholds set in the Group’s Para 25 risk-management framework. [IFRS S2 BC para B11]
Illustrative figures. Continuuiti’s Climate Risk service produces this metric for any portfolio of locations using twelve physical hazards across five SSP-RCP scenarios and four time horizons.
Cohort findings: what reporters typically skip on Para 29(c)
Typically skipped. This is the most-skipped disclosure across every early-reporter cohort globally. NZ FMA, KPMG AASB S2 First Impressions (FAST 30 tracker), PwC AASB S2 Unpacked review of first-wave Group 1 reporters, and Deloitte Wave 1 reviews have independently flagged that roughly one-third to one-half of first-wave reporters do not quantify the amount or percentage. Where reporters disclose at all, the typical pattern is a qualitative hedge (“our assessment of the potential financial impacts of climate-related risks continues to mature”) and a cross-reference to scenario-analysis narrative. The IBG vol-19 FN-MF-450a.1 metric set provides the precise loan-count plus loan-value form that fully satisfies Para 29(c) for a mortgage-anchored loan book.
What good looks like. Specific carrying amount and percentage with stated threshold, scenario, time horizon, and adaptation treatment. Sub-portfolio disaggregation is a meaningful enhancement. Multi-scenario presentation is the form Para 22 contemplates.
Para 29(d). Climate-related opportunities: assets aligned with opportunities
The amount and percentage of assets or business activities aligned with climate-related opportunities. The opportunity-side counterpart to Para 29(b) and 29(c). Disclosure should pair the quantitative figure with revenue, capacity, or other operational metrics that contextualise the alignment claim.
Standard text (verbatim, IFRS S2 Para 29(d))
Climate-related opportunities. The amount and percentage of assets or business activities aligned with climate-related opportunities.
The Group discloses the carrying amount and percentage of business activity aligned with climate-related opportunities, defined as lending and capital-markets activity that supports the transition to a low-emissions economy or that finances climate adaptation. [IFRS S2.29(d); 30]
| Opportunity category | Carrying amount / volume (CU bn) | Notes |
|---|---|---|
| Energy-efficient residential mortgage book | 14.2 | Discount-pricing programme for highest-rated homes |
| Renewable-energy project finance | 9.6 | Solar, wind, storage, hydro |
| Sustainability-linked loans (commercial) | 8.4 | Pricing tied to verified ESG / climate KPIs |
| Green-bond underwriting / arranging (cumulative) | 5.7 | Climate-sustainability bonds, transition bonds |
| Critical-minerals project finance | 0.6 | Lithium, copper, nickel |
Definition of alignment uses the Group’s own Sustainable Finance Framework (third-party-assured) and references EU Taxonomy where applicable. Para 30 reasonable-and-supportable: alignment criteria evolve with regulatory guidance.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(d)
Typically skipped. The alignment criteria. Banks routinely report sustainable-finance origination volumes but rarely disclose the framework that determines what qualifies. Without the criteria, the number is unauditable.
What good looks like. Alignment criteria named (own framework + external taxonomy reference); breakdown by category; in-period vs. cumulative vs. commitment trajectory.
Para 29(e). Capital deployment toward climate-related risks and opportunities
The amount of capital expenditure, financing, or investment deployed toward climate-related risks and opportunities. Disclosure should disaggregate by category (mitigation, adaptation, opportunity) and ideally by sub-portfolio. The figure must reconcile with the entity’s strategy and decision-making disclosures (Para 14) and target-progress disclosures (Para 33-36).
Standard text (verbatim, IFRS S2 Para 29(e))
Capital deployment. The amount of capital expenditure, financing or investment deployed towards climate-related risks and opportunities.
During the reporting period, the Group deployed [IFRS S2.29(e)] CU 312m of capital toward climate-related risks and opportunities. The breakdown is set out below.
| Category | Amount (CU m) | Risk vs. opportunity |
|---|---|---|
| Sustainable finance loans originated | 185 | Opportunity |
| Climate-resilience capex on owned operational sites | 48 | Physical risk |
| Hazard data and analytics platform investment | 22 | Physical risk (risk-management infrastructure) |
| Provisioning uplift for climate-adjusted ECL on most-affected mortgage cohort | 57 | Physical risk |
The CU 48m climate-resilience capex covers flood defences, backup power, HVAC upgrades at branch network and data-centre sites identified as elevated-risk in the Para 29(c) screening. The CU 57m provisioning uplift reflects management’s overlay on the IFRS 9 ECL model for the residential mortgage cohort in highest-vulnerability geographies; the uplift is reviewed quarterly and is expected to be released or expanded as scenario inputs evolve.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(e)
Typically skipped. The provisioning-uplift line. Most banks disclose sustainable-finance origination volumes (the easy, marketing-friendly number) and operational-resilience capex on owned sites. The climate-adjusted ECL uplift on the loan book — which is the largest single financial impact for most banks — is rarely disclosed as a discrete line under 29(e).
What good looks like. A breakdown that is honest about the ratio between opportunity-side flows and risk-side spend / provisioning.
Para 29(f). Internal carbon prices
Disclose whether and how the entity applies an internal carbon price in decision-making (investment, transfer pricing, scenario analysis), and the per-tonne price used. Disclosure should distinguish between prices applied to operational decisions and prices used in strategic and scenario contexts. Sectors with material own-emissions exposure typically apply different prices for different decision contexts.
Standard text (verbatim, IFRS S2 Para 29(f))
Internal carbon prices. The entity shall disclose:
(i) an explanation of whether and how the entity is applying a carbon price in decision-making (for example, investment decisions, transfer pricing and scenario analysis);
(ii) the price for each metric tonne of greenhouse gas emissions the entity uses to assess the costs of its greenhouse gas emissions.
The Group applies an internal carbon price as a shadow input to investment, pricing, and scenario-analysis decisions. [IFRS S2.29(f)]
| Application | Price (CU per tonne CO2e) | Notes |
|---|---|---|
| Capital-investment decisions over CU 200m | 120 | Applied to projected emissions over 10-year horizon; risk-adjusted upward to 180 for highest-uncertainty projects |
| Sustainability-linked-loan pricing for high-emission borrowers | 80 | Used in pricing-margin uplift calibration |
| Climate-adjusted ECL modelling on conventional power generation | 140 | Embedded in scenario-driven probability of default uplift |
| Operational-decarbonisation business case | 100 | Used to evaluate own-operations transition projects |
The carbon-price level was reviewed during the period and increased from CU 95 to CU 120 for capital-investment decisions, reflecting updated NGFS NDC + Net Zero 2050 scenario carbon-price trajectories. The Group’s price is positioned at the median of NGFS scenario carbon-price ranges for 2030.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(f)
Typically skipped. Multiple-price disclosure. Most banks report a single internal carbon price; in practice the price often varies by application and the disclosure should reflect that.
What good looks like. Carbon price by application, year-on-year change with reason, alignment to external scenario trajectories.
Para 29(g). Remuneration: climate-linked executive compensation
Disclose whether and how climate-related considerations factor into executive remuneration, and the percentage of executive compensation in the current reporting period that is climate-linked. The percentage should reconcile with the climate KPIs disclosed under Para 33-36 and the governance-oversight disclosures under Para 6(a)(v).
Standard text (verbatim, IFRS S2 Para 29(g))
Remuneration. The entity shall disclose:
(i) a description of whether and how climate-related considerations are factored into executive remuneration (see also paragraph 6(a)(v));
(ii) the percentage of executive management remuneration recognised in the current period that is linked to climate-related considerations.
Climate-related considerations are factored into executive remuneration through both short-term and long-term incentive plans. [IFRS S2.29(g); 6(a)(v)]
| Component | % of variable remuneration linked to climate | Notes |
|---|---|---|
| Group CEO short-term incentive | 10% | Tied to operational-emissions targets and sustainable-finance origination volume |
| Group CEO long-term incentive | 15% | Tied to sectoral financed-emissions reduction targets and 2030 trajectory |
| Group CRO long-term incentive | 20% | Tied to physical-risk-driven ECL trajectory and risk-management process maturity |
| Other executive committee average | 8–12% | Sector- and function-specific weightings |
Aggregate: 11.5% of executive management remuneration recognised in the current period is linked to climate-related considerations. Linkage is overseen by the Compensation & Human Capital Committee of the Board.
Illustrative figures.
Cohort findings: what reporters typically skip on Para 29(g)
Typically skipped. The percentage. Para 29(g)(ii) explicitly requires the percentage of executive management remuneration linked to climate. Many disclosures describe the linkage qualitatively without the numeric requirement.
What good looks like. Percentage by role plus aggregate; named oversight committee; cross-reference to Para 6(a)(v).
Para 32. Industry-based metrics
Disclose industry-based metrics associated with the entity’s business model and activities. The standard refers entities to the SASB Industry-Based Guidance (IBG) on implementing IFRS S2 — applicability is per industry. The IBG metrics complement (not replace) the cross-industry Para 29 disclosures; both must be reconciled where they overlap.
Standard text (verbatim, IFRS S2 Para 32)
An entity shall disclose industry-based metrics that are associated with one or more particular business models, activities or other common features that characterise participation in an industry. In determining the industry-based metrics that the entity discloses, the entity shall refer to and consider the applicability of the industry-based metrics associated with disclosure topics described in the Industry-based Guidance on Implementing IFRS S2.
The Group applies the IBG industry-based metrics for Commercial Banks (vol-16, FN-CB) and, for the residential mortgage portfolio, refers to the Mortgage Finance volume (vol-19, FN-MF) for additional physical-risk metrics. The pure FN-CB IBG does not include direct physical-risk metrics; banks are expected to disclose physical-risk exposure of the loan book using metrics from the borrower industries. [IFRS S2.32]
From IBG vol-19 (FN-MF) Climate Change Adaptation:
| Metric | Value |
|---|---|
FN-MF-450a.1(1) Number of mortgage loans in 100-year flood zones |
23,408 loans |
FN-MF-450a.1(2) Value of mortgage loans in 100-year flood zones |
CU 6.42bn |
FN-MF-450a.2(1) Total expected loss attributable to weather-related natural catastrophes (annual), by geographical region |
CU 92m total: home-market region A 64m; home-market region B 22m; secondary regions 6m |
FN-MF-450a.2(2) Loss Given Default attributable to weather-related natural catastrophes, by geographical region |
27% portfolio-weighted (vs. 21% portfolio average); region A 31%, region B 24%, secondary regions 19% |
From IBG vol-16 (FN-CB) on incorporation of ESG factors in credit analysis (FN-CB-410a.2): The Group discusses integration of climate-related ESG factors in commercial and industrial lending, including significant concentrations of credit exposure to climate-related factors and how those factors influence views on creditworthiness, expected loss, and the value of posted collateral. Full description in the Risk Management section above and in Appendix C.
Illustrative figures. Continuuiti’s Climate Risk and Damage services produce the underlying location-level inputs.
Cohort findings: what reporters typically skip on Para 32
Typically skipped. The borrowing of Mortgage Finance metrics into a Commercial Banks disclosure. Many banks treat their FN-CB volume as exhaustive, disclose only the FN-CB-410a.2 narrative, and omit the FN-MF physical-risk metrics entirely — even when the residential mortgage book is the largest exposure on the balance sheet.
What good looks like. Explicit cross-reference: which IBG volumes the entity has applied, why, and which metrics it has reported. The IBG itself instructs entities to consider applicability across business activities.
Para 33–36. Climate-related targets: quantitative and qualitative
Disclose the quantitative and qualitative climate-related targets set to monitor strategic progress, including any targets required by law or regulation. For each target: the metric, objective, scope, period, base, milestones, absolute-vs-intensity classification, and how the latest international climate agreement informed it. Performance against targets must be disclosed; for GHG targets, gases covered, scopes, gross-vs-net classification, and any planned use of carbon credits with verification scheme detail.
Standard text (verbatim, IFRS S2 Para 33–36)
An entity shall disclose the quantitative and qualitative climate-related targets it has set to monitor progress towards achieving its strategic goals, and any targets it is required to meet by law or regulation, including any greenhouse gas emissions targets. For each target, the entity shall disclose:
(a) the metric used to set the target;
(b) the objective of the target (for example, mitigation, adaptation or conformance with science-based initiatives);
(c) the part of the entity to which the target applies;
(d) the period over which the target applies;
(e) the base period from which progress is measured;
(f) any milestones and interim targets;
(g) if the target is quantitative, whether it is an absolute target or an intensity target;
(h) how the latest international agreement on climate change, including jurisdictional commitments that arise from that agreement, has informed the target.
An entity shall disclose information about its approach to setting and reviewing each target, and how it monitors progress against each target, including:
(a) whether the target and the methodology for setting the target has been validated by a third party;
(b) the entity’s processes for reviewing the target;
(c) the metrics used to monitor progress towards reaching the target;
(d) any revisions to the target and an explanation for those revisions.
An entity shall disclose information about its performance against each climate-related target and an analysis of trends or changes in the entity’s performance.
For each greenhouse gas emissions target the entity shall disclose:
(a) which greenhouse gases are covered by the target;
(b) whether Scope 1, Scope 2 or Scope 3 greenhouse gas emissions are covered by the target;
(c) whether the target is a gross greenhouse gas emissions target or net greenhouse gas emissions target. If the entity discloses a net greenhouse gas emissions target, the entity is also required to separately disclose its associated gross greenhouse gas emissions target;
(d) whether the target was derived using a sectoral decarbonisation approach;
(e) the entity’s planned use of carbon credits to offset greenhouse gas emissions to achieve any net greenhouse gas emissions target, including
(i) the extent to which, and how, achieving any net greenhouse gas emissions target relies on the use of carbon credits;
(ii) which third-party scheme(s) will verify or certify the carbon credits;
(iii) the type of carbon credit, including whether the underlying offset will be nature-based or based on technological carbon removals, and whether the underlying offset is achieved through carbon reduction or removal;
(iv) any other factors necessary for users to understand the credibility and integrity of the carbon credits the entity plans to use.
The Group has set the following climate-related targets, presented per Para 33 disclosure requirements. [IFRS S2.33–36]
| Target | Metric | Objective | Scope | Period | Base year | Milestones | Absolute / intensity | Paris-aligned? |
|---|---|---|---|---|---|---|---|---|
| Operational Scope 1+2 (market-based) | tCO2e | Mitigation | Group operations | 2030 | 2022 | FY26 -45%; FY28 -60% | Absolute (-72%) | Yes (1.5°C aligned) |
| Operational renewable electricity | % | Mitigation | Group operations | 2025 (achieved) | n/a | FY24 80%; FY25 100% | Absolute (100%) | Yes |
| Sustainable-finance origination (cumulative) | CU billion | Opportunity | Group lending + capital markets | 2030 | 2020 | FY25 CU 110bn; FY27 CU 600bn; FY29 CU 1.1T | Absolute (CU 1.5T) | n/a |
| Residential real estate financed-emissions intensity | tCO2e per CU m of lending | Mitigation (sectoral) | Mortgage book | 2030 | 2022 | FY26 -22%; FY28 -38% | Intensity (-50%) | Yes |
| Power generation (financed) intensity | tCO2e per MWh financed | Mitigation (sectoral) | Power generation lending | 2030 | 2022 | FY26 -35%; FY28 -50% | Intensity (-60%) | Yes |
| Thermal-coal exposure | CU bn carrying amount | Mitigation | Lending book | 2028 | n/a | FY26 -85%; FY27 -95% | Absolute (zero) | Yes |
Validation and review (Para 34). Sectoral targets validated by UNEP FI Guidance v4 framework; the Group is preparing SBTi Financial Sector Standard alignment for FY26. Targets reviewed annually by the Board Risk Committee with quarterly progress updates.
Performance (Para 35).
| Target | 2025 | 2024 | 2023 | Base year | Status |
|---|---|---|---|---|---|
| Operational Scope 1+2 (-72% by 2030) | -38% (108k tCO2e) | -22% (137k tCO2e) | -10% (158k tCO2e) | 175k tCO2e (2022) | On track |
| Operational renewable electricity (100% by 2025) | 100% | 80% | 55% | n/a | Achieved |
| Sustainable-finance origination (cumulative CU 1.5T by 2030) | CU 110bn | CU 80bn | CU 55bn | 0 (2020) | On track |
| Residential RE financed-emissions intensity (-50% by 2030) | -18% | -10% | -4% | 2022 baseline | On track |
| Power generation (financed) intensity (-60% by 2030) | -28% | -16% | -7% | 2022 baseline | On track |
| Thermal-coal exposure (zero by 2028) | -71% | -50% | -28% | baseline carrying amount | On track |
GHG-target detail (Para 36). All seven Kyoto-Protocol gases (CO2, CH4, N2O, HFCs, PFCs, NF3, SF6) included in measurement. All GHG targets are gross. No carbon credits planned for use against operational targets; for sectoral financed-emissions targets, customer-level carbon credits are excluded from the metric. Sectoral decarbonisation approach used (IEA Net Zero Emissions sectoral pathways; SBTi Financial Sector Standard reference where applicable).
Illustrative target set.
Cohort findings: what reporters typically skip on Para 33–36
Typically skipped. Para 36(c) gross-vs-net disclosure for each target. Banks routinely report ‘net zero by 2050’ without disclosing the role of carbon credits or whether the headline target is gross or net.
What good looks like. Per-target table covering all eight Para 33 attributes; explicit gross-vs-net per Para 36(c); validation-framework reference; performance against base year.
Commentary