Starter's Guide to Climate Change Scenario Analysis: Practices and Trends for Scenario Analysis in the Life Insurance Industry
April 15, 2022
The Life Insurance Association of Japan (hereinafter "LIAJ"; Chairman: Yukinori Takada (President of SUMITOMO LIFE INSURANCE COMPANY)) published "Starter's Guide to Climate Change Scenario Analysis" (hereafter the "Guide") that was written mainly for people in the insurance industry who are getting started on this topic.
The LIAJ have endorsed the recommendations of the Financial Stability Board (FSB)'s Task Force on Climate-related Financial Disclosures (TCFD), and we are supporting the efforts of each member company in line with the TCFD recommendations by providing relevant information.
The TCFD Recommendations encourages companies to use scenario analysis when considering the potential financial impact of climate change, but it is said that many companies find it difficult because they have not accumulated established methods and achievements. In particular, life insurance companies need to analyze the impact on their companies from both aspects of life insurance providers and institutional investors, and as an institutional investor, to read the "disclosed information" of investee companies.
Based on these situations, this handbook has compiled the basic knowledge required of practitioners in the industry who are involved in their scenario analysis.