Taking action against climate change

The Society acknowledges climate change as a matter of scientific fact. Climate change presents risks to the Society from both an environmental and financial perspective, which may result in damage to some of its short, medium and long term objectives.

Measures in place and the monitoring of impact

Below is an overview of the measures implemented to mitigate these risks, as well as further steps the Society will take to develop its climate change risk strategy throughout 2021.

Governance

  • The Society’s Board has ultimate responsibility for climate change risks, however responsibility for oversight of the management of financial risks from climate change has been allocated to the CEO.
  • The Board has set the Society’s climate change risk appetite statement as well as ensuring that climate related financial risks are effectively managed.

Risk Management

  • Climate change risk was incorporated into the Society’s Risk Management Framework, including the inclusion of climate related risks into the Society’s risk register in 2019 which, in line with all other risks is regularly reviewed and updated as and when necessary.
  • The Society’s Board and Senior Management Team periodically review its exposure to climate change risks. The approach taken to identify, monitor, manage and report the impact of climate change risks will continue to be developed throughout 2021 and beyond.
  • The Society’s Own Risk and Solvency Assessment (ORSA) for the year ended 2019 included commentary in respect of the Society’s exposure to climate change and this will continue to evolve over time.
  • The Society’s Solvency Financial Conditions Report (SFCR) will continue to be reviewed to reflect its exposure to climate change risks including what if scenario analysis to assess the potential impact of climate change risks materialising.

Strategy

  • The performance of the business could be adversely affected by harmful environmental events and developments which could impact financial markets and longevity, morbidity and mortality risks to which the Society has limited exposure.
  • In terms of the Society’s investment portfolios, during 2020, the Society engaged with its external Investment Managers to look to evaluate the individual holdings within each portfolio, from a climate change perspective. This included a weighted portfolio ESG score compared to the index and an assessment of greenhouse gas tons per £m, again compared to the index. This reporting will continue to evolve in 2021.
  • To manage the climate risks relating to the property portfolios, the Society regularly receives reports from its Property Managers, including Energy Performance Certificates and annual flood risk rating to understand the impact of climate risks such as potential threats to coastal properties, flood risk and increases in buildings and contents insurance.

Metrics and Targets

  • The Society has seen a reduction in its carbon footprint throughout 2020 from reduced travel as almost all staff have worked from home and meetings have been held remotely in response to the Covid-19 pandemic. The Society is keen to continue to explore the options around remote meetings and working where possible.
  • Oddfellows House, the Society’s Head Office has been awarded the Building Research Establishment Environmental Assessment Method (BREEAM) Certification, which focuses on sustainability in relation to energy, water, waste, heating, insulation, pollution and recycling.
  • In 2021 the Society will look to develop a set of climate change risk metrics and targets that are appropriate and proportionate to its exposure to climate change risks and complexity of the Society’s business model and strategy.

A proportionate and risk-based approach

The Society will strive to take a proportionate and risk based approach that is appropriate to its exposure to climate change risk and complexity of the
Society’s business model and strategy.

Prescribed responsibility

The PRA and FCA Senior Managers and Certification Regime (SM&CR) requires the Society to allocate the ‘Responsibility for managing financial risks from climate change’ (Prescribed Responsibility) to a member of its Senior Management Team.

The Society’s Board agreed that this Prescribed Responsibility should rest with the CEO which was done within the required regulatory timeframe of 15 October 2019.