精东影业

Climate Risk Disclosure

As member of the National Association of Insurance Commissioners (NAIC) and part of 精东影业鈥檚 Corporate Social Responsibility (CSR) strategy, we report through the NAIC Climate Risk Disclosure in alignment with the Task Force on Climate-related Financial Disclosures (TCFD). The report is a risk management tool aimed at increasing transparency and identifying climate-related risks and opportunities as they relate to the company. Through our disclosure we seek to support informed collaboration and engagement on climate-related issues across the insurance industry.

Governance

Disclose the organization鈥檚 governance around climate-related risks and opportunities.

Describe the board鈥檚 oversight of climate-related risks and opportunities.

精东影业 has a strong system of governance over climate-related issues, with engagement from both the Board of Directors and upper-level management. Climate-related governance is handled at a group level for 精东影业. This governance is proportionate to the nature, scale, and complexity of the operations across 精东影业. It allows the Board, management committee, and senior management to integrate climate-related risks and opportunities into strategy, decision-making, and business processes.

Our enterprise sustainability governance program has established AVP Sustainability roles within 精东影业 and 精东影业 Re to build consistency and structure around the Corporate Social Responsibility (CSR) program. These positions, in collaboration with cross-functional working groups, are responsible for enterprise CSR strategy and integrating sustainability in our operations, practices, and policies. A Management Committee member, reporting directly into the CEO, is responsible for oversight of the sustainability initiatives and strategic direction.

Board Oversight

Pacific Mutual Holding Company (鈥淧MHC鈥), a Nebraska mutual insurance holding company, is the parent of 精东影业Corp, an intermediate Delaware stock holding company (鈥淧LC鈥).聽 PLC owns 100% of 精东影业 (鈥淧LIC鈥), a Nebraska domiciled stock life insurance company. PLIC owns 100% of 精东影业 & Annuity Company (鈥淧L&A鈥), an Arizona domiciled stock life insurance company. The PMHC Board's responsibility is consistent with the oversight role of responsible business, risk management, and stewardship and includes oversight of the CSR program, which takes into account climate-related risks and opportunities. The Board convenes at least five times per year, but unscheduled meetings may be called at any time to address specific needs of 精东影业 including climate-related matters. Committees of the Board are updated at least once per year on CSR topics and as needed for informational or decision-making purposes.

Committee structures are created to facilitate and assist in the execution of the Board鈥檚 responsibilities. At each regular meeting of the Board, the committees are required to report significant matters reviewed by the committee and matters considered and acted upon. In addition to the full Board鈥檚 oversight, climate-related risks are considered by the Audit Committee, Investment and Finance Committee, and Governance and Nominating Committee. Specific responsibilities are described below:

  • Audit Committee
    • Discuss overall policies concerning the company鈥檚 risk assessment and risk management framework, inclusive of climate-related risks
    • Review and discuss with management specific insurance and operational risks facing the organization as delegated to the Committee by the Board, and the steps management has taken to monitor and control these risks
    • Direct reports from management sub-committees that may include climate-related risks such as the Enterprise Risk Committee, Emerging Risk Committee, and Model Risk Committee on a periodic basis
  • Investment and Finance Committee
    • Review and advise investment policies, investment transactions, financial risk management, and corporate capital transactions, including policies related to responsible investment and financial risk management related to climate risks
    • Discuss with management financial market and economic risks, including risks which may be climate-related, and the steps management has taken to manage these risks
    • Review the Own Risk and Solvency Assessment and Enterprise Risk Report required to be submitted by applicable state insurance regulators, which may include climate- related risk information
  • Governance and Nominating Committee
    • Carry out duties and responsibilities related to the management of risk, including climate-related risks, as may from time to time be required by applicable law or other applicable governing documents, or delegated or requested by the Board
    • Monitor and advise the Corporate Social Responsibility team. The Corporate Social Responsibility team leads efforts in drafting the annual CSR report and manages climate initiatives
Describe management鈥檚 role in assessing and managing climate-related risks and opportunities.

Management groups or sub-committees also have responsibility for identifying and assessing climate- related risks and reporting potential exposures to their respective standing committees. The Sustainability function within the CSR program is responsible for supporting and coordinating firm-wide efforts across the existing and arising climate-related issues from these groups. The responsibilities of these groups and sub-committees are described below.

  • Enterprise Risk Committee
    • Responsible for all risks across the company, including climate risk which is managed as part of the Company鈥檚 emerging risk management program.
  • Management Investment Committee
    • Reviews and approves the Company鈥檚 Responsible Investment Policy
  • Corporate Social Responsibility team
    • Updates the Governance and Nominating Committee at least once per year on relevant developments to people, communities, customers, and the environment

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Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization鈥檚 businesses, strategy, and financial planning where such information is material.

Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

Through 精东影业鈥檚 risk identification process and prioritization structure, current strategies are monitored and adapted to mitigate the exposure to climate risks for all processes within the business. Given the global nature of climate change, we proactively participate in industry forums and collaborate with peers. This enables us to exchange best practices, deliberate on emerging trends, and maintain alignment with current industry standards in our climate risk management strategies.

Pacific life defines short-term risks as 1-5 years, medium-term risks as 5-30 years, and long-term risks as beyond 30 years. While climate-related risks are closely monitored (see the 鈥楻isk Management鈥 section response for further explanation on how the company identifies, assesses, and manages climate-related risks), at this time, through our analysis, 精东影业 has deemed any climate-related risks or opportunities to be manageable in the short-, medium-, and long-term time horizons due to the nature of the life insurance business 精东影业 participates in, but this will continue to be evaluated over time.

精东影业 is working to expand their risk management process to comply with forthcoming regulation.

Describe the impact of climate-related risks and opportunities on the organization鈥檚 businesses, strategy, and financial planning.

精东影业 has engaged various stakeholders and business functions throughout the organization, including Board and management committees (see the 鈥楪overnance鈥 section response), Enterprise Risk Management (ERM) and Business Continuity (see the 鈥楻isk Management鈥 section response), Investment, Actuarial, and Corporate Affairs. Below is additional information on the work done within each business area regarding climate-related risks and opportunities.

Investment

Climate-related risks and opportunities in 精东影业鈥檚 investment portfolio have been an area of focus for 精东影业. This focus led to initiatives such as the creation of 精东影业鈥檚 Responsible Investment Policy, which was initially published and adapted by 精东影业 in 2019 and updated in November 2022. These principles, which continue to be refined, outline 精东影业鈥檚 desire to achieve sustainable, long-term returns in a balanced and responsible manner by acknowledging the evolving materiality of environmental, social, and governance (ESG) factors and increasingly integrating them into the investment portfolio.

精东影业 has also developed a roadmap which outlines development plans to enhance the company鈥檚 ESG investment strategy through 2025. This plan aims to allow 精东影业 to deliver consistent risk-adjusted returns to policyholders in a responsible manner through the integration of ESG factors into the investment decision making process, and it will allow for continued monitoring and mitigation of climate-related transition risks within 精东影业鈥檚 investment portfolio.

Lastly, 精东影业 has taken steps to take advantage of climate-related opportunities through the creation of the Sustainable Financing Framework. The framework was created to help improve the quality of life of individuals and families, and the social responsibility programs focus on doing this in the communities where 精东影业 employees live and work. 精东影业 will not provide funding through its Sustainable Financing Framework and sustainable note offerings if the borrower is associated with the following climate-related risks: activities related to the exploration, production, or transportation of fossil fuels (e.g., coal, oil, and gas); consumption of fossil fuels for power generation; large hydroelectric power generation (e.g., plants with a capacity of greater than 20 megawatts or dams with a height greater than ten meters); and nuclear energy. Through the transition to a low carbon economy, 精东影业 is seeing more opportunities to invest in projects that use renewable energy such as solar and wind power, liquefied natural gas, and battery technology. This financing framework, and subsequent note issuances, highlight the investment 精东影业 is making to support the transition to a low carbon economy.

Funds

精东影业 offers two proprietary ESG (鈥渆nvironmental, social and governance鈥) funds as underlying investment options for certain of our life insurance and annuity contracts in which contract owners may invest their premiums.聽These two ESG funds, the ESG Diversified Portfolio and ESG Diversified Growth Portfolio, are asset allocation funds that seek their respective investment goals while considering ESG criteria, one of which is environmental.聽 Environmental considerations include investments that may help the transition to a low-carbon economy.聽

Actuarial

Assessing and understanding climate-related risk is important for proper underwriting and accurate identification of new risks that may impact policyholders or operations. Volatility in frequency and severity of weather events are expected to make certain geographic locations more prone to climate risk. To monitor this risk, geographical concentration risk assessments of 精东影业鈥檚 insurance portfolio are done regularly to understand what areas are policy-dense and how these areas may be impacted by future changes in weather events.

Research has also been done into the ways climate-related risks may impact mortality in the future. To quantify these impacts, excess mortality stress testing is performed on the underwriting portfolio to understand how the stressed mortality may impact the business. Results of this stress testing have been immaterial thus far, but 精东影业 plans to continue to test and integrate climate risk assumptions and factors into pricing, projection, and valuation models as appropriate.

Corporate Affairs

精东影业鈥檚 Corporate Social Responsibility (CSR) team sits within the Corporate Affairs team and is responsible for climate-related disclosures and company-wide environmental initiatives aimed at reducing emissions and promoting sustainability programs. The CSR team works with the business units to determine priorities, engage the appropriate stakeholders and address issues related to climate, while supporting integration of processes that support the business.

Scope 1 and 2 greenhouse gas emissions are calculated annually using 2019 as a baseline. Emissions targets may be set in the future. Current company and employee efforts to limit 精东影业鈥檚 environmental footprint include:

  • Providing the option for policyholders to receive electronic account statements and e-delivery of required mailings
  • Increased use of digital files in lieu of paper files
  • Office buildings that incorporate green concepts and technology, including smart thermostats, efficient reflective roofs, high energy efficiency lighting, systems, as well as sustainable materials
  • Consideration of green leasing options in real estate procurement
  • Proactive electronic waste, bottle & can recycling, and trash recycling programs
  • Landscaping with drought-tolerant plants to reduce water consumption
  • Completed work with Southern California Edison Electric company to reduce energy usage and still meet business needs
  • Changes to kitchen equipment and air conditioning optimization to reduce gas consumption.
  • Energy-efficient LED lighting in office buildings鈥 common areas
  • Data center optimization to reduce energy usage and increase efficiency
  • Purchase of hardware certified to be energy efficient including Energy Star
Describe the resilience of the organization鈥檚 strategy, taking into consideration different climate-related scenarios, including a 2掳C or lower scenario.

精东影业鈥檚 risk management organization is tasked with determining investment portfolio resilience, testing credit risk of the portfolio. Climate risk scenario analysis was performed using quantitative 1.5- and 4-degree scenarios to determine climate risk within the investment portfolio and inform future long-term climate risk strategy. Both physical and transition risk assessments were performed across the most material drivers of loss. Various impact pathways are identified to assess how changing corporate bonds and commercial loans will affect the portfolio. Physical impacts were assessed from increases in frequency and intensity of physical hazards such as hurricanes, coastal inundation, flooding, etc. Transition impacts were assessed from impacts of the low carbon transition; carbon tax, labor costs, retrofit costs, etc. Effects driven from the climate scenarios can result in losses due to default, which is then used to calculate projected actual loss value. The analysis has affected strategies for credit decisions in various aspects of the investment portfolio. Divestment and investment opportunities are being analyzed for new types of financial investments that are more resilient to climate risk under each scenario. We intend to repeat climate scenario analysis on a regular cadence, adjusting the frequency as results dictate.

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Risk Management

Disclose how the organization identifies, assesses, and manages climate-related risks.

Describe the organization鈥檚 processes for identifying and assessing climate-related risks.

精东影业 identifies, assesses, manages, and discloses the risks to which the business is, or could be, exposed to, including climate-related risks. Climate risks are integrated within the broader risk management framework. Some potential risks are identified through the Business Continuity Management (BCM) group. BCM administers annual Business Impact Assessments (BIAs) to identify risks at the process level. The BIA is annually completed by the manager of a process and derives process criticality, Recovery Time Objectives (RTO) and required dependencies. BCM may open formal risk issues when gaps in recovery capability do not meet the recovery requirement. This system allows process-level identification of risks that the Emerging Risk Committee and Enterprise Risk Committee may not be able to detect from a management level. Risks identified are then assessed based on the BCMs four tier Process Criticality ranking derived from the BIAs with mission-critical priority being the most important out of four prioritization tiers.

Describe the organization鈥檚 processes for managing climate-related risks.

BCM and the BIA process help inform risks that are considered by Enterprise Risk Management (ERM). ERM is responsible for identifying, assessing, and working to mitigate risks. Management committees are also used to assess risks on a group level. The Enterprise Risk Committee is responsible for overseeing all risks present to the company including people, processes, and systems. The Emerging Risk Committee is a sub-committee of the Enterprise Risk Committee responsible for monitoring and assessing new risks and evaluating if they have a material impact on 精东影业. The committee then assesses ownership, estimated impact, and likelihood. When risks are fully managed, they are removed from the emerging risk list. Climate risk is considered an emerging risk that is regularly monitored for material impact to 精东影业.聽

Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization鈥檚 overall risk management.

Operational Risk Management

Climate change may result in increased frequency and more severe weather-related events such as hurricanes, tidal waves, sea level changes, wildfires, heatwaves, drought and tornados. With operations in Southern California, Omaha, Lynchburg, Bermuda and other geographic areas, the company has exposure to business disruption and operational risk associated with these events. There are Business Continuity Plans (BCP) in place to ensure the availability, recoverability and integrity of critical business and technology-driven processes with minimal impact to normal operations. With hybrid work options already in place and the majority of the offices leased, physical and transition risks to our business operations are limited.

Underwriting Portfolio Risk Management

Extreme weather events and heat stress could result in higher than anticipated mortality experience. Given a well-balanced portfolio of life and annuity products - with offsetting mortality exposures, the net financial effect for 精东影业 is expected to be manageable. Additionally, the risk management team handles excess mortality stress tests linked to climate-related risk. The analysis considers a wide range of scenarios and what impact pathways may occur. Drivers by region are also considered. For example, floods, wildfires, insect-born flus, heatwaves, cold fronts, and air quality impact different regions in different ways. Thus far, the mortality testing results have not been material but will continue to be monitored to identify potential risks. Geographic concentration analysis of the insurance portfolio is done to monitor the number of policyholders per region. There are not currently any parameters influenced by climate risk in pricing or valuation models, but evolving underwriting practices and modeling methodologies may lead to future assumption changes.

Investment Portfolio Risk Management

精东影业鈥檚 investment team has made significant progress in identifying climate risk in the portfolio and in incorporating climate risk assessments into the underwriting process. To help prepare the investment portfolio for transition risks, 精东影业 created a roadmap through 2025 that outlines a process to better measure and manage these risks. Significant resources have also been invested to estimate the financial impact of climate risk on the portfolio in different climate scenarios with an aim to chart the next set of tangible actions at the conclusion of the analysis. This also includes analysis on investments such as real estate, integrating operational risk assessment.

Regulatory Risk Management

精东影业 monitors existing, proposed, and forthcoming regulatory requirements regarding climate change as part of ongoing due diligence. We monitor not only those regulations that will directly affect 精东影业, but also those that will affect our peers and business partners as they may have a cascading affect that could influence our approach.聽

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Metrics and Targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.

精东影业 uses a variety of metrics and tools to manage the potential financial impact of climate- related risks and opportunities on the business. These include metrics related to insurance, investments, and emissions.

Disclose the metrics related to insurance, investments, and emissions.

Insurance

Pacific life monitors geographic concentration risk of the underwriting portfolio, which aids in the analysis of how exposure to physical risks may impact the insurance portfolio. Catastrophe modeling is not used to assess climate-related risks at this time and is not incorporated into underwriting assumptions or factors given climate change events are not yet expected to be material to business operations.

Investment

To better plan for the transition to a low carbon economy, 精东影业 is incorporating investment criteria, metrics, and targets into portfolio management. The Sustainable Financing Framework aims to finance green and social projects that align with 精东影业鈥檚 sustainability priorities. The framework encourages issuers to structure and administer their issuances of green bonds, social bonds and sustainability bonds in alignment with the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines, respectively. The Principles are intended to promote integrity in the Sustainable Bond market through recommendations relating to transparency, disclosure, and reporting. 精东影业鈥檚 Sustainable Bond issuances will target 90% eligible green investments and the remainder eligible social investments, metrics which will be regularly tracked. Examples of eligible projects include green buildings, renewable energy, energy efficiency, and clean transportation.

精东影业 updates investors annually regarding the allocation of net proceeds from issued Sustainable Bonds, until such time bonds are fully allocated. Where feasible, the allocation reporting includes qualitative and quantitative key performance indicators including:

  • Green Buildings
    • Green building certifications
    • Total number of buildings certified
    • Total square feet certified
    • Percentage of overall company square feet certified
  • Renewable Energy
    • Renewable energy capacity sourced and developed (MW)
    • Renewable energy procured and produced from the capacity above (MWh)
    • Emissions (including metric tons of CO2e) avoided or reduced
    • Annual renewable energy procured and produced as a % of annual global electricity consumption
  • Energy Efficiency
    • Energy savings (MWh)
    • Emissions (including metric tons of CO2e) avoided or reduced
    • Office energy consumption/square foot
    • Office energy consumption/employee
    • Data center Power Usage Effectiveness
  • Clean Transportation
    • Commuter carbon emissions (including metric tons of CO2e) avoided or reduced

Credit Risk Scenario analysis is performed by the risk management function, which provides metrics for tracking climate-related risks within 精东影业鈥檚 investment portfolio. Corporate bonds and commercial loans are assessed with carbon prices being a key input. Through the analysis, information pathways are identified and used in other models and management decisions. Outcomes of the testing may affect strategies for credit decisions in various aspects of the investment portfolio, and potential opportunities may be analyzed for new types of financial investments.

Emissions

Greenhouse Gas (GHG) emission disclosures inform investors of 精东影业鈥檚 carbon footprint and track progress as society transitions to a low carbon economy. Scope 1 and Scope 2 emissions are calculated annually with a baseline of 2019, using emission quantification methodologies drawn from the Greenhouse Gas Protocol developed by the World Resources Institute and World Business Council for Sustainable Development (GHG Protocol). The emissions manual is reviewed and updated at least annually based on developments in data collection, calculation, and data quality review process in future years. Emissions are calculated in Metric Tons of Carbon Dioxide emissions, or MTCO2e.

Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.

2022 Scope 1 emissions are 872.6 MTCO2e, a decrease of 11% over the prior year, and 2022 Scope 2 emissions are 5982.1 MTCO2e, a decrease of 1% over the prior year. 精东影业 defines its GHG emissions inventory organizational boundaries using the Operational Control Approach. Offices over which 精东影业 has operational control are included in the GHG emissions inventory, including owned and leased properties, globally with the exception of the following: 1) Field offices and 2) Any office that is smaller than 500 sq.ft. Progress will be monitored year over year. Scope 3 emissions are not yet calculated, but are planned to be assessed in the future.

Last updated: September 2024

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