Climate change is one of the most serious and complex risks facing society today. It is one of Sun Life’s risks, which we manage within our overall RMF.
We continue working to better understand potential climate-related risks and to improve our resilience against them. There are two major categories of climate-related risks:
- Physical risk: risks related to physical impacts of climate change, including event-driven acute physical risks, for example more severe weather events; and chronic physical risks from longer-term shifts in climate patterns.
- Transition risk: risks related to the transition to a lower-carbon economy. This includes policy, legal, technology and market changes to address the need to reduce and adapt to climate change, and related reputation risk.
Our definition of climate risk includes impacts in both of these categories. These impacts can include, but are not limited to, damage to owned and operated real assets including real estate and infrastructure, a reduction in the values of investments in public and private fixed income and non-fixed income assets tied to fossil fuels and carbon intensive industries, litigation risk to a company or sector in which we invest, health impacts to affected populations, and socio-economic, geopolitical and regulatory changes.
Our approach to addressing climate change risk also involves strengthening our ability to evaluate and report on potential impacts. We provide climate disclosures guided by the recommendations of the Task Force on Climate-related Financial Disclosures. These disclosures help investors and other stakeholders assess how Sun Life is tackling potential climate-related impacts on our business.