Bank of Communications Co Ltd

The Board of Directors undertakes ultimate responsibility for business management as the top decision-making body for the Bank's risk management and green finance. The main responsibilities of the Board of Directors include supervising the formulation and implementation of the Bank's climate-related development strategies, policies and regulations as well as targets and plans, regularly reviewing the results of identifying and monitoring climate-related risks and opportunities, and promoting the improvement of the Bank's green financial system. During the process of formulating major strategies and related policies for the identification and management of climate risks and opportunities, establishing a comprehensive risk management system, overseeing capital utilization and asset allocation, innovating and developing business, and monitoring the implementation of strategies and execution of various tasks, the Board of Directors have incorporated green finance-related issues into consideration. [...] In order to clarify the Board of Directors' assignment of responsibility for climate-related issues, strengthen the management and supervision process of the Board of Directors, and improve the climate governance system at the board level, the Board of Directors has established and authorised the Strategy and Corporate Governance Committee, the Risk Management Committee (hereinafter referred to as the \"RMC\"), and the Green Finance Management Committee (hereinafter referred to as the \"GFMC\") to perform relevant duties. [...] The \"RMC\" is directly managed by the Board of Directors and holds at least one meeting every quarter. The \"RMC\" is composed of independent non-executive directors, of whom the Chairman is elected by the Board. The \"RMC\" is responsible for monitoring various risks, including but not limited to credit risk, market risk, operational risk, interest rate risk, liquidity risk, legal and compliance risk, strategic risk, reputation risk, climate risk, and any other material risks which may arise from time to time. In addition, the \"RMC\" takes on a monitoring role and is responsible for assisting the Board of Directors in monitoring and supervising the Bank's risk strategies, risk appetites, risk structure, capital adequacy and liquidity adequacy. [...] The \"GFMC\" is chaired by the Chief Executive. To advance green finance management, the \"GFMC\" monitors and supervises the Bank's green finance management, convening regular or irregular meetings to collectively review and evaluate various objectives, action plans, as well as major issues and topics related to environmental, social, and governance risks. In principle, at least one full meeting is convened annually. The primary responsibilities of the \"GFMC\" include formulating and promoting the implementation of the Bank's green finance management objectives and action plans, in accordance with the green finance development strategies determined by the Board of Directors and local regulatory requirements in Hong Kong. Additionally, it oversees the planning and advancement of institutional mechanisms for green finance, reviews and decides on green finance-related policies and important systems, regularly assesses the status of green finance governance and development, tracks the achievement of major regulatory indicators, and makes timely strategic adjustments based on actual conditions. [...] The Senior Management is responsible for coordinating the departments of the Bank to jointly execute the climate risk and green finance-related policies approved by the Board of Directors, implement the climate action plans formulated by the Board of Directors, and achieve the climate-related targets set by the Board of Directors. In addition, the Senior Management regularly reports the project progress to the Board of Directors and board-level committees to assist in evaluating climate-related management performance and monitoring the achievement of climate-related targets. To strengthen the responsibilities of supervising risk management, the Bank has established the Comprehensive Risk Management and Internal Control Committee (hereinafter referred to as the \"CRMICC\") and the Credit Committee (hereinafter referred to as the \"CC\") at the Senior Management level. The \"CRMICC\" collectively supervises and evaluates various major risks, including climate risks defined by the HKMA, and discusses significant matters related to risk management through quarterly meetings. The \"CC\" holds two meetings annually to review the current credit granting strategy. The climate risk factors include the distribution of green loans, the proportion of loans in industries with higher climate risks, and the direction of credit granting development of green finance. [...] The \"CRMICC\", authorised by the \"RMC\", is chaired by the Bank's Chief Executive Officer, with the Deputy Chief Executive Officer in charge of the Risk Management Department serving as the vice chairman, and all other members of the General Manager Office serving as committee members. The duties of the \"CRMICC\" include determining the Bank's risk control objectives, overall risk strategies, management policies, procedures and measures for internal controls based on the risk management strategies and overall policies determined by the Board of Directors. It also takes responsibility for coordinating the planning and promoting the construction of comprehensive risk management and internal control system, and supervising and guiding each business line and department to effectively implement risk management strategies, the requirement of risk appetites and risk limits, and optimising internal controls. The \"CRMICC\" reviews the set-up, monitoring procedures, and the implementation status of risk appetites, risk limits and key risk management indicators. The \"CRMICC\" is also responsible for approving results of major risk identification and assessment, reviewing control measures for significant risk scenarios, etc., and regularly reporting management situations on various risks and submitting relevant reports to the \"RMC\" for review and approval. [...] The Bank regularly reports or submits reports on climate-related risks and green finance to the \"RMC\" and \"GFMC\" and asks for their approval or decisions on other major issues and topics relevant to climate-related risks and green finance. When a climate risk event occurs or a climate risk regulatory standard is issued, the \"RMC\" and \"CRMICC\" will timely report in regular meetings and continuously review the project outcomes. If the situation is urgent or there are multiple departments involved in the topic, the Bank will hold a \"GFMC\" meeting to invite all the relevant departments to participate in the discussion.

The Board of Directors undertakes ultimate responsibility for business management as the top decision-making body for the Bank's risk management and green finance. The main responsibilities of the Board of Directors include supervising the formulation and implementation of the Bank's climate-related development strategies, policies and regulations as well as targets and plans, regularly reviewing the results of identifying and monitoring climate-related risks and opportunities, and promoting the improvement of the Bank's green financial system. The Board of Directors has incorporated the climate-related issues into the processes of formulating major strategies, identifying and making management policies for climate risks and opportunities, establishing a comprehensive risk management system, supervising capital use and asset allocation, innovating and developing businesses, and monitoring the implementation and execution status of strategies, etc. [...] In order to clarify the Board of Directors' assignment of responsibility for climate-related issues, strengthen the management and supervision process of the Board of Directors, and improve the climate governance system at the board level, the Board of Directors has already set up and authorized the Risk Management Committee (hereinafter referred to as the "RMC") and Green Finance Management Committee (hereinafter referred to as the "GFMC") to perform duties. [...] The "GFMC" is chaired by the Chief Executive, the Deputy Chief Executive in charge of credit and risk management is the vice chairman, and other committee members include all the remaining persons from the Executive Office. In order to promote green finance management, the "GFMC" monitors and supervises the Bank's green finance management, and also collectively reviews and evaluates the various objectives, action plans, as well as major issues and topics related to environmental, social and governance risks by holding regular or irregular meetings. In principle, at least one meeting is held every year. The main responsibilities of the "GFMC" include taking the lead in formulating and promoting the implementation of the Bank's green finance management objectives and action plans, in accordance with the green finance development strategies determined by the Board of Directors and Hong Kong's local regulatory requirements. Meanwhile, it is also responsible for coordinating the planning and promoting the construction of institutional mechanisms for green finance, reviewing and making decisions on green finance-related policies and important systems, regularly assessing the status of green finance governance and development, tracking the achievement of major regulatory indicators, and making timely strategic adjustments based on actual conditions, etc. [...] To strengthen the responsibility of supervising risk management, the Bank has established a Comprehensive Risk Management Committee (hereinafter referred to as the "CRMC") at the senior management level to collectively supervise and evaluate various risks including climate risks defined by HKMA through holding quarterly meetings. The "CRMC" is authorized by the "RMC". The Chief Executive of the Bank serves as the chairman, the vice chairman is the Deputy Chief Executive in charge of the Risk Management Department, and all other persons from the Executive Office serve as committee members. The duties of the "CRMC" include determining the Bank's risk control objectives, overall risk strategies, management policies, procedures and measures for internal controls based on the risk management strategies and overall policies determined by the Board of Directors. It also takes responsibility for coordinating the planning and promoting the construction of comprehensive risk management and internal control system, and supervising and guiding each business line and department to effectively implement risk management strategies, the requirement of risk appetites and risk limits, and optimizing internal controls.

Complying with the climate change management framework set up by the Board of Directors, the Bank has identified the climate-related risk factors and regularly assessed and monitored the potential financial impact of climate-related risks on it. The Bank has also clarified the management responsibilities for the identified climate risk factors and served the climate and environmental risk management as an important part of the Bank's medium and long-term planning. At the same time, measures such as risk monitoring, stress testing, green ratings, and climate risk reserves will be studied and utilised continuously to strengthen the Bank's capabilities of risk identification and risk resistance and enhance the risk management in high carbon emissions industries. [...] The Risk Management Committee (hereinafter referred to as the "RMC") is a standing committee under the Board of Directors, which has been established, authorised and directly managed by the Board of Directors and holds at least one meeting every quarter. The RMC is responsible for monitoring various risks, including but not limited to credit risk, market risk, operational risk, interest rate risk, liquidity risk, legal and compliance risk, strategic risk, reputational risk, climate risk, and any other material risks which may arise from time to time. In addition, the RMC takes on a monitoring role and is responsible for assisting the Board of Directors in monitoring and supervising the Bank's risk strategies, risk appetite/tolerance, risk structure, capital adequacy and liquidity adequacy. [...] In order to promote green finance management, the Board of Directors of the Bank has established and authorised the affiliated Green Finance Management Committee (hereinafter referred to as the "GFMC") to monitor and supervise the Bank's green finance management. The GFMC also collectively reviews and evaluates the various objectives, action plans, as well as major issues and topics related to environmental, social and governance risks by holding regular or irregular meetings. The main responsibilities of the GFMC include taking the lead in formulating and promoting the implementation of the bank's green finance management objectives and action plans, in accordance with the green finance development strategies determined by the Board of Directors and Hong Kong's local regulatory requirements. It is also responsible for coordinating the planning and promoting the construction of institutional mechanisms for green finance, reviewing and making decisions on green finance-related policies and important systems, regularly assessing the status of green finance governance and development, tracking the completion of major regulatory indicators, and making timely strategic adjustments based on actual conditions, etc. In principle, at least one meeting is held every year. [...] The Bank regularly reports or submits reports on climate-related risks and green finance to the RMC and GFMC and asks for their approval or decisions on other major issues and topics relevant to climate-related risks and green finance.