To keep tabs on the implications of climate change for the Company, momo has launched the “TCFD Climate Related Financial Impact Assessment” project at the end of 2020 and introduced the TCFD proposed framework published by the UN Financial Stability Board. Under the framework laid out by the TCFD, the Sustainable Development Management Committee and the Sustainable Development Department are charged with working with external consultants to identify the potential impacts of climate change on the Company's operations, the associated risks and opportunities, and to evaluate and determine whether the risks are acceptable before deciding on response measures and management approaches.
Data Collection on Climate Issues
To address the future risks of extreme climate impacts and capture the potential opportunities for industries to move towards net zero emissions, momo has chosen the net zero emissions by 2050 scenario (NZE), SSP 1-2.6 and SSP 5-8.5 scenarios, based on regular reports from the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). The transition risk and opportunity issues are organized according to the NZE scenario, including risk factors of market, resource efficiency, energy sources, technology, products and services, and resilience, into issues such as increasing energy costs, rising vehicle costs, entering new markets, rising building costs, and customer behavior change. Physical risks were assessed in the SSP1-2.6 and SSP5-8.5 scenarios by compiling the issues of increasing mean temperature, changing precipitation patterns and extreme weather, sea level rise and growing severity and frequency of extreme weather from the acute and chronic physical risk factors, and by compiling the issues that reflect the characteristics of the momo industry at each time scale for subsequent risk hazard materiality assessment and financial impact assessment.
The risk and opportunity periods are set according to short-, medium- and long-term timeframes as shown in the table:
Climate Scenarios
The scenarios used in this case included NZE, SSP 1-2.6 and SSP 5-8.5, identifying extreme challenges that include transition risks as well as physical risks.
- NZE scenario: To limit global warming to well below 1.5°C, with countries to achieve net zero emissions by 2050.
- SSP 1-2.6 scenarios: Low-emissions scenarios that attempt to meet sustainability targets but are progressing slowly.
- SSP 5-8.5 scenarios: High-emissions scenarios where fossil fuels are fully developed.
Climate-Related Risks and Opportunities Assessment Approaches
In accordance with ISO 31000 risk management guidelines, momo assesses the hazard level for each risk using the following approaches:
Climate Risk and Opportunity Identification Results
Through the foregoing process of identifying climate related risks and opportunities, momo in 2022 identified a total of 16 climate risks (9 transition risks and 7 physical risks) and 7 opportunity issues, and based on the significance of the risks and hazards, the top three issues were all transition risks, including "zero carbon building conversion", "renewable energy upgrade" and "electric vehicles replacing fuel-fired vehicles." As momo has classified the impact of extreme weather and natural disasters on the Company's operations as a key operational risk, it has also included the issue of "extreme weather-induced chain disruption," which is the top ranked physical risk in terms of materiality, together with the top three transition risk issues, as a key climate risk, in order to identify the impact and draw up detailed response measures and action plans. In addition, momo ranked the top three identified climate change opportunities in terms of significance, namely "logistics and transportation efficiency improvement", "zero-carbon logistics" and "green products", and formulated specific development plans to seize the opportunities and promote green e-commerce transformation ahead of the peers.
Indicator and Target Setting
momo sets indicators and targets for the management of climate change-related risks by identifying key climate risk and opportunity issues and the corresponding risk types.
