CWBFG Annual Report 2022

SOCIAL AND ENVIRONMENTAL RISK Social and environmental risk is the potential for loss or harm resulting from social or environmental impacts or concerns related to our business or our clients. This risk involves a broad spectrum of issues, including climate change, pollution and waste, energy and other resource usage, human rights, diversity, equity and inclusion, labour standards, and the strength of the communities we operate in. We recognize the importance of social and environmental risk management practices and processes, and continue to advance our understanding of the impact these risks may have on our business and the business of our clients. Our Board of Directors and its committees provide oversight of these risks and their impacts on our enterprise- wide strategy. Under the leadership of the CFO, we have a cross-functional sustainability team that is responsible to identify and prioritize social and environmental issues based on engagement with our clients, people, and investors, and to develop an implementation plan for our overarching approach to sustainability, which includes social and environmental factors, aligned with our strategic direction. The sustainability team provides regular updates and education on emerging trends related to social and environmental risks and market developments to our Board of Directors. Industry practises related to the identification, assessment and management of social and environmental risk are evolving at a rapid pace, especially those related to climate- related risks, and we continue to monitor and respond to emerging regulatory and supervisory frameworks, guidance, and consultation. Our GRM function is responsible for the ongoing development of policies and processes to identify, assess, monitor, and report on social and environmental risks. Identified social and environmental risks are managed through our business policies and procedures across CWB. In 2022, CWB Wealth became a signatory of the United Nations Principles for Responsible Investment (UN PRI), which supports integration of social and environmental factors into our investment analysis and decision-making processes for our wealth business. Environmental risks within our lending portfolio are managed through our credit granting process (see the Credit Risk section above). Further information on our approach to environmental risks specifically related to climate change are included in the TCFD Disclosure section below. We are committed to providing transparent and timely disclosures related to social and environmental risks to facilitate consistent and comparable reporting across all industries. We published our inaugural Sustainability Report in 2022, which included disclosure on our approach and performance to address significant social and environmental risks and reflected our phased adoption of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, further discussed below, and the Sustainability Accounting Standards Board (SASB) standards. As we move forward, we will continue to advance our disclosures as our approach to sustainability evolves. Further information on our approach to sustainability is available in our 2021 Sustainability Report, located on our website at

TCFD Disclosure Governance

Board Oversight The Board of Directors and its committees provide oversight to social and environmental risks and opportunities, including the impact of climate change. The Board of Directors oversees our enterprise-wide approach to climate change and related disclosures included within our Sustainability Report, and monitors progress on the integration of climate factors into our ongoing strategy. As the topic of climate change requires a multidisciplinary approach, each board committee also provides oversight of climate-related factors that are specific to their respective responsibilities. In 2022, the committee mandates were expanded to include specific oversight responsibilities related to social and environmental factors. The Board and its committees regularly receive reporting on and discuss a range of climate-related issues, which include our approach to climate change and progress towards measurement of our operational and financed greenhouse gas emissions, current and emerging trends related to climate-related risks, the evolving regulatory landscape, and increased stakeholder focus and engagement.

Management Oversight

In 2022, we established an ESG Steering Committee focused on the design and execution of our approach to integrate climate factors into our strategy and operations, as part of the development of a comprehensive approach to sustainability. The ESG Steering Committee consists of each member of our executive team, and is supported by our sustainability team, who engages with internal stakeholders and works closely with the GRM function to establish appropriate working groups tasked with the development of various components of our approach to climate change.

Our Executive Risk Committee provides oversight of our developing approach to identify, assess, monitor and report on climate-related risks, with support and input from the GRM function.


We recognize that we have a part to play in Canada’s transition to net -zero emissions by managing our direct and indirect climate impact, exploring ways to support our clients in achieving their climate goals and mitigating the risks associated with climate change. As we progress the development of our sustainability approach, our strategy will incorporate short-, medium-, and long-term goals targeted to address specific climate-related issues that could have a significant financial impact on our operations, or the operations of our clients. We are committed to measure and manage our greenhouse gas emissions, with an initial focus on our operational emissions across our national footprint, to support our ability to develop meaningful and supportable reduction targets in the future. In addition to continued efforts to measure and manage our own carbon footprint, we are focused to develop a deeper understanding of the risks and opportunities that climate change presents for our clients. As we move forward, we plan to expand our greenhouse gas emissions estimates to encompass the financed emissions within our lending portfolio, with consideration for data and measurement methodology limitations, which we believe will be a foundational component of our developing approach to climate change. Through this process, we will continue to assess the credibility, reliability, comparability and decision-making usefulness of greenhouse gas emissions estimation approaches and data sources and consider how they may be leveraged as we enhance our approach to climate risk management. To remain well-informed on climate-related issues and emerging trends and support the development of our approach to climate change, our teams provide representation on industry groups and national and local climate-related programs. We participate in the Sustainable Finance Action Council, which advises on movement towards mandatory climate change disclosures, the development of a climate risk taxonomy within the c ontext of Canada’s capital markets and addressing the climate data needs and capacity within the financial sector.

58 | CWB Financial Group 2022 Annual Report

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