Manage our impact responsibly
Table of Contents
Maintain a foundation of trust
Obsessed with your success
Supplemental reporting
Appendices and Glossary
Overview
The physical and transition impacts of climate change have the potential to impact our principal risks, which are those that we believe could have the greatest potential to materially impact our operations and financial performance. The chart below provides examples of climate-related risk drivers as they relate to our principal risk categories, as well as current and future mitigation activities, which will evolve as we enhance our approach to climate change.
Principal risk Principal risk definition Impact of climate risk
Examples of current and future actions to mitigate risk
Credit risk
The risk of loss resulting from the failure of a counterparty to fulfil its contractual commitment or obligation to CWB.
Climate-related impacts could affect our clients’ income such that they may become unable to meet their financial commitments to CWB, or negatively impact the market value of underlying collateral securing our loans. Physical climate risks could disrupt operations at our banking centre and corporate office locations. The response to climate change by policymakers may result in increased operating and capital costs associated with our energy and fuel usage. Climate-related regulations and disclosure frameworks are evolving at a rapid pace, which could lead to increased
• Our lending portfolio diversification by geography and industry helps to mitigate the risk of over-exposure to a sector or region that may be exposed to climate risks. • As our climate risk heatmap evolves, it will support the identification and understanding of inherent physical and transition risks within our lending portfolios, which will facilitate the development of our climate risk appetite. • We have limited direct physical risk exposure based on our modest banking centre and corporate office footprint across Canada. • We maintain business continuity and disaster recovery plans to ensure our ability to maintain critical operations through periods of business disruption. • Supported by engagement with industry working groups, we monitor the regulatory environment for climate-related risk management and disclosures to ensure we remain abreast of proposed regulatory changes and are prepared for compliance. • We regularly engage with our stakeholders to understand their perspectives on a variety of topics, including ESG factors. • We will continue to provide transparent disclosures as we advance our approach to climate change. • We are focused to determine how we can best support our clients to achieve their climate goals, in alignment with our growth strategy and prudent risk appetite. • CWB Wealth became a signatory of the PRI in 2022 and is currently formalizing an approach to integrate ESG factors into investment analysis and decision-making processes to help mitigate risk and generate long-term value for our clients.
Operational risk
The risk of loss resulting from people, inadequate or failed internal processes and systems or from external events.
Regulatory compliance and legal risk
The risk of loss resulting from failure to comply with or satisfy the laws, regulations or prescribed practices that apply to CWB.
potential for litigation or regulatory enforcement action.
Business and strategic risk
The risk of loss resulting from an inappropriate business or strategic choice, or inability to successfully execute processes to achieve our strategic priorities.
Our ability to meet the evolving needs of our clients for sustainable products and services could impact our strategic execution and growth aspirations. Strategic and reputation risks may arise from a failure to effectively communicate our climate strategy, as well as stakeholder perceptions of our and our clients’ planned approach to address climate change and related risks.
67 2023 SUSTAINABILITY REPORT AND PUBLIC ACCOUNTABILITY STATEMENT
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