KLP employ scenario analysis in the screening and subsequent analysis of climate risks, in accordance with the guidance set forth in TCFD. KLP is currently in the process of developing climate risk scenarios for all its business areas, including those used in the UNEP FI TCFD pilot project. KLP develop a mixture for quantitative scenarios (used for the climate risk assessment of our listed equities and bonds) and qualitative or semi-quantiative scenarios for our remaining business areas subject for climate risk screening.
A key approach to KLPs climate risk analysis work is to work systematically to enhance internal competence on climate change related questions and understanding on potential financial risks that may arise therein. Scenario analysis is key in this respect, and more of our emphasis relate to using scenario analaysis and climate risk screening to develop our internal knowledge, rather than believing that we are able to make valid climate risk assessment at this point in time where the general knowledge is immature, and data, methods and tools are generally insufficient.
Hence, KLPs plan moving forward is to continue its work on developing its competence on climate risk, including effort on developing better, more valid and more applicable climate risk scenarios, in order to progress towards climate risk analysis with less uncertainty in the future. KLP is committed to this work, and it has a high priority in the organization.