1/ Physical risks and opportunities
CNP Assurances has mainly focused on analysing the physical risk exposure of its property and woodland assets, directly-held equities and corporate and sovereign bond portfolio.
Exposure to physical risk through our forests is relatively limited. The analysis of the physical risk was carried out on our property portfolio based on two IPCC scenarios. For the most part, CNP's exposure is low or zero. In 2018, CNP Assurances began a study of the physical risk of its equity and bond portfolios in order to deepen the vision of the physical risk to which it could be exposed. In 2019, CNP measured the financial impact (VaR) of physical risk on its equity and corporate bond portfolio.
Measures taken to reduce physical risks: With regard to real estate assets, based on the analysis of physical risk carried out, CNP Assurances will reduce its exposure by asking its asset managers to propose adaptation solutions. With regard to forests, CNP Assurances' investment policy has allowed for a good geographic diversification of the portfolio in France. For equity and Bond, CNP makes shareholder engagement with companies on measuring and reducing their exposure to physical risk.
2/ Transition risks and opportunities
The value of assets is potentially exposed to regulatory, technological, market and reputational risk. Measures taken to reduce risks: CNP Assurances has managed these transition risks for many years through several approaches:
- Identification of the most material risk in 2015 concerning thermal coal. CNP Assurances thermal coal policy was reinforced in 2018 and 2019 by lowering the turnover threshold to 10% and by committing to no longer investing in the companies involved in the development of new coal power plants or new coal mines;
-Calculation of the carbon footprint since 2016 on the shares and bonds of companies held directly to highlight the companies most exposed to transition risks (with the target to reduce it by 47% by 2021). CNP Assurances has set up dialogues with key stakeholders. Since 2017, CNP Assurances has stepped up the alignment of its equity portfolio with model portfolios composed of European securities promoting or accompanying the energy transition.
- CNP Assurances also monitors GHG emissions avoided by building renovation works undertaken since 2012, and has a target of 40% decrease of the property portfolio’s carbon footprint by 2021.
-The completion in 2018 and 2019 of a 2°C alignment study on the equity and corporate bond portfolios by 2Dii. The study is based on a Sustainable Developpement Scenario (SDS) and provides a scenario analysis on 5 sectors: fossil fuels, automotive, cement & steel, aviation & marine transportation, electricity generation, according to different energy sources. In 2019, CNP measured the financial impact (VaR) of transition risk on its equity and corporate bond portfolio.
Green investments in favor of the energy and environmental transition are an opportunity. CNP had a target to invest €5billion between 2018 and 2021, which has been reached at end 2019.