Climate change has emerged as one of the biggest challenges facing globally. CMBI Asset Management Limited ("CMBI Asset Management” or “Company”) is aware of the negative impact of climate change and actively participates in actions to address climate-related risks to reduce the potential negative impact on our business and the investment portfolio, with the aim of creating long-term value for our clients, society and the environment.
To better address the risks associated with climate change, CMBI Asset Management adopts an approach to incorporate climate factors into our governance, investment management, and risk management by identifying, assessing, managing and monitoring climate-related risks through a range of tools.
In order to establish an effective climate management framework and process, the Board of Directors (“Board”)has delegated the Risk Control Committee to lead and execute the climate-related investment strategy of CMBI Asset Management. The Risk Control Committee meets at least annually and is responsible for identifying, assessing, monitoring and managing climate-related issues in relation to the Company's investment portfolio. Specific tasks of the Risk Control Committee include supporting the development of investment strategies and risk management procedures to ensure the company addresses climate-related risks and providing training to employees to build internal capacity for identifying and managing climate-related risks. The Risk Control Committee is also responsible for goal setting to address climate-related issues and manage climate-related risks. Internal procedures and processes have been set up to report the status and progress of efforts to manage climate-related management risks to the Board as required by the regulation.
We understand the importance of incorporating climate-related risks consideration into our investment management process for both risk control effectiveness and long-term low carbon economic benefits. CMBI Asset Management is committed to adopting the principle of responsible investment to our existing investment principles, by taking environmental, social and governance (“ESG”) factors, including climate-related risks factor into the investment management process to help clients realize the values of sustainable development. In the investment analysis process, the investment management team identifies relevant and material climate-related risks of the portfolio by conducting relevance and materiality assessments and provides regular updates and summaries to the Investment Committee. The Investment Committee is authorized by the Company management and is responsible for the decision-making of the Company and its subsidiaries in relation to external investments. The scope of the Investment Committee approval functions exercised within the authorization of the company includes the establishment of investment projects, project investigation and research, due diligence, post-investment management and other related work requirements, such as executing the risk management related policy and procedures. When making investment decisions and proposing new funds, the investment management team considers whether non-financial risks and opportunities such as ESG or climate-related risks are included in the investment portfolio. We also analyze and assess the potential physical and transition climate risks and opportunities arising from the climate-related risk factors of our portfolio companies in the investment analysis reports, so as to integrate climate-related risks in our overall investment decisions. If the new funds are more likely to be impacted by climate-related risks. If the investment management team considers that climate-related risks are not relevant to the investment strategies of the funds it manages, the investment management team will document these exceptions in the investment analysis report accordingly. As of 31 December 2021, the funds managed by CMBI Asset Management have not been identified as irrelevant to climate-related risks and we have taken reasonable steps to assess the impact of climate-related risks on the performance of the underlying investments of the funds.
The Risk Control Committee of CMBI Asset Management has delegated the risk management-related departments the responsibility of monitoring the risk management of the funds and the portfolio, including the formulation and regular review of the Company's climate-related risks management mechanism. The fund managers and all departments are required to comply with the relevant requirements set out in the "Circular to licensed corporations - Management and disclosure of climate-related risks by fund managers" published by the Securities and Futures Commission (“SFC”) to establish, implement and maintain the climate-related risk management policies and procedures to integrate climate-related risks factors into the investment risk management, and develop relevant internal management policies. For each fund or portfolio managed by CMBI Asset Management, we adopt a bottom-up approach and use appropriate tools and metrics to identify, evaluate and quantify the associated and material climate-related physical and transition risks of each fund or portfolio, for example, whether the industry or business involved in the investee company will have a significant impact on climate change (e.g. high energy-consuming, high carbon emission industries), and whether relevant transformation plans or mitigation measures are in place to address the impact, etc. Based on the qualitative climate-related risks assessment, we analyze the geographic location and sector-based nature of the investee company using an internalclimate-related risk score as a measure to inform the climate-related risk distribution pattern and overall risk level of the portfolio. Where climate-related risks are assessed to be relevant and material to an investment strategy or fund, we consider conducting a scenario analysis and calculating a carbon footprint for each fund or portfolio. We will also conduct due diligence on companies as an active engagement initiative in accordance with our climate-related risk investment strategy. In addition to assessing the impact of climate-related risk on an investee company's portfolio, we also focus on active communication with companies that have significant climate-related risks to follow up on their ESG and climate-related risks management information in order to further understand their approach to climate-related risks. According to the internal management policies, the risk management-related departments will continuously manage and monitor the climate-related risks of each fund or portfolio, keeping abreast of the latest climate change developments in the market, climate change-related policy implementation and trends. For portfolios identified as having high climate-related risks, the risk management-related departments will conduct more frequent assessments and reviews to ensure that the Company responds to climate-related risks in a timely manner.
CMBI Asset Management will monitor and annually review climate-related risks disclosures on an ongoing basis. For any updates, fund investors will be notified of any material changes as soon as practicable. If you have any enquiries, please contact our investor relation at email@example.com.