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GPIF Publishes the "FY2020 Analysis of Climate Change-Related Risks and Opportunities in the GPIF Portfolio"

October 5, 2021

Government Pension Investment Fund, Japan (GPIF) announced its support for the Task Force on Climate-related Financial Disclosures (TCFD) in 2018, and has disclosed information based on the recommendations of the TCFD every year since. Following on from last year, GPIF has again conducted a TCFD-based analysis of our portfolio and is reporting the results to pension beneficiaries through a supplementary guide to our ESG report entitled "FY2020 Analysis of Climate Change-Related Risks and Opportunities in the GPIF Portfolio."

We have enhanced this yearʼs analysis by (1) including the entire supply chain in our greenhouse gas emissions analysis; (2) expanding the analysis to include not only traditional asset classes but also alternative asset classes; and (3) providing an analysis of inter-industry transfer of opportunities and risks accompanying the transition to a low-carbon society.

〈Key Contents〉

Introduction: Challenges to Address and Key Points of This Report
Chaper1: Analysis of Portfolio Greenhouse Gas Emissions
Chaper2: Scenario Analysis on Risks and Opportunities
Chaper3: Analysis of Inter-Industry Transfer of Transition Risks and Opportunities
Chaper4: Other Analysis

For this yearʼs report, in addition to MSCI and Trucost, we newly engaged Astamuse, a Japan-based research company that excels in the analysis of intellectual property, patent information and research and development investment, to provide assistance in our analysis.

〈Comment from MIYAZONO Masataka, President of GPIF〉

There is a growing recognition that increasingly materializing climate change risks need to be seriously considered when investing. Among these, transition risks occur simultaneously across all asset classes and issues, and cannot be completely eliminated through diversification. With this in mind, this year GPIF once again examined climate change risks and opportunities inherent in our portfolio.

While the analyses in this report focus mainly on how climate change impacts our portfolio, since GPIF is a universal owner that invests not only in domestic listed companies but also in major companies across the globe, it provides valuable insight into the challenges and risks all Japanese companies, all foreign companies, and by extension, countries all around the world face with respect to climate change. Conversely, the report also examines how valuable the technologies required to solve these challenges are, and the potential business opportunities that arise as a result. We therefore believe this report can provide a useful reference not only for investors but also for other stakeholders as well.

Accurately assessing how the climate will change and what the inherent risks and opportunities will be several decades into the future in a practical sense is an incredibly difficult task, and the analysis results need to be interpreted as occurring within a spectrum. We hope, however, that the report serves as an importance resource for investors and issuers alike as they think about their own exposure to climate risks and opportunities.