Momentum Metropolitan : TCFD report 2022

2022

Contents

1 ABOUT THIS REPORT

1 Related reports

2 Timeframe classifications

2 Report boundary, assurance, and approval

2 Leadership statements

3 BACKGROUND AND CONTEXT

• Summary: Key milestones on our TCFD journey

4 Climate change developments

7 Our approach to climate change

9 GOVERNANCE

9 Board oversight of climate change

10 Management's role in our climate change response

1. Climate skills and training
2. STRATEGY

11 Developing our climate change strategy using scenario analysis

1. Our use of climate change scenarios in understanding risk and opportunity

1. Responsible investment approach to climate change

1. Moving our climate strategy forward

17 RISK MANAGEMENT

1. How we identify and assess climate risk

1. How we manage climate risk

17 How we integrate climate risk into our group enterprise risk management processes

19	METRICS AND TARGETS
19	Our carbon footprint
20	Performance for F2022
21	Focus: Our Green IT strategy

MOMENTUM METROPOLITAN TCFD REPORT 2022

About this report

Momentum Metropolitan is one of South Africa's largest diversified financial services companies. Our business is about protection (life and non-life), investments and long-term savings, and we conduct it through Momentum, Metropolitan and Guardrisk brands. Outside South Africa, we operate in five African countries through Momentum Metropolitan Africa, which includes Botswana, Ghana, Lesotho, Mozambique, and Namibia. Momentum Investments has operations in the United Kingdom and Guernsey. The Group has a health insurance joint venture in India and Guardrisk has businesses in Gibraltar and Mauritius.

Momentum Metropolitan Holdings Limited (hereafter, Momentum Metropolitan or the Group) formally signed up as a supporter of the Task Force on Climate-Related Financial Disclosures (TCFD) in June 2021, and we released our first TCFD report in December 2021.

This report is our second set of climate-related disclosures, in line with the TCFD-recommendations. It outlines our approach to climate change and the steps we have taken in support of our commitment to climate action. The data in the report relates to the financial year from 1 July 2021 to 30 June 2022 (F2022). Where specific exclusions apply, these have been indicated. The reporting period extends to the end of October 2022.

The World Economic Forum (WEF), in its Global Risks Report 2022, ranks "climate action failure" and "extreme weather" as the two most potentially severe risks for the next decade. An urgent, collective response is needed to limit the global temperature increase to 1.5°C above pre-industrial levels. Collective action will avert the most severe climate impacts, as per the Intergovernmental Panel on Climate Change's (IPCC) Sixth Assessment Report.

Momentum Metropolitan recognises our responsibility to build a resilient society and environment in the way we do business. We also recognise the need to accelerate our climate performance and have found the TCFD recommendations to be a useful framework in developing our roadmap for this journey.

Related reports

21	Future target setting
22	APPENDICES

22 Annexure A: List of abbreviations, acronyms and definitions

24 Annexure B: Summary of climate risk indicators identified by our life, non-life, and investment businesses

1. Annexure C: Overview of materiality of climate change on principal risk types
2. Annexure D: Reference list

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This report should be read in conjunction with:

Our 2022 Sustainability Report, which provides insight into our Sustainability Framework, related performance, and future commitments

Our 2021 PRI Assessment and 2021 PRI Transparency Report, which detail our progress with responsible investment practices

Our 2021 Stewardship Report, which demonstrates the extent to which we have aligned our responsible investment practices with the United Nations supported Principles for Responsible Investment (PRI)

Our 2021 CDP submission and

2022 Carbon Footprint Verification statement. At the time of publication our 2022 CDP submission was not yet scored but is publicly available.

MOMENTUM METROPOLITAN TCFD REPORT 2022

About this report continued

Timeframe classifications

The nature of climate change impacts is considered in the long term and the timeframes for understanding climate change risk are heavily reliant on the Paris Agreement, which puts the expected science-based global impact on a 2050 timeline. This timeline is also considered when doing scenario analysis, which TCFD recommends (See page 13 for our approach to timeframes in scenario analysis).

This differs from the risk management timeframes applied within the business to do strategic planning.

• Short-term:The short-term horizon is 6 to 12 months.
• Medium-term:The medium-term horizon is 1 to 3 years.
• Long-term:The long-term horizon is 3 to 5 years.

Report boundary, assurance, and approval

We report on Momentum Metropolitan and the combined material input from our six business units as set out on page 6 of the 2022 Sustainability Report. This report's information was prepared and provided by Momentum Metropolitan's various businesses, based on the Group's internal reporting and information systems and processes.

Our carbon footprint is subject to external assurance by Verify CO2, who provided limited assurance on the Group's carbon emissions.

The Board acknowledges responsibility for the integrity of this report. The members of the Social, Ethics and Transformation Committee (SETC), and the Board, Risk, Capital, and Compliance Committee (BRCC) on behalf of the Board, have applied their minds to the report and believe that the information is reliable, and that it fairly presents the Group's climate disclosures, aligned with TCFD.

Sharron McPherson	David Park
Chair: Momentum	Chair: Momentum
Metropolitan Social,	Metropolitan Board Risk
Ethics and Transformation	and Capital Compliance
Committee	Committee

Leadership statements

Dr Sharron McPherson

Chair: Social, Ethics and

Transformation Committee

David Park

Chair: Board Risk, Capital and Compliance Committee

Climate-related disasters are increasing in severity and frequency around the world, exposing the vulnerability of our economic, social, and political systems. Greater commitment and coordination is needed at a global, regional, and local level if we are to secure our collective future.

Momentum Metropolitan's purpose is to enable businesses and people from all walks of life to achieve their financial goals and life aspirations. The Group's Reinvent and Grow strategy emphasises the creation of long-term sustainable value for our stakeholders. Aligned to this, our new Sustainability Framework, launched in June 2022, articulates our commitment to integrate and collaborate on all sustainability matters across the Group.

All ambitions we might have for prosperity is built on the foundation of the natural world. That is why environmental stewardship is a priority for us. Climate action must be embedded in all our business decisions, based on sound governance and ethical practices. We already have this in place at Momentum Metropolitan, but we know that we need to rapidly improve our understanding of climate change and explore new technologies and science-based planning tools to build resilience into our business response.

This will necessitate investment in curated learning and capacity building on climate and sustainability issues at all levels of our organisation. We believe in the transformative potential of collective learning and action and are committed to this journey.

Climate change is a real risk that affects the sustainability of our economic markets and the institutions (financial and non-financial) that operate in these markets. The financial sector is used to modelling and accounting for uncertainty, and while climate change is immensely complex, it is perhaps the greatest opportunity we have to utilise the diverse set of specialist skills concentrated in our sector, to mitigate the risks and support the stability of the sector and society. The Task Force on Climate-Related Financial Disclosures offers our businesses the opportunity to improve their understanding of the long-termclimate-related risks and opportunities that will impact them.

Climate change is a key strategic risk for our business and should be managed with the same rigour and purpose as other risks. We support the World Economic Forum Principles and the King IV Guidance on the responsibility of oversight committees in responding to climate change. We also want to support society through the transitioning of the economy as we recognise the social risks inherent to this challenge.

At Momentum Metropolitan, the Board Risk, Capital, and Compliance Committee (BRCC) approves (with input from key stakeholders) the risk appetite for climate change related risks. It provides independent oversight of the design, implementation and adherence to our internal climate change risk management procedures and the effectiveness thereof at a Group level.

The BRCC will continue to fulfil this responsibility but recognises the varied touchpoints and intersections with other Board committees on climate care. We are reviewing the governance of climate change across Board committees, to ensure that the Group is well-positioned for sustainability.

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MOMENTUM METROPOLITAN TCFD REPORT 2022

Background and context

SUMMARY: KEY MILESTONES ON OUR TCFD JOURNEY

The TCFD recommendations were developed to improve transparency and trust on the reporting of climate-related risks and opportunities. Companies are encouraged to make climate-related disclosures based on a unifying set of principles that enable market participants to fairly assess the value and ability of firms in dealing with the risks and opportunities presented by climate change impacts.

According to the 2022 TCFD Status Report, climate-related financial disclosures have been steadily increasing worldwide. TCFD-aligned disclosure is now mandatory in various jurisdictions such as the United Kingdom and New Zealand. In South Africa, TCFD is voluntary, but compliance is considered essential for companies committed to climate action.

The four thematic areas of the framework represent the core elements of how organisations operate. Disclosures in each category thus provide good insight into a company's climate response.

Momentum Metropolitan's progress since its first disclosures in December 2021

PURPOSE: Disclose the organisation's governance around climate-related risks and opportunities, including the role of the Board and management.

PURPOSE: Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation's businesses, strategy, and financial planning.

• The Sustainability Forum was optimised to coordinate collaboration and to drive strategic initiatives. It meets monthly and engages in continuous learning to build climate competence.
• To embed the Sustainability Framework, business units embarked on a structured process to identify sustainability-related risks and opportunities, including climate risks and opportunities. Where this process is completed, governance processes at business unit level are formalised to drive implementation and
  are integrated into the Group's sustainability and climate governance structures.

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• The Group has committed to integrating climate-related risks and opportunities into the corporate strategic plan- ning process in F2024.
• Momentum Metropolitan conducted scenario analysis in 2021, using customised scenarios. This year, we used
  the analysis framework of the Network for Greening the Financial System (NGFS). This shift was done to align
  to a framework developed for the financial sector.

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PURPOSE: Disclose how the	T
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organisation identifies, assesses, and	a
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manages climate-related risks.		ment

• In addition to following the Own Risk and Solvency
  Assessment (ORSA) process, a Group climate risk framework was developed and approved to drive the consistent identification, assessment, measurement, monitoring and management of climate risk across the Group.
• A Climate Risk Steering Committee (Climate Risk SteerCo) was formed to embed the framework throughout the business.

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						PURPOSE: Disclose the metrics and
					n
				a			targets used to assess and manage
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Re							relevant climate-related risks and
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opportunities, where such information is material.

• Climate-relatedmetrics and targets are being clarified and expanded as business units finalise their commitments under the climate pillar of our Sustainability Framework.
• The Group committed to start work in February 2023 on a transition plan to net zero for our own and financed emissions.

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MOMENTUM METROPOLITAN TCFD REPORT 2022

Background and context continued

CLIMATE CHANGE DEVELOPMENTS
A world at risk
The negative impacts of climate change are mounting faster than scientists
anticipated. The window to sustain a liveable world will rapidly close if global
mitigation (reducing and stabilising the levels of heat trapping greenhouse
gases) and adaptation efforts (adjusting to present or future climatic
impacts) are delayed further.	(¡C)
human induced, driven by our reliance on carbon-based fuels for economic
average
The scientific consensus is that the current levels of global warming are
growth and progress.	1901-2000
According to the United States National Oceanic and Atmospheric
Association (NOAA) 2021 Global Climate Report:	from
• 2021 was the sixth-warmest year on record, based on data collected
Difference
since 1880
• Surface temperature increases, averaged over land and sea, showed
a 0.8°C increase from the 20th-century average and a 1.04°C increase
from the pre-industrial period (1880-1900)
These climatic shifts have been fuelling extreme weather events globally
and locally and we are quickly approaching the global threshold of limiting
warming to 1.5°C to ensure a climate-safe future.

Extreme weather attribution entails mapping the human contribution to extreme weather events, particularly extreme heat events and extreme flooding. As this discipline grows, it provides the scientific basis for all role players in society to support the low-carbon transition. A 2021 analysis by Carbon Brief, assessing 400 peer-reviewed studies, showed that for 56% of flooding events and 68% of drought events studied, human activity made the event more likely or more severe.

Global perspective

Global average surface temperature

1.0

0.8

0.6

0.4

0.2

0

-0.2-0.4-0.6

-0.8
-1.0
1880	1900	1920	1940	1960	1980	2000	2020

Source:https://www.climate.gov/news-features/understanding-climate/climate-change-global-temperature

Annual average surface temperature deviation for South Africa (base period: 1981 - 2010)

(based on the data for 26 long-term climate stations)

Celsius)	1.5
(degrees	1
0
deviation	0.5
-1
Temperature	-0.5
1951	1954	1957	1960	1963	1966	1969	1972	1975	1978	1981	1984	1987	1990	1993	1996	1999	2002	2005	2008	2011	2014	2017	2020
	-1.5

Source: Annual state of the climate 2021 South African Weather

Service (SAWS)_WCS-CLS-ASC-2020

Local perspective

Extreme weather on the rise

						Flood	Storm	Drought
globally	250
200
events	150
100
of
Number	50
0
	1950	1960	1970	1980	1990	2000	2010	2017

Source: The Emergency Events Database (EM-DAT) | www.emdat.be | Reported events, not

controlled for any variables

Reports of heavy rain and flooding in Gauteng (1961 - 2020)

	45
	40
	35
reports	30
25
of	20
Number	15

10

5

0

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

Source: Regional Weather and Climate of South Africa, South African

Weather Service (SAWS)_ WCS-CLS-REGIONAL_CLIMATE_GAUTENG.001

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