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1、2 0 2 3 C L I M A T E R E P O R T 2INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXTable of Contents 1 The Task Force on Climate-related Financial Disclosures(TCFD)was established in 2017 to provide a voluntary reporting framework to help organizations disclose climate-r

2、elated risks and opportunities,support market transparency and inform capital decisions.IFRS S1 and IFRS S2 include all TCFD recommendations,and when both International Financial Reporting Standards(IFRS)standards were released in June 2023,the Financial Stability Board asked the IFRS Foundation to

3、assume the TCFDs mandate beginning in 2024.The TCFD was formally disbanded in November 2023.Scotiabank monitors changes in standards and expectations relating to climate reporting,including IFRS S2,CSRD and OSFI B-15,and will adapt our reporting to meet new requirements over time.2 This Land Acknowl

4、edgement applies to the land on which Scotiabank has its executive offices(Toronto,Canada)and its Canadian operations,and does not represent the historical and personal experiences of Indigenous Peoples across our international operations.3MessagefromOurChiefSustainabilityOfficer 4AboutScotiabank 5I

5、ntroductiontoOurFirstClimateReport 72023PerformanceHighlights 8TCFDRecommendations 11 G OV ER N A N CE 12Introduction 12OurClimateGovernance13 Board Oversight16 Management Oversight 20 S T R AT EGY 21Introduction24 Our Refreshed Climate Goals 25FinancingClimateSolutions27AdvancingtoNet-Zero32Reducin

6、gOurOwnEmissions34 Culture,SkillsandCompetenciestoSupportClimateTransition 43 R I S K M A N AG EM EN T 44 Introduction45 IntegratingClimateRiskintoScotiabanks RiskManagementFramework47 Identifying,AssessingandManagingClimateRisks 50ExposuretoCarbon-relatedAssets51ScenarioAnalysis 54 M E T R I C S A

7、N D TA RG E T S 55 Introduction 56OurClimate-relatedMetricsandTargets58OurClimate-relatedFinanceTarget59FinancedEmissions64OurApproachtoTargetSetting66EmissionsfromOperations 69 A PPEN D I X70Forward-lookingStatementsI N T H I S R EP O RT“We”,“us”,“our”,the“Bank”and“Scotiabank”meanTheBankofNovaScoti

8、aanditssubsidiaries.R EP O RT I N G FR A M E WO R KThisisScotiabanksfirststandalonereportonitsprogressimplementingtherecommendationsoftheTaskForceonClimate-relatedFinancialDisclosures.1 ScotiabankhasbeenreportinginlinewiththeTCFDrecommendationssincefiscal2018;suchdisclosureswereincludedthroughitsann

9、ualandsustainabilityreports.R EP O RT I N G PER I O DUnlessotherwisestated,informationanddatainthisreportrelatestothe2023fiscalyearendingOctober31,2023(“fiscal2023”).Climate-relateddisclosureswerelastmade inour2022ESGReport.Seeourwebsiteforpastreports.CU R R EN C YAllcurrencyisstatedinCanadiandollar

10、sunlessotherwisenotedandmaybesubjecttocurrencyexchangeratefluctuations.E X T ER N A L A SSU R A N C EKPMGhasperformedanindependent,limitedassuranceengagementforselectedperformanceindicatorsmarkedwiththissymbolinthereport.See:2023 KPMG Limited Assurance ReportR E P O R T I N G S U I T EFor more infor

11、mation,please see documents in our reporting suite:2023 ESG Report 2023 ESG Data Pack and Indices 2023 Annual ReportS COT I A BA N K I N D I G E N O U S N E T WO R K E M PLOY E E R E S O U RC E G RO U P L A N D AC K N OW LE D G E M E N T We are privileged to stand on the ancestral and unceded territ

12、ory of First Nations,Inuit and Mtis people.We offer our gratitude to the First Peoples for their care for,and teachings about,our earth and our relations.We acknowledge the effect of residential schools and colonialism on Indigenous families and Communities.Considering this history,we dedicate ourse

13、lves to moving forward in the spirit of partnership,collaboration and reconciliation.Stewardship with Indigenous Peoples,Cultures and Communities is all of our responsibility.We reflect on the actions and the steps that must be made towards the advancement of Truth and Reconciliation.2 C AU T I O N

14、A RY S TAT E M E N TThisdocumentisnotrequiredtobepreparedorfiledbytheBank(asdefinedinthisdocument)underCanadianorU.S.securitieslaws.Theinformationcontainedhereinshouldnotbereadasnecessarilyrisingtothelevelofmaterialityofdisclosurerequiredinoursecuritieslawfilings,andsuchinformationshouldnotbeconside

15、redtobeincorporatedbyreferenceintoanysuchfilings.ThisdocumentshouldnotbeusedasabasisfortradinginsecuritiesoftheBankorforanyotherinvestmentdecision,anditisnotintendedtoconstitutefinancial,legal,tax,investment,professionalorexpertadvice.2023 CLIMATE REPORT 3INTRODUCTION GOVERNANCE STRATEGY RISK MANAGE

16、MENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS Message from Our Chief Sustainability OfficerClimate change is one of the most important issues of our time.According to the Eu

17、ropean Unions Copernicus Climate Change Service(C3S),2023 was 1.48C warmer than the pre-industrial average from 18501900.1 Still,structural changes in policy,investment,and clean energy investments foundational to an orderly transition to net-zero are taking shape.Thetransitiontoalow-carboneconomyis

18、acomplexprocessthatwilltaketime,andwillrequirecollaborationamongindustry,thefinancialsector,andgovernment.Further,progressislikelytovaryfromyeartoyearandwillrequireaflexibleresponsetoexternalfactors,suchasimprovementsintechnologiesthatsupportthetransition,andgovernmentpolicy.Thecorefocusofourapproac

19、histoworkwithourclients,includinglarge,corporateclientsinhigh-emitting,hard-to-abatesectors,aswellassmallercompaniesinthecleanenergyandtechnologysectorstoaddresstheirneedsthroughouttheenergytransition.Bothplayavitalroleintransitioningtoalowercarboneconomy,anddecarbonizationovertime.Itiswithinthiscon

20、textthatweshareourClimateReportwithyou,whichoutlineshowScotiabankisprogressingonitsambitionstoaddressclimatechange,consideringtherisksandchallengesweexpecttofacealongtheway.OurreportrefreshestheBanksarticulationofitsclimategoals,focusingonthreepillars:FinancingClimateSolutions,AdvancingtoNet-Zeroand

21、ReducingOurOwnEmissions.Wehavesetagoalofproviding$350billioninclimate-relatedfinance2by2030.SinceNovember1,2018,wehaveprovided$132billiontowardsthatgoal.In2023,wealsopublishedaClimate-RelatedFinanceFramework,anupdatedversionofwhichisreleasedalongwiththisreport,3definingthoseproductsandservicesthatar

22、eeligibleunderthetarget.1 The 2023 Annual Climate Summary,Global Climate Highlights 2023.2 Please see p.6 of this Climate Report for a definition of climate-related finance.3 Please see our Climate-related Finance Framework on Scotiabanks Climate Centre of Excellence,here.Weareadvancingournet-zeroef

23、fortsbyworkingtoenhanceourunderstandingofourclientstransitionplanningactivities,especiallyintheindustrieswherewehaveset2030interimtargets,andbyproducinginsightfulresearchtoinformourapproachtoemissionsreductioninourlendingportfolio.In2023,weenhancedourfinancedemissionsreportingandraisedourambitiontor

24、educetheBanksowngreenhousegasemissionsto40%by2030relativeto2016levels.ThroughourClimateChangeCentreofExcellenceand$10million Net-ZeroResearchFund,wearecontributingtoinsightsaboutclimatepolicyleversandinnovativeresearchaimedatmovingtheneedleonclimatechange.Wewillcontinuetoleveragetheestablishedanddev

25、elopingregulatoryandglobalreportingrecommendationsandstandardsforclimatereportingtoprovideaclearunderstandingaboutScotiabanksapproachtoaddressingclimatechange.Thereisnoquestionthatthereremainschallenging,urgent,andcomplexworkaheadofusinaddressingclimatechange.Ourbankisproudtocontributetothisglobalim

26、perativebysupportingclientsintheireffortsandhelpingtobringforwardamoreresilientplanetforourpeople,clients,andcommunities.Inallthiswork,wearegratefulforthesupportofthebroadandmulti-disciplinaryteamsacrosstheBankworkingtogether,asonewinningteam,onoursharedjourneytoactfortheclimateandeveryfuture.Meigan

27、 Terry ChiefSustainability,SocialImpactandCommunicationsOfficer2023 CLIMATE REPORT 4About ScotiabankAtthecoreofourbusinessisourfocusonourmillionsofclientswhoregularlyrelyonourserviceandadvice.Weservetheseclientsthroughourfourbusinesslines:C A N A DIA N BA N KI N G (CB)CanadianBankingprovidesafullsui

28、teoffinancialadviceandbankingsolutions,supportedbyanexcellentclientexperience,toover11millionclients.Retail,SmallBusinessandCommercialBankingclientsareservedthroughitsnetworkof947branchesand3,703automatedbankingmachines(ABMs),aswellasonline,mobileandtelephonebanking,andspecializedsalesteams.CBalsopr

29、ovidesanalternativeself-directedbankingsolutiontoTangerineclients.I NTE RN ATI O N A L BA N KI N G(I B)InternationalBankingisadiversefranchiseofferingfinancialadviceandsolutionstoover12millionRetail,CorporateandCommercialclients.Thegeographicfootprintencompasses15+countries,includingMexico,Chile,Per

30、u,Colombia,Brazil,Uruguay,andcertainmarketsacrossCentralAmericaandtheCaribbean.TheBankiswellpositionedwithauniquegeographicalfootprint,providingdigitalleadershipandconnectivitywithCanadaandtheU.S.markets.IBcountriescontinuetodemonstrateattractivedemographicsandopportunitiestogrowbankingpenetration.G

31、 LO BA L WE A LTH MA N AG E M E NT (GWM)GlobalWealthManagementisfocusedondeliveringcomprehensivewealthmanagementadviceandsolutionstoclientsacrossScotiabanksfootprint.GWMservesover2millioninvestmentfundandadvisoryclientsacross13countriesadministeringover$600billioninassets.G LO BA L BA N KI N G A N D

32、 MARKE T S(G B M)GlobalBankingandMarketsprovidescorporateclientswithlendingandtransactionservices,investmentbankingadviceandaccesstocapitalmarkets.GBMisafull-servicewholesalebankintheAmericas,withoperationsin20+countries,servingclientsacrossCanada,theUnitedStates,LatinAmerica,EuropeandAsia-Pacific.F

33、ormoreinformation,seeScotiabankscorporate profile.WE ARE HERE FOR EVERY FUTUREGrow and scale in priority markets Invest through disciplined capital allocation Deliver a common approach across markets Support our clients in the transition to net-zero Create connectivity across our markets for multina

34、tional clientsEarn primary client relationships Deliver theentire bank Lead with advice,follow with solutions Create consistently high-quality experiencesacross all channelsMake it easy to do business with us Simplify and digitize end-to-end Streamline and improve efficiency across our Bank Ensure o

35、ur Bank is resilient,safe and secure Ensure data-driven decision-makingWin as one team Be the employerof choice Invest in developing skills for the future Create an environment where we all belong Create positive impact in our communitiesBe our clients most trusted financial partner.to drive sustain

36、able,profitable growth and maximize total shareholder returnOur values are:Respect|Integrity|Accountability|Passion 2023 CLIMATE REPORT INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATE

37、REPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS 5INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS Introduction to Our First Cli

38、mate Report 1 Intergovernmental Panel on Climate Change,2023:Summary for Policymakers.In:Climate Change 2023:Synthesis Report.Contribution of Working Groups I,II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change Core Writing Team,H.Lee and J.Romero(eds.).IPCC,Ge

39、neva,Switzerland,pp.1-34.2 Basel Committee on Banking Supervision,2022:Principles for the Effective Management and Supervision of Climate-Related Financial Risks.Bank for International Settlements.3 Guideline B-15(“B-15”),effective fiscal year-end 2024 for Domestic Systemically Important Banks,inclu

40、ding Scotiabank,outlines OSFIs expectations related to the management and disclosure of climate-related risks by federally regulated financial institutions.4 Scotiabank has been reporting in line with TCFD recommendations since fiscal 2018.For more information,see our archived ESG reports.5 For more

41、 information on the Banks Climate Commitments,see our Net-Zero Pathways Report.Our Climate Commitments are voluntarily undertaken by Scotiabank in accordance with relevant standards,methodologies and guidance published for the financial sector.For further information,please see the Cautionary Statem

42、ent,p.2.6 The Net-Zero Banking Alliance is a UN-convened and industry-led group of global banks that have agreed to net-zero financed emissions by 2050.Scotiabank became a member in October 2021.7 For the purpose of this report,carbon intensive sectors are understood as those listed by the NZBA as a

43、luminum,agriculture,cement,coal,commercial and residential real estate,iron and steel,oil and gas,power generation and transport.8 Emissions intensity reduction targets are distinct from targets to reduce absolute emissions.Scotiabanks emissions intensity reduction targets are based on a physical in

44、tensity metric(see our Metrics and Targets section for more information).Astheimpactsofclimatechangeontheglobaleconomybecomeincreasinglypronounced,1financialinstitutionsmustmaintainsoundclimate-riskmanagementpractices.2Inrecognitionofthisgrowingimperative,theOfficeoftheSuperintendentofFinancialInsti

45、tutionsinCanada(OSFI)finalizedGuidelineB-15ClimateRiskManagementin2023,creatingaframeworkfortheintegrationanddisclosureofclimate-relatedrisksintheCanadianfinancialsystem.3 Atthesametime,climatechange,andtheneedforaglobalenergytransition,presentsfinancialinstitutionsandtheirclientswithuniquebusinesso

46、pportunities.Scotiabankrecognizesthatthesemountingclimate-relatedrisksandeconomicopportunitiescallonustotakestockoftherolewecanplayandtotakeactiontosupportourclientsandourcommunitiesintheclimatetransition.Aspartofthisinaugural2023ClimateReport,4wearepleasedtopresentourclimategoalsinanewway.Builtonth

47、eBanksvoluntary Climate Commitments,5aswellasourcommitmentsasamemberoftheNet-ZeroBankingAlliance6(NZBA),ourrefreshedvisionofthesegoalsfocusesourattentiononthreepillars:1.Financing Climate Solutions,byprovidingclimate-relatedfinancingasdefinedbelowinthissection,toclientsinallsectorsincludingcertainca

48、rbonintensivesectors.7 2.Advancing to Net-Zero,byworkingwithclientstoachievenet-zeroemissionsassociatedwithourlendingportfolioandsetting2030sectoralemissionsintensityreductiontargets8tokeepusoncoursetomeetourgoalofachievingnet-zerofinancedemissionsby2050(see the Metrics and Targetssectionofthisrepor

49、tfordetailsregardingthemetricswehavechosen,andourapproachtotargetsetting).3.Reducing Our Own Emissions,byintroducingsolutionstominimizetheBanksoperationalemissions.2023 CLIMATE REPORT 6INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFIC

50、ER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS Wearealsopleasedtodescribethevariouswayswehaveadvancedkeyclimateinitiatives.Insupportofourfirstpillar,FinancingClimateSolutions,theBankreleasedaClimate-related Finance Framework,whichdefinesthosepro

51、ductsandservicesthatcounttowardsourgoalofproviding$350billioninclimate-relatedfinanceby2030(“$350BTarget”).1Asusedinthisreport,climate-relatedfinanceconsistsofthoseproductsandservices(suchaslendingandadvisoryservices)aswellasthetypesoftransactions(suchassustainability-linkedloansordedicatedpurposelo

52、ans)whichsupport,amongotherthings,climatechangemitigation,adaptation,pollutionprevention,sustainablemanagementofnaturalresources,biodiversityconservationandcirculareconomy.2Intheabsenceofastandardizedsustainableorclimate-relatedtaxonomyapplicabletoourbusiness,wehavedevelopedthisframeworktoenhancecla

53、rityofourclimate-relatedfinanceactivities.Wemayrevisitandmayupdatetheframeworkfromtimetotime,includingifandwhenanapplicabletaxonomyorotherguidanceapplicabletoclimate-relatedfinancebecomesavailable.Toadvancetonet-zero,wetookstepstoenhancethedataqualityofourfinancedemissionsintheOilandGassectorandanno

54、uncedanemissionsintensityreductiontargetforautomotivemanufacturers.1 The$350B Target,which involves the provision of$350 billion in climate-related finance by 2030,represents a small portion of the Banks overall lending and advisory services.2 See Scotiabanks Climate-related Finance Framework here f

55、or further details on climate-related products,services,as well as eligible transactions.When referenced throughout this Climate Report,climate-related finance will be understood as above.The Climate-related Finance Framework came into effect as of November 1,2023 and replaces the Banks previous int

56、ernal taxonomy.3 Greenhouse gas,or GHG,is defined in the Greenhouse Gas Protocol as including the six gases included in the Kyoto Protocol:carbon dioxide(CO2),methane(CH4),nitrous oxide(N2O),hydrofluorocarbons(HFCs),perfluorocarbons(PFCs)and sulphur hexafluoride(SF6).The Bank currently measures CO2,

57、CH4 and N2O for our operational emissions.4 The Climate Transition Steering Committee will be established in fiscal 2024.Alsoin2023,aspartofourgoaltoreduceourownemissions,weincreasedourtargettolowerabsoluteoperationalgreenhousegas3 emissionsfrom35%to40%by2030againsta2016baselineandincreasedourintern

58、alcarbonpriceto$65/tCO2efrom$60/tCO2ein2022.Weintendtoincreaseourinternalcarbonpriceto$80/tCO2ein2024.Tofurthersupportourclimategoals,we:ReviewedourenvironmentalriskgovernancestructureandplantoestablishaspecificClimateTransitionSteeringCommittee,4creatingclearaccountabilityforourclimategoals,andprom

59、otingtransparencyinthefulfilmentofthosegoalsacrosstheorganization.Advancedthoughtleadershiprelatingtooursectoralstrategies,publishingonsubjectsrangingfromelectricvehicles(EV)todecarbonizingtheagriculturalsector.Tookimportantstepstodevelopournet-zeroclientpreparednessmodelsforthosesectorsinwhichwehav

60、eemissionsreductiontargets.AllofthisprogresswillbereflectedinourfirstiterationofaClimateTransitionPlan,whichwillbepublishedbyendofthe2024fiscalyear.2023 CLIMATE REPORT 7INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIAB

61、ANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS 2023 Performance HighlightsIncreasedourinternal carbonpriceto$65/tCO2eSpent$16.4 millionondecarbonization andenergyefficiencyprojectsTowardsacumulative$76.3 millionspendsince2018Measuredfinancedemissionsacross 5 ca

62、rbonintensivesectorsIncreasedourScope1and2emissionsintensityreductiontarget from 35%to 40%by2030againsta2016baseyearAnnouncedanother10grantrecipientsoftheBanks Net-ZeroResearchFundSetanemissionsintensityreductiontarget for the Automotive ManufacturingsectorPublished at least 4thoughtleadershippapers

63、onvarioustopicsrelatingtoAgriculture,AutomotiveManufacturing,CementManufacturing,OilandGas,and Residential MortgagesReleasedtheClimate-related FinanceFrameworkReached$132 billion ofourgoaltoprovide$350billioninclimate-related financeby20302023 CLIMATE REPORT 8INTRODUCTION GOVERNANCE STRATEGY RISK MA

64、NAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS TCFD Recommendations1 Upon establishment of the Climate Transition Steering Committee in fiscal 2024,the Corporate ESG Comm

65、ittees mandate,as it relates to climate-related matters,transfers to the Climate Transition Steering Committee.2 The Climate-related Finance Framework applies as of November 1,2023.Thetablebelowprovidesanoverviewofourprogressduringfiscal2023againstthespecificcategoriesoftheTCFDframework,aswellasrefe

66、rencestooursuiteofsustainability-relatedreporting.PILLARRECOMMENDED DISCLOSURESDISCLOSURE LOCATIONSUMMARY OF 2023 PROGRESSGovernancea)DescribetheBoardsoversightofclimate-relatedrisksandopportunities.2023ClimateReport,pp.12152023 ESG Report,p.162023 Annual Report,pp.74,110 TheBoardofDirectorsoversees

67、theBanksEnvironmental,SocialandGovernance(ESG)strategy,monitorsmanagementsexecutionagainstthisstrategyand,throughtheBoardcommittees,reviewstherelatedimpacts,risks,initiativesandreporting.Amongotherthings,theBoardofDirectorsreviewedthe2030emissionsintensityreductiontargetforautomotivemanufacturers.b)

68、Describemanagementsroleinassessingandmanagingclimate-relatedrisksandopportunities.2023ClimateReport,pp.16192023 ESG Report,p.162023 Annual Report,pp.7475,110 TheBoardengageswiththePresidentandCEOandtheGroupHeadandChiefRiskOfficer(CRO),receivingreportsandupdateson climate-relatedmatters.TheBanksfourm

69、anagementcommitteesdrivetheday-to-dayimplementationofourclimategoals,includingtheOperationalRiskCommittee,CorporateESGCommittee,1DisclosureCommittee,andCommunityInvestmentCommittee.Strategya)Describetheclimate-relatedrisksandopportunitiestheorganizationhasidentifiedovertheshort,medium andlongterm.20

70、23ClimateReport,p.242023 ESG Report,p.502023 Annual Report,p.110 TheBanksupdatedenterprise-wideclimategoalsaimtoaddressclimaterisksandopportunitiesintheshort,mediumandlongterm.TheBankmeasures,assessesandcontinuestointegrateourclimate-relatedrisksinourlendingportfoliosandwill,intheprocessofestablishi

71、ngaClimateTransitionPlan,embedtheserisksintoourcorporatestrategy,internalprocessesandenterprise-widedecisionmaking.b)Describetheimpactofclimate-relatedrisksandopportunitiesontheorganizationsbusiness,strategyandfinancialplanning.2023ClimateReport,pp.24422023 ESG Report,p.502023 Annual Report,p.110 As

72、partofourrefreshedclimategoals,specificallythepillarFinancingClimateSolutions,theBanksSustainableFinanceteamandCleanTechEnergyInitiativearesupportingourclientstoaddresstheirownclimate-relatedprojectsandobjectives.TheBankfinalizeditsClimate-relatedFinanceFramework,whichdefinestheproductsandservicesin

73、cludedinour$350BTarget2andbecameapplicableonNovember1,2023.Infiscal2023,theBankcontinuedtodevelopandpilotadetailedinternalscore,aspartofourunderwritingprocess,withaviewtogeneratingastandardizedmeansofassessingourclientsnet-zerogoalsandtransitionplans(the“Net-ZeroPreparednessScore”).Aspartofthepiloti

74、ngprocess,theBankisconsideringanumberofrecommendationstoimprovethefunctionalityandscopeoftheNet-ZeroPreparednessScore(formoreinformation,see p.28ofthisreport).ScotiabankexpectstopublishthefirstiterationofourClimateTransitionPlanbytheendofthe2024fiscalyear,whichwilldescribehownet-zeroandotherclimate-

75、relatedobjectivesareintegratedintorelevantdecision-makingenterprise-wide.2023 CLIMATE REPORT 9INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PERFORMANCEHIGHLIGHTS|TCFDRECOM

76、MENDATIONS PILLARRECOMMENDED DISCLOSURESDISCLOSURE LOCATIONSUMMARY OF 2023 PROGRESSStrategy(continued)c)Describetheresilienceoftheorganizationsstrategy,takingintoconsiderationdifferentclimate-relatedscenarios,includinga2Corlowerscenario.2023ClimateReport,pp.51532023 Annual Report,p.110 Infiscal2023,

77、ourclimatescenarioanalysisfocusedonevaluatingcreditrisksinournon-retailandretailcreditportfolios.Ournon-retailanalysisconsidersexposuretotransitionrisks,andbothchronicandacutephysicalhazards;methodologiescontinuetoevolveandhavefocusedonpredictingcreditriskinshort-term(2025),medium-term(2030)andlong-

78、term(2050)horizons,enterprise-wide,usingfourscenariosfromtheNetworkofCentralBanksandSupervisorsforGreeningtheFinancialSystem:1 Nationally Determined Contributions,2 Current Policies,3 Delayed Transition4andNetZero2050.5 Climatescenarioanalysisforourretaillendingportfoliofocusedonphysicalrisk.Initial

79、analysisofourCanadianretaillendingportfoliofocusedonexaminingchangesinfluvialfloodingrisk;weareworkingtoexpandourfocustoincludeamoreextensivesetofacuteandchronicphysicalrisks,suchaswildfirerisk,cyclonerisk,risksfromsealevelrise,andtransitionrisk.TheBankhasparticipatedintheUnitedNationsEnvironmentPro

80、grammeFinanceInitiativesClimateRiskandTCFDProgramme,6enhancingourabilitytoevaluateclimate-relatedtransitionandphysicalrisksinourlendingportfolio.Risk Managementa)Describetheorganizationsprocessesforidentifyingandassessingclimate-relatedrisks.2023ClimateReport,pp.47502023 ESG Report,pp.18,502023 Annu

81、al Report,pp.7779,81,109111 TheBankhasorisintheprocessofdevelopingtoolstoassessclimateconsiderationsintootherrisktypes:-Forcreditrisk,thereisamandatoryClimateChangeRiskAssessment(CCRA),whichisusedtoassessclimate-relatedcreditriskacrossournon-retaillendingportfolio.Weareworkingtowardsusingclimatescen

82、arioanalysistoprojectcreditimpactstoourbusinesslendingportfolioatshort-term,medium-termandlong-termhorizonsundervariousclimatescenarios.-Formarketandliquidityrisk,wearedevelopingaprojectplantoassessimpactsduetophysicalandtransitionclimatestressscenarios.-Forlegalandregulatoryrisk,aprocesswascreatedt

83、oassessthesustainabilityfeaturesofcredittransactionstomitigategreenwashingrisk.-Foroperationalrisk,thereareprocessestoassesstheimpactsofphysicalrisksandweareembeddingextremeweathereventsonouroperationalresilienceprogram.TheBankhasupdateditsheatmapthatsupportsourunderstandingofeachindustryssensitivit

84、ytophysicalandtransitionriskacrossournon-retaillendingportfolio.b)Describetheorganizationsprocessesformanagingclimate-relatedrisks.2023ClimateReport,pp.47502023 ESG Report,pp.18,502023 Annual Report,pp.7779,81,109111c)Describehowprocessesforidentifying,assessing and managing climate-relatedrisksarei

85、ntegratedintotheorganizationsoverallriskmanagement2023ClimateReport,pp.45462023 ESG Report,pp.18,502023 Annual Report,pp.7479,81,109111 ESGriskisaprincipalriskintheBanksenterprise-wideRiskManagementFramework;climateriskisasubcategoryofESGrisk.ESGrisksaremanagedinalignmentwiththefivekeyelementsoftheR

86、iskManagementFramework:riskgovernance,riskappetite,riskmanagementtools,riskidentificationandassessment,andriskculture.ThisincludesacompositeESGriskappetitemetricthatembedsclimate-relatedsub-metricsandisinternallyreportedonaquarterlybasistotheRiskCommitteeoftheBoardofDirectors.1 The purpose of the Ne

87、twork of Central Banks and Supervisors for Greening the Financial System(NGFS)is to help strengthen the global response required to meet the goals of the Paris Agreement,enhance the role of the financial system to manage risks,and mobilize capital for green and low-carbon investments in the broader

88、context of environmentally sustainable development.2 Countries that are signatories to the Paris Agreement are expected to establish Nationally Determined Contributions(NDCs)which reflect efforts made by each country to reduce national emissions and adapt to the impacts of climate change.In the cont

89、ext of NGFS scenarios,NDCs scenario assumes currently pledged conditional NDCs are implemented fully,and respective targets on energy and emissions in 2025 and 2030 are fulfilled in all countries.For more information,see the NGFS Scenarios Portal,as well as the Risk Management section of this report

90、(pp.51-52).3 Current Policies assumes that only currently implemented policies are preserved,leading to high physical risks.For more information,see the NGFS Scenarios Portal,as well as the Risk Management section of this report(pp.51-52).4 Delayed Transition assumes annual emissions do not decrease

91、 until 2030,strong policies are needed to limit warming below 2C,and negative emissions are limited.For more information,see the NGFS Scenarios Portal,as well as the Risk Management section of this report(pp.51-52).5 Net Zero 2050 assumes global warming to 1.5C through stringent climate policies and

92、 innovation,reaching global net-zero CO2 emissions around 2050.For more information,see the NGFS Scenarios Portal,as well as the Risk Management section of this report(pp.51-52).6 Since 2017,the United Nations Environment Programme Finance Initiative(UNEP FI)Climate Risk and TCFD Programme has worke

93、d to develop practices to identify,measure,disclose and manage climate risk in the financial sector.2023 CLIMATE REPORT 10INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXMESSAGEFROMOURCHIEFSUSTAINABILITYOFFICER|ABOUT SCOTIABANK|INTRODUCTIONTOOURFIRSTCLIMATEREPORT 2023PER

94、FORMANCEHIGHLIGHTS|TCFDRECOMMENDATIONS PILLARRECOMMENDED DISCLOSURESDISCLOSURE LOCATIONSUMMARY OF 2023 PROGRESSMetrics and Targetsa)Disclosethemetricsusedbytheorganizationtoassessclimate-relatedrisksandopportunitiesinlinewithitsstrategyandriskmanagementprocess.2023ClimateReport,pp.56572023 ESG Repor

95、t,pp.51,1031052023 Annual Report,pp.12,111 TheBankusesaseriesofmetricstomonitorourperformanceagainstthethreepillarsofourrefreshedclimategoals,providingyear-over-yearperformanceastheyrelatetoFinancingClimateSolutions,AdvancingtoNet-ZeroandReducingOurOwnEmissions.Financing Climate Solutions$350billion

96、inclimate-relatedfinanceby2030Advancing to Net-Zero Financedemissions Physicalintensityemissions Creditexposuretocarbon-relatedassets Heatmap(accountsforbothphysicalandtransitionrisks)Reducing Our Own Emissions AbsoluteScope1and2,andsomecategoriesofScope3(Category3,6fuel-andenergy-relatedactivities,

97、businessairtravel)Internalcarbonprice GHGintensityperemployeeb)DiscloseScope1,Scope2and,ifappropriate,Scope3greenhousegas(GHG)emissions,andtherelatedrisks.2023ClimateReport,pp.5963,66682023 ESG Report,pp.51,105106 Foroperationalemissions,wediscloseourScope1and2emissions,andselectcategoriesofScope3em

98、issions.Wecontinuetodiscloseourfinancedemissionsforourinitialprioritysectorsfor2021:OilandGas,PowerandUtilities,Agriculture,andResidentialMortgages.TheBankhasintroducedanumberofupdatestoourfinancedemissionsmethodologies,inpreparationforfuturelimitedassurance,and,asameansofensuringyear-over-yearcompa

99、rability,restatedourfinancedemissionsforthefollowingsectors:OilandGas,PowerandUtilities,andAgriculture.c)Describethetargetsusedbytheorganizationtomanageclimate-relatedrisksandopportunitiesandperformanceagainsttargets.2023ClimateReport,pp.64682023 ESG Reportpp.4752,1051062023 Annual Report,p.111 Infi

100、scal2023,weestablishedaninterimemissionsintensityreductiontargetintheAutomotiveManufacturingsector(36%reductionby 2030comparedtoour2019baseline).In2023,weincreasedourglobaltargettoreduceabsoluteScope1andScope2GHGemissionsfrom35%to40%by2030againstour2016baseyear.Wecontinuetoreportourexistinginterimem

101、issionsintensityreductiontargetsforourOilandGasandPowerandUtilitiessectors.2023 CLIMATE REPORT INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXGovernanceIN THIS SECTION:12 INTRODUCTION12 OUR CLIMATE GOVERNANCE13 BOARD OVERSIGHT16 MANAGEMENT OVERSIGHT 112023 CLIMATE REPOR

102、T 12INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTIntroductionTheBanksapproachtoclimategovernanceandmanagementprovidesoversightandaccountabilityofclimate-relatedrisksandopportunitiesacrosstheenterprise

103、.Ourclimategovernancemodelprovidesthefoundationforourclimategoals,whilealsoallowingustoberesponsivetoemergingclimate-relatedissues,suchasclimatetransitionplanningandupcomingregulatoryrequirementsandpolicydevelopments,includingOSFIGuidelineB-15ClimateRiskManagement,theCorporateSustainabilityReporting

104、Directive1andIFRSS2 Climate-relatedDisclosures.2 Thisyear,were-evaluatedourexistingapproachtoourclimategovernancetoensureaccountabilityoverexecutionofkeydeliverablesonclimate-relatedpriorities.Notably,theBankcreatedaclimate-focusedcommitteetheClimateTransitionSteeringCommittee,totakeeffectinfiscal20

105、24whichwillensureseniormanagementaccountabilityoverclimate-relatedinitiatives,bothvoluntaryandregulatory.202 3 H I G H LI G HT S TheBoardwasbriefedonarangeofclimate-relatedmatters,suchasOSFIB-15,IFRSS1andS2.TheBoardreviewedthe2022ESGReportandouremissionsintensityreductiontargetfortheAutomotiveManufa

106、cturingsector.WebolsteredgovernanceofourSustainableBondFrameworkthroughthecreationofanESGSub-CommitteeoftheBanksAsset&LiabilityCommittee,whichoverseestheimplementationoftheFramework.Weheld29meetingswithourstakeholdersincludingproxyadvisorsandcoalitionsofinvestorsandactivistgroupstodiscussrelevantESG

107、issuesandtrends.TheBankdecidedtocreateasenior-levelClimateTransitionSteeringCommitteeinfiscal2024.1 The Corporate Sustainability Reporting Directive(CSRD)entered into force in January 2023,amending the Non-Financial Reporting Directive and strengthening the rules regarding the social and environment

108、al information companies are required to report,and including a broader set of large companies and listed small and medium sized entities that fall into the scope of the regulation.2 IFRS S2 requires disclosure of climate-related risks and opportunities that could reasonably be expected to affect th

109、e entitys cash flows,its access to finance or cost of capital over the short-,medium-or long-term.IFRS S2 was issued in June 2023 and applies to annual reporting periods beginning on or after January 1,2024.Our Climate GovernanceRobust,responsivegovernanceovertheBanksclimate-relatedgoalsandobjective

110、sisessentialtooursuccess.ClimaterisksandopportunitiesthatarenecessarytofulfilourclimategoalshavebeenembeddedintoprocessesacrosstheBank.Thefollowingfiguredetailsourcurrentclimategovernanceframework,whichconsistsofexistingandrecentlyestablishedcommittees.Scotiabanks Climate Governance Framework BOARD

111、OF DIRECTORS AND ITS COMMITTEESEXECUTIVEMANAGEMENTMANAGEMENTCOMMITTEESFUNCTIONALGROUPSAudit&ConductReview Committee Human Capital&Compensation CommitteeRisk CommitteeCorporate Governance Committee Executive Vice President and General CounselSenior Vice President and Chief Sustainability,Social Impac

112、t and Communications Officer Group Head and Chief Risk OfficerSenior Vice President and Head,Corporate and Commercial Credit Risk3 Board of DirectorsChief Executive Officer(CEO)and Operating CommitteeDisclosureCommitteeClimate TransitionSteeringCommittee4CommunityInvestmentCommitteeOperationalRiskCo

113、mmitteeLegal and CorporateAffairs(GlobalSustainability Team)Asset&LiabilityCommitteeGlobal RiskManagement(ESG Risk Team)Business Banking Data&Analytics(ESG DataAnalytics Team)Net-Zero FinancedEmissions Working Group(cross-functional)3 In Q2 2024,the position of Senior Vice President and Head,Corpora

114、te and Commercial Credit Risk is replaced with Senior Vice President,Enterprise Risk.4 In fiscal 2024,a Climate Transition Steering Committee assumes the Corporate ESG Committees mandate on climate-related matters,with accountability for compliance with climate-related regulations,and design and exe

115、cution of the Banks Climate Transition Plan.2023 CLIMATE REPORT 13INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTBoard Oversight 1 2023 Public Accountability Statement can be found within the 2023 ESG R

116、eport(p.88).ScotiabanksclimategoalsandtheachievementofthosegoalscontinuetobeoverseenbytheBoard.CommitteesoftheBoard,includingtheRisk,CorporateGovernance,Audit&ConductReview,andHumanCapital&CompensationCommittees,areaccountableforclimate-relatedrisksandopportunitiesrelatingtotheirspecificmandates.Cli

117、mate-relateddutiesandresponsibilitiesaresetoutintheBoards mandate and committees charters aswellasinthissection.Thefollowingsummarizesresponsibilitiesof,andactivitiesundertakenby,theBoardandeachofitscommitteeswithrespecttoclimate-relatedmatters.Board Oversight of Climate-related Risks and Opportunit

118、iesBOARD AND BOARD COMMITTEESCLIMATE-RELATED AGENDA FREQUENCYELEMENTS OF MANDATE PERTAINING TO CLIMATE-RELATED MATTERS 2023 ACTIVITIES RELATING TO CLIMATE-RELATED MATTERS Board of DirectorsQuarterly,at minimum OverseeingtheBanksESGstrategy(includingclimate-relatedmatters),monitoringmanagementsexecut

119、ionagainstthisstrategyand,throughtheBoardcommittees,reviewingtherelatedimpacts,risks,initiativesandreporting.ApprovingandoverseeingtheimplementationoftheBanksoverallriskstrategy,includingtheBanksEnterpriseRiskAppetiteFramework,inwhichESGriskisrecognizedasoneoftheBanksprincipalrisks.Overseeingthatpro

120、cessesareinplacetoidentifysignificantfinancialandnon-financialrisks,includingESGandclimate-relatedrisks,andreviewingandapprovingsignificantriskmanagementframeworksandpolicies.Ensuringtheimplementationofappropriateprocessesbymanagementtomanageclimate-relatedrisks.ReceivedregularupdatesontheBanksclima

121、tepriorities,disclosures,highlightsandlandscape,includingupdatesonthefollowing:-globalnet-zerodevelopments,theBanks2023net-zeroreportingrequirementsandtimelinesandtheBanks2023net-zerofocusareas.-acomparativereviewoftheBanks2022climatedisclosurescomparedtoitsCanadianpeers.-theBanksESGstrategyandprogr

122、essfor2023,includingupdatesontheESGregulatoryandreportinglandscapeandsustainabilityinitiativesimportanttotheBanksnet-zerostrategy.-theBanksprogressinreachingnet-zeroinfinancedemissionsby2050andareviewofaninterimemissionsintensityreductiontargetfortheAutomotiveManufacturingsector.ReviewedtheBanks2022

123、ESGReportandPublicAccountabilityStatement,1includingclimate-relateddisclosuresasrequiredasasignatorytotheNZBA,anet-zerotransitionplanandanupdatetotheBanks2022Net-ZeroPathwaysReport,withassurancebyKPMGforseveralESGmetrics.OversawBank-levelstrategicplanningsessions,includingtheESGstrategy.Receivedquar

124、terlyenterpriseriskmanagementreports,whichhighlightvariousrisks,includingESGrisks.ApprovedtheBanksEnterpriseRiskAppetiteFramework(whichrequiresconsiderationofESGrisks)andtheESGRiskSummaryFramework.ReviewedtheBanksstakeholderengagementprogram,includingdiscussionsabouttheBanksnet-zeroplansandclimatetr

125、ansitionplans,alongwiththeshareholderproposalsrelatedtoclimatechange.Briefedregularlyaspartoftheirongoingtrainingontopicsrelatedtoclimatereporting,net-zeroandclimate-relatedfinance.2023 CLIMATE REPORT 14INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIM

126、ATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTBOARD AND BOARD COMMITTEESCLIMATE-RELATED AGENDA FREQUENCYELEMENTS OF MANDATE PERTAINING TO CLIMATE-RELATED MATTERS 2023 ACTIVITIES RELATING TO CLIMATE-RELATED MATTERS Audit&Conduct Review CommitteeAd-hoc Overseeingclimate-relateddisclosure,aspartofthe

127、BanksfinancialreportingofESGmatters,asrequiredbyregulatorsorthatmayberequiredbylaw.1 AssistingtheBoardinfulfillingitsoversightresponsibilitiesforthesystemofinternalcontrol,includinginternalcontroloverfinancialreportinganddisclosurecontrolsandprocedures.ProvidedsupportonESGdisclosure,includingclimate

128、-relateddisclosure,tobeincludedinfinancialreportingandundersustainabilityandclimaterisk-regulationsandstandardscomingintoeffectin2024(forexample,theOSFIB-15).Corporate Governance CommitteeRegularly ReviewingtheBanksESGstrategy,prioritiesandreporting,includingreportsontheBanksESGperformance(specifica

129、lly,theBanksESGReportandPublicAccountabilityStatement)andbenchmarkingoftheBanksESGperformanceandpractices.2 OverseeingappropriateallocationofESG-relatedresponsibilitiesacrossthecommitteesoftheBoardandupdatingtheBoardonESGmatters,asnecessary.Reviewingglobaltrendsandpracticesincorporatedisclosureofnon

130、-financialperformance,includingcurrentandemergingESGmatters.ReviewingandrecommendingtotheBoardtheBanksapproachtoshareholderengagementandglobalemergingareasoffocusfortheBanksstakeholders.Maintainingthedirectorsskillsmatrix,whichincludesESGmattersasakeyareaofexperience.Actinginanadvisorycapacitythroug

131、hacontinuingassessmentoftheBanksapproachtocorporategovernanceandmakingpolicyrecommendations,includingontopicssuchastheBanksESGstrategy.ReviewedtheBanks2022ESGReportandPublicAccountabilityStatement,includingupdatesonclimate-relateddisclosures,net-zerogoals,plansandtargets.MonitoredtheBanksESGprioriti

132、esthroughouttheyearandreceivedupdatesonrelevantESGinitiatives,includingtheBanksenhancedESGRiskSummaryFramework,anemissionsintensityreductiontargetandupdatestotheBankstransitionplans,andupdatedtheBoardonsuchESGmatters.OversawthepromotionandmaintenanceoftheBanksriskcultureandrisk-drivenvalues,includin

133、gtheBanksfocusonidentifyingandmanagementofrisks,includingESGandclimate-related,legalandcompliance,macroeconomicuncertainty,technology,andgeopoliticalrisks.Recommendedforapprovalthe2023ManagementProxyCircular,includingdisclosureontheBanksresponsestoshareholderproposalsonESGmatterswithafocusonclimate-

134、relatedissues.Human Capital&Compensation Committee Ad-hoc Overseeinghumancapitalandcompensationstrategiesrelatedtodiversity,equityandinclusion;employeehealth,safety,andwell-being;andotherESGpoliciesandpractices.3 AssistingtheBoardinitsoversightoftheBankshumancapitalmanagementpracticesandstrategies,i

135、ncludingconsideringotherESGpracticesrelatedtothecommitteesmandate.Reviewedregulatory,governance,andexecutivecompensationtrends,includingtheselectionofappropriatefinancialandnon-financialperformancemetricsincorporatingESGmeasures,suchasmetricsrelatingtoclimate-relatedfinancinganddecarbonizingoftheBan

136、ksoperations.Jointlyreviewed,recommendedorapprovedwiththeRiskCommittee,changestotheannualincentiveplan,linkingESGinitiativestocompensation.1 See Audit&Conduct Review Committee charter.2 See Corporate Governance Committee charter.3 See Human Capital&Compensation Committee charter.2023 CLIMATE REPORT

137、15INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTBOARD AND BOARD COMMITTEESCLIMATE-RELATED AGENDA FREQUENCYELEMENTS OF MANDATE PERTAINING TO CLIMATE-RELATED MATTERS 2023 ACTIVITIES RELATING TO CLIMATE-R

138、ELATED MATTERS Risk CommitteeQuarterly RetainingoversightofESGrisks,includingclimate-relatedrisks,andperiodicallyreviewingandapprovingtheBankskeyriskmanagementpolicies,frameworks,andlimitstoensurethatmanagementisoperatingwithintheBanksEnterpriseRiskAppetiteFramework.1 ReviewedtheBanksenterpriseriskm

139、anagementreportswhichincludenon-financialrisks,suchasESGrisksand climate-relatedrisks.ReviewedandapprovedtheBankskeyriskmanagementpolicies,frameworksandlimitstoensurethatmanagementisoperatingwithintheBanksEnterpriseRiskAppetiteFramework(whichrequiresconsiderationofESGrisks).Focusedonregulatorytrends

140、relatingtonon-financialrisks,includingESGandclimate-relatedrisks.OversawthepromotionandmaintenanceoftheBanksriskcultureandrisk-drivenvalues,includingtheBanksfocusonidentifyingandmanagementofrisks,includingESGandclimate-related,legalandcompliance,macroeconomicuncertainty,technologyandgeopoliticalrisk

141、s.Jointlyreviewed,recommended,orapprovedwiththeHumanCapital&CompensationCommitteechangestotheannualincentiveplan,linkingESGinitiativestocompensation.1 See Risk Committee charter.S KI LL S A N D CO M PE TE N CI E STheBoardmaintainsamatrixtomonitortheskillsandexperiencenecessaryfortheoversightoftheBan

142、ktoday,andinthefuture.TenmembersoftheBoardconsider“ESGMatters”asoneofthekeyareasofexperiencetheybringtotheBoard.WedefineexperienceinESGmattersasexperienceinsustainabilitymatters,environmentalissues(includingclimate-relatedissues),socialissuesand/orcorporategovernanceprinciplesandpracticesinanorganiz

143、ationofsignificantsizeandcomplexity.DirectorsoftheBoardwithclimate-relatedskillshaveexperienceinsustainabilitymattersandclimate-relatedissuesincomplexorganizations,alongwithastrongtrackrecordofinvolvementwithadvisorycommitteesdrivingstandardsforclimatechangereporting.TheBoardsskillsmatrixisreportedi

144、nour2024 Management Proxy Circular(p.23).2023 CLIMATE REPORT 16INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTManagement Oversight E XECUTI V E MA N AG E M E NTOurclimategoalsareembeddedinactivitiesacro

145、ssalldivisionsoftheBank,andourcommitmenttosupportourclientsisenterprise-wide,drivenbyseniormanagementandourPresidentandCEO.TheBanksseniormanagementprovidesregularESGupdatestotheBoardanditsBoardcommittees.1 In Q2,the position of SVP and Head,Corporate and Commercial Credit Risk is replaced with SVP a

146、nd Head,Enterprise Risk.Summary Table of How Our Executive Management Supports Climate GovernanceFUNCTIONEXECUTIVE MANAGEMENTCLIMATE-RELATED ROLES AND RESPONSIBILITIESEnterpriseCEOTheCEOreportstotheBoarddirectlyonanannualbasisandhasresponsibilityfortheBankscurrentclimategoals,includingsettingclimate

147、-relatedemissionsintensityreductiontargets.Sustainability ExecutiveVicePresident(EVP)andGeneralCounselTheEVPandGeneralCounselreportsdirectlytotheCEOandisresponsibleformanagingandoverseeingtheBankslegalaffairs,theactivitiesoftheCorporateGovernanceOfficer,theCorporateSecretarysDepartment,CorporateSecu

148、rityandtheOfficeoftheOmbudsman.SeniorVicePresident(SVP)andChiefSustainability,SocialImpactandCommunicationsOfficerTheSVPandChiefSustainability,SocialImpactandCommunicationsOfficeroverseestheactivitiesoftheGlobalSustainabilityteam,includingexecutingnet-zeroprograms,settingemissionsintensityreductiont

149、argets,measuringandtrackingfinancedemissions,andpublishingclimate-relateddisclosures.RiskGroupHeadandCROTheGroupHeadandCROisresponsibleforassessingESGrisksandopportunitiesasitrelatestoourlending,investingandunderwritingactivities.TheyhavedelegatedtheirauthorityovertheoversightofESGrisktotheOperation

150、alRiskCommittee.SVPandHead,CorporateandCommercialCreditRisk1 TheSVPandHead,CorporateandCommercialCreditRiskleadstheESGoversightonbehalfofGlobalRiskManagement.2023 CLIMATE REPORT 17INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVER

151、SIGHT|MANAGEMENTOVERSIGHTMA N AG E M E NT CO M M IT TE E STheBankhasestablishedfourmanagementcommitteestodrivetheday-to-dayimplementationofourclimategoals.Thesecommitteestakeanenterprise-wideapproach,conveningseniorleaderswithaccountability fortheBankstransitiontonet-zero,managementofclimate-related

152、risks,climateriskreportingandcommunityinvestments.COMMITTEESCLIMATE-RELATED AGENDA FREQUENCYCHAIRMEMBERSHIPCLIMATE-RELATED ROLES AND RESPONSIBILITIESOperational Risk Committee(ORC)QuarterlySVPandHead,EnterpriseRiskSeniorleadershipfromacrossbusinesslinesandcorporatefunctionsTheORCprovideseffectiveove

153、rsightandchallengeoftheBanksmanagementofenvironmentalandsocialrisks.ItsresponsibilitiesincludemonitoringoftheESGriskprofile,andrecommendingapprovalofrelevantriskframeworks,policies,riskappetitestatementsandlimitstotheORC.Corporate ESG CommitteeMonthlySVPandChiefSustainability,SocialImpactandCommunic

154、ationsOfficerSeniorleadershipfromacrossbusinesslinesandcorporatefunctionsTheCorporateESGCommitteeassiststheBankinachievingitsESGobjectivesbyprovidingstrategicguidanceandadviceonthemanagementandreportingofScotiabanksESGprioritiesandapprovingenterprise-widepoliciesandpositionstatementsthataddresstheen

155、vironment.Infiscal2024,ScotiabanksCorporateESGCommitteewasreplacedwithrespecttoclimate-relatedmatters.Climate Transition Steering CommitteeQuarterlySVPandChiefSustainability,SocialImpactandCommunicationsOfficerCEOandGroupHead,GlobalBankingandMarketsSeniorleadershipfromacrossallbusinesslinesandcorpor

156、atefunctionsClimate-relatedrisksandopportunitiesarebeingoverseenbyaClimateTransitionSteeringCommittee,whichreplacestheCorporateESGCommitteeonclimate-relatedmattersinfiscal2024.TheClimateTransitionSteeringCommitteesmandateincludesaccountabilityforcompliancewithOSFIB-15andotherregulatoryinitiativesrel

157、atingtoclimate,aswellastheexecutionoftheBanksClimateTransitionPlan.Disclosure CommitteeQuarterly,at minimumEVP and General CounselSeniorleadershipacrosstheBankscorporatefunctionsToactinanadvisorycapacitytothePresidentandCEOandtheBoardtoensurethatallpublicdisclosureofinformationmadebytheBankinwhateve

158、rformistimely,accurateandbalancedandthatappropriatecontrolsareinplaceandworkingeffectively.2023 CLIMATE REPORT 18INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTCOMMITTEESCLIMATE-RELATED AGENDA FREQUENCY

159、CHAIRMEMBERSHIPCLIMATE-RELATED ROLES AND RESPONSIBILITIESAsset&Liability Committee(ALCO)As neededEVPandGroupTreasurerGroupHeadandChiefFinancialOfficer(AlternateChair)PresidentandCEO,CROandseniorleadersfromtheBanksbusinesslinesOversightoftheBanksSustainableBondFramework.In2023,anALCOESGSub-Committeew

160、asestablishedtosupportALCOmembersintheirreviewandoversightoftheFramework.Community Investment CommitteeAs needed1 SVPandChiefSustainability,SocialImpactandCommunicationsOfficerSeniorleadershipfromacrosssomebusinesslinesandcorporatefunctionsResponsiblefortheoversightandapprovalofgiftsexceeding$500,00

161、0forScotiabanks10-year,$25millionclimatecommunityinvestmentinitiative,aswellasScotiabanksNet-ZeroResearchFund.Formoreinformation,seetheStrategysectionofthisreport(p.39).1 The Community Investment Committee(CIC)convenes every two months on climate-related matters;the CIC meets on an as-needed basis t

162、o consider grant proposals.2023 CLIMATE REPORT 19INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURCLIMATEGOVERNANCE|BOARDOVERSIGHT|MANAGEMENTOVERSIGHTLI N KI N G E SG A N D CLI MATE PE RFO RMAN CE TO E XECUTI V E PAYWerecognizetheimportanceofESGfactorsinev

163、aluatingtheBanksperformanceanddeterminingexecutivevariableincentiveawards.SeveralkeyESG-relatedmetricsformedadiscretesectionoftheBanksstrategicandoperationalscorecard,toallowformoreexplicitevaluationoftheBanksprogressagainstcriticalESGobjectives.Beginningin2023,ScotiabankaddedfurthercoreESGmetrics,w

164、ithafocusonclimate-relatedfinancing,decarbonizationoftheBanksoperationsandrepresentationofequity-deservinggroups,combinedwithcustomerexperienceindeterminingtheall-Bankbusinessperformancefactor,withanoverallweightingof20%.Resultsarediscussedinour2024 Management Proxy Circular,pp.67,69,9394.2023 CLIMA

165、TE REPORT INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXStrategyIN THIS SECTION:21 INTRODUCTION24 OUR REFRESHED CLIMATE GOALS25 FINANCING CLIMATE SOLUTIONS27 ADVANCING TO NET-ZERO32 REDUCING OUR OWN EMISSIONS34 CULTURE,SKILLS AND COMPETENCIES TO SUPPORT CLIMATE TRANSIT

166、ION 202023 CLIMATE REPORT 21INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION Introduction Theissuescreate

167、dbyclimatechange,andthewaysofaddressingthoseissues,arebothchallengingandquicklyevolving.Moreover,climate-relatedchallengescannotbeaddressedbyScotiabank,orbyourclients,aloneaneffectiveresponsetoclimatechangerequiresreal,tangibleactionfromboththepublicandprivatesectors,includingfinancialinstitutions,a

168、crosseconomiesworldwide.Withtheseconsiderationsinmind,wearepleasedtointroduceanew,refreshedarticulationofourclimategoals:Buildingontheexistingpillarsofourapproachtoclimaterisksandopportunities,includingourvoluntaryClimateCommitments,andourmembershiptotheNZBA,wehaveanchoredourclimategoalsinaction.Thi

169、ssectionoutlinesthisrefreshedviewofourclimategoals,andtheworkwevedonethroughoutfiscal2023insupportofthosegoals.202 3 H I G H LI G HT S Revisedourenterprise-wideclimategoalsbasedonleadingpractices,emergingregulatoryrequirementsandevolvingscience-basedapproaches.Published a Climate-related Finance Fra

170、meworkthatdefinesthoseproductsandservicesthatareeligibleforinclusioninthe$350BTarget.Wecontinuedtodevelopandpilotadetailedinternalscoreaspartofourunderwritingprocess,withaviewtogeneratingastandardizedmeansofassessingofourclientsnet-zerogoalsandtransitionplans(“Net-ZeroPreparednessScore”).Publishedth

171、oughtleadershipasitrelatestoadoptionofelectricvehiclesanddecarbonizingtheagriculturalsector.2023 CLIMATE REPORT 22INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSION

172、S CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION Roadmap to Our Climate Goals20182019202020212022Financing Climate SolutionsAnnounced our Climate Commitments,including aim to provide$100 billion of climate-related finance by 2025Published Green Bond Framework and issued a USD$500 million Gr

173、een BondEstablished Sustainable Finance group in Global Banking and MarketsPartnered with Institute for Sustainable Finance at Queens UniversityIncreased aim to provide climate-related finance to$350 billion by 2030Issued USD$1 billion Sustainable Bond and updated Sustainable Bond FrameworkJoined Su

174、stainable Finance Action Council(SFAC)Grew Sustainable Finance team and added expertise in sustainable finance to Canadian Banking divisionEstablished Clean Tech Energy InitiativeAdvancing to Net-ZeroPublished Statement on Financing in the ArcticBecame member of the Net-Zero Banking Alliance(NZBA)Pu

175、blished Statement on Financing CoalPublished Net-Zero Pathways Report,setting financed emissions targets for Oil and Gas,Power and Utilities sectorsConducted pilot project to assess preparedness between targets and client net-zero plans and objectivesReducing Our Own EmissionsSet internal carbon pri

176、ce and established schedule for annual increasesSet 100%non-emitting electricity targets for our own operationsReduced our own GHG emissions by 25%four years ahead of our target(2025)Set new global target for 35%GHG emissions reduction in our own operations by 2030 relative to 2016 levelsEnterprise-

177、wide tools and initiatives (e.g.,culture,competencies,managing climate risks and promoting resilience)Integrated TCFD recommendations in annual and sustainability reports in fiscal 2018Included climate-related risks and opportunities in all industry reviews relating to lending activities Incorporate

178、d climate change risk module in mandatory environmental risk training for banking officers and credit adjudicatorsDeveloped and implemented Climate Change Risk Assessment to inform credit decisionsEstablished Corporate ESG Committee Announced Net-Zero Research Fund($10 million to 2030)Launched Clima

179、te Change Centre of ExcellenceIntroduced an environmental performance metric as a risk appetite metricPublished Banks credit risk exposure to carbon-related assets Enhanced climate scenario analysis capabilitiesLinked ESG metrics,including progress on our Climate Commitments,to all-Bank performance

180、payIncentivized climate performance in executive variable compensation implemented for 2023Expanded environmental performance metric to ESG performance metric;reported quarterly to the Risk Committee of the Board2023 CLIMATE REPORT 23INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGE

181、TS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION 2023 Immediate20242025 Short-term2030 Medium-term2050 Long-termFinancing Climate SolutionsReleased a Climate-related Finan

182、ce FrameworkEstablished Asset&Liability Committee(ALCO)ESG Sub-Committee to enhance the Banks sustainable products issuance,governance and oversightSupport renewable energy and transition financing,and grow advisory services Release one to two additional climate-related productsContinue to digitize

183、tracking our$350B TargetExplore opportunities to partner with government and intergovernmental organizations to provide blended financeTarget year for meeting our goal to provide$350 billion in climate-related finance by 2030Advancing to Net-ZeroPublished first standalone Climate ReportSet net-zero

184、interim emissions intensity reduction target for the Automotive Manufacturing sectorPublished thought leadership on electric vehicles,critical minerals,and sustainability in the Agriculture sectorEmbed Net-Zero Preparedness pilot into business-as-usual and tie to client engagement strategyImplement

185、quarterly financial exposure Management Information Systems tool for sectors in which net-zero interim targets have been setExpand financed emissions reporting to additional sectors,where data is available Incorporate facilitated emissions into financed emissions reportingEnhance climate-related fin

186、ancial disclosures in line with OSFI Guideline B-15 and IFRS S2 Work towards obtaining limited assurance on financed emissions reportingWork with RMI and peers on whitepaper to assess target-setting methodology for the Agriculture sector in CanadaFinalize climate data architectureDefine role of offs

187、ets in net-zero strategyContinue to contribute to thought leadership on net-zeroTarget year for meeting our goals to:Reduce physical emissions intensity within our Oil and Gas portfolio by 30%(Scope 1 and 2)and 15%25%(Scope 3)Reduce Scope 1 and 2 physical emissions intensity within our Power and Uti

188、lities portfolio by 55%60%Reduce Scope 1,2 and 3 downstream1 physical emissions intensity in our Automotive Manufacturing portfolio by 36%Set additional interim net-zero targets for 2035 and beyond Provide$25 million in funding to charitable organizations and think tanks focused on climate and net-z

189、ero,including$10 million via Scotiabanks Net-Zero Research FundTarget year for meeting our goal to achieve net-zero financed emissions Reducing Our Own EmissionsIncreased our global target to reduce operational Scope 1 and 2 GHG emissions from 35%to 40%by 2030 relative to 2016 base yearMeasure GHG e

190、missions in supply chain,and set a baseline and a GHG reduction targetLaunch Live Net-Zero Employee Campaign to encourage emissions reductions at work and in the home Meeting our goal to achieve carbon neutrality2 in the Banks Canadian operations by 2025Increase internal price of carbonTarget year f

191、or meeting our goals to:Reduce own Scope 1 and 2 emissions by 40%by 2030 relative to 2016 base year Achieve carbon neutrality in the Banks international operations by 2030Enterprise-wide tools and initiatives(e.g.,culture,competencies,managing climate risks and promoting resilience)Refreshed enterpr

192、ise-wide climate strategyStood up enterprise-wide project to embed OSFI B-15 Climate Risk Management GuidelineConducted initial projections of climate risk to 2050 for Scotiabanks corporate lending portfolioEstimated physical risk impacts of climate change on Canadian mortgage portfolioEstablished a

193、 Climate Transition Steering Committee,which assumed the Corporate ESG Committees mandate on climate-related matters,with accountability for compliance climate-related regulations,and design and execution of the Banks Climate Transition PlanEstablish Climate and Social Impact Committee for Internati

194、onal Banking division Release inaugural Climate Transition PlanParticipate in OSFIs 2024 climate scenario analysis exercisesDevelop roles and responsibilities interaction model across three lines of defence as it relates to climateEstablish a learning platform to enhance banking and credit officers

195、approach to clients climate transition activities and to net-zero pathways by sector 1 In connection with the physical emissions intensity target related to our Automotive Manufacturing portfolio,Scope 3 downstream emissions covers tank-to-wheel emissions,often referred to as tail pipe emissions.2 F

196、or a definition of carbon neutrality,see p.67.2023 CLIMATE REPORT 24INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMAT

197、ETRANSITION Our Refreshed Climate Goals1 Climate-related finance is defined in the Introduction of this report as consisting of those products and services(such as lending and advisory services)as well as the types of transactions(such as sustainability-linked loans or dedicated purpose loans)which

198、support,among other things,climate change mitigation,adaptation,pollution prevention,sustainable management of natural resources,biodiversity conservation and circular economy.For further details,see Scotiabanks Climate-related Finance Framework.TheBankhassetanumberofenterprise-widegoalsthataddressc

199、limate-relatedrisksandopportunitiesintheshort,mediumandlongterm.Thisyear,wehaverefreshedhowwearticulatethesegoalsand,accordingly,howwewilltakeactiontofulfilthem.Ourclimategoalscomprisethreepillars:Financing Climate Solutions,byprovidingclimate-relatedfinancing1 toclientsincertaincarbonintensivesecto

200、rs.Advancing to Net-Zero,byworkingwithclientstoreduceemissionsandsetting2030sectoralemissionsintensityreductiontargetstokeepusoncoursetomeetourgoalofachievingnet-zerofinancedemissionsby2050.Reducing Our Own Emissions,byintroducingsolutionstominimizetheBanksdirectimpactonclimatechange.Inthefollowings

201、ection,weoutlinethestepstakeninfiscal2023toadvanceourworkundereachpillar.Keytoourworkhasbeenengagement:withourclientsontheirclimate-relatedgoalsandobjectives,withourstakeholderstounderstandtheirconcerns,andwithourpeopletoenhancetheirclimate-relatedknowledgeandtogivethemtheopportunitytoactivelypartic

202、ipateinimplementingsolutions.Witheachstep,weimproveourunderstandingofthetasksathand,wefurtherimplementandembedclimaterisksandopportunitiesintotheBanksactivities,andweenhanceourabilitytoserveourclients.FINANCING CL IMATE SO LUTIO NSO BJ E C T I V E S&A MB I T I O N SKE Y TO O LS&LE V E RSProvide clim

203、ate-related f inancing both to emerging low-carbon industries and to accelerate the transition of the rest ofthe economy,with a focus on carbon intensivesectors.Expanding climate-related f inancial products and services Climate-related f inance taxonomy andframeworkR EDUCING O UR OW N EMISSIO N SDec

204、arbonizing our own operations and introducing solutions to reduce the Banks direct impact on climate change.Working towards interim targets for Scope 1 and 2emissions Increasing the Banks internal carbon price Developing a carbon offset strategy Undertaking initiatives to reduce energy consumption a

205、nd improve energy ef f iciency Securing emissions-free electricity globally and inCanadaADVANCING TO NET-ZERODecarbonize our portfolio in line with the Paris Agreement,our 2030 sectoral targets and pathways,and our goal of achieving net-zero f inanced emissions by 2050.Measure and assess our f inanc

206、ed emissions in our lending portfolios,which,in turn,inf luences our corporate strategy,internal processes and enterprise-wide decision making.Net-zero interim emissions intensity reduction targets in certain carbon intensive sectors(e.g.,oil and gas,power and utilities,transport)Reviewing policies

207、related to thresholds in certain sectors(e.g.,Statement on Financing the Arctic and Statement on Financing Coal)Conducting environmental due diligence Net-zero preparedness scoring for clients that form part of emissions intensity reduction targetsC ULT UR E,S K I L L S&CO M P E T E N C I E S TO SUP

208、 P O RT T H E T R A N S I T I O NClimate Transition Plan,climate-related training for employees,Net-Zero Research Fund,Climate Change Centre of ExcellenceM A N AGI N G C L I M AT E R I S KS A N D P RO M OT I N G R E S I L I E N C EClimate change risk assessments,climate scenario analysis2023 CLIMATE

209、 REPORT 25INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION Financing Climate SolutionsAchievingnet-zerogl

210、oballyby2050isestimatedtorequiretrillionsininvestmentsannuallytoreshapeentiresectors.Currenthigh-emittingsectorssuchastransportation,power,realestate,andoilandgaswill,inthecomingdecades,requirebothsignificantshiftsandsubstantialincreasesincapitaltodecarbonizeoperationsandproducts.AsaleadingCanadianf

211、inancialinstitution,weplayakeyrole,bothdomesticallyandacrossourfootprint,tohelpourclientsinallsectors,includingcarbonintensivesectors,meettheirownclimate-focusedobjectives.WhilesomeofourclientsarepartoflendingportfoliosforwhichScotiabankhassetemissionsintensityreductiontargets,the pathtonet-zerofort

212、heseclientswillnotbelinear.Clientsincertaincarbonintensivesectorsplayacriticalroleintheglobalenergytransition,anditisvitalthatScotiabankcontinuestoworkwiththeseclientstoprovidethemwiththefinancingtheymayneedtomakenecessaryinvestmentsoracquisitionstosupportthatobjective.Throughcontinualengagementwith

213、clientsinthesesectors,weunderstandthatmanyhaveorareproducingclimatetransitionplans,anditisthroughcontinuedengagementwithclientsincarbonintensivesectorsthatwecanbetterunderstandthesupporttheyneedtomeetemissionsreductiongoals.FinancingClimateSolutionsispartlysupportedthroughtwobusinessplatforms:ourSus

214、tainableFinanceteamandaCleanTechEnergyInitiative,bothofwhichaimtohelpclientsmeettheirclimate-relatedgoalsanddeliverpositiveenvironmentaloutcomes.TheSustainableFinancegroupworkswithcorporate,financial,publicsectorandinstitutionalclients,assistingthemtoincorporatesustainabilityandclimate-relatedfactor

215、sintotheirfinancingactivities,andtoaligntheircapitalmarketactivitieswithcorporatesustainabilitystrategyandgoals.Thisincludeshelpingclientsidentifyeligibleenvironmentalprojectsandprovidingfinancingsolutionsthathelpcompaniescontributetosustainabilityobjectives.FormoreinformationonSustainableFinancehig

216、hlightsforfiscal2023,seeour2023 ESG Report(pp.3646).In2022,ScotiabankestablishedaCleanTechEnergyInitiativewithinCorporateandInvestmentBanking.IntegratedwithproductspecialistsacrosstheBank,thisteamofinvestmentbankersisdedicatedtoadvisingandsupportingourclientscleantechnology,energytransitionanddecarb

217、onizationgoals.Theteamcoordinatesacrossvariousgeographiesandbusinesssectors(suchasenergy,metalsandmining,aswellasconsumer,industrialandretailsectors)andfocusesonbattery,electricvehicle(EV)chargingandinfrastructure/electrification,carboncapture,solartech,hydrogenandrenewablefuels,andrenewablenaturalg

218、as.InOctober2023,theBankfinalizeditsClimate-related Finance FrameworkeffectiveasofNovember1,2023whichdefinestheproductsandservicesthatareincludedinthe$350BTarget.Asoutlined intheframework,productsandservicesincludedinthe$350BTarget areintendedtoaddressarangeofclimate-relatedprojectsthatfallinto thec

219、ategoriesoutlinedinthetableonthefollowingpage,andwhich mayormaynotleadtoreductionsinoverallemissions.Currently,thereisnostandardizedmethodologyormeansofcalculatingtheimpactofclimate-relatedfinancingonallbusinessesthatreceivefinancingeligibleforinclusioninthe$350BTarget.Infiscal2023,Scotiabankestabli

220、shedannualtargetsforeachbusinesslinethatoffersproductsandservicesundertheFrameworkandhasincludedprogressinthe$350BTargetinthebank-widebusinessperformancefactor,asdefinedonp.19ofthisreport,aswellasinvariablecompensationrelatingtoindividualperformance.2023 CLIMATE REPORT 26INTRODUCTION GOVERNANCE STRA

221、TEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION$350B TARGET ELIGIBLE CATEGORIESLow-carbonenergyEnergyefficiencyPollutionpreventionan

222、dcontrolEnvironmentallysustainablemanagementoflivingnaturalresourcesandlanduseSustainable food systems Low-carbontransportationTerrestrialandaquaticbiodiversityconservationSustainablewaterandwastewatermanagementGreen buildings Circulareconomyadaptedproducts,productiontechnologiesandprocessesClimatea

223、daptationandresilienceFuel-switchingLow-carbonintensityfuelsIndustrialsandelectrificationCarboncaptureScotiabank and Nutrien Ag Solutions are collaborating to support Canadian growers in adopting more sustainable and productive agricultural products and practices.Launched in the beginning of Decembe

224、r 2023,this program aims to bolster the financial resilience of farmers and advance Canadas agriculture sustainability goals for the broader value chain.Growers who meet certain eligibility requirements and are enrolled in Nutrien Ag Solutions Sustainable Nitrogen Outcomes program,an initiative targ

225、eting improved nitrogen management to reduce nitrous oxide emissions,can take advantage of a special financing offer on products and services required to advance through the program.2023 CLIMATE REPORT 27INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREF

226、RESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION Advancing to Net-Zero1 The Partnership for Carbon Accounting Financials is a global initiative aimed at developing a global GHG accounting standard to i

227、ncrease the number of financial institutions applying this standard and to make GHG accounting common practice within the financial industry.2 Facilitated emissions are those emissions associated with the primary issuance of capital markets instruments and loan syndication.A primary issuance refers

228、to new securities to provide debt-based or equity-based financing,including new issuance of various types of bonds issued for general purposes,common stock,equity and debt investments in private companies,preferred shares and syndicated loans.AsasignatorytotheNZBA,Scotiabankvoluntarilycommittedtored

229、ucingfinancedemissionsfromourlendingandinvestmentportfoliosovertimetoalignwithpathwaystonet-zeroby2050.Wemeasureandassessourfinancedemissionsinourlendingportfolio,which,inturn,influencesourcorporatestrategy,internalprocessesandenterprise-widedecision-making.Ourabilitytocalculatefinancedemissionsacro

230、ssourlendingportfolioisthefoundationofdeterminingwhereemissionsreductiontargetsshouldbeset.GuidedbytheNZBAprinciplethatbanksshouldsetemissionsreductiontargetsinthosecarbonintensivesectorsthatcomprisethesignificantmajorityoftheirfinancedemissionswheredataandmethodologiesareavailable,weundertookanente

231、rprise-wideanalysisin2022,whichrevealedthatourOilandGas,PowerandUtilities,AgricultureandResidentialMortgagesportfoliosaccountedforasignificantportionoftheBanksfinancedemissions.Onthebasisofthatanalysis,wesetemissionsintensityreductiontargetsintheOilandGasandPowerandUtilitiessectors.Whiledatalimitati

232、onshavenotallowedforthesettingofemissionsreductiontargetsintheAgricultureandResidentialMortgagessectors,wecontinueworkingonwaystosupportimprovementsindataavailabilityinAgricultureandResidentialMortgages.Infiscal2023,westartedtheprocessofresettingouranalysisoffinancedemissionsacrosstheBanksentireport

233、folio,theresultsofwhichwillbereportedinour2024ClimateReport.TheTransportsector,comprisedofseveralcomponentsub-sectors,andwhichformsasignificantpartoftheBanksfinancedemissionsfootprint,isthebasisofourlatestemissionsintensityreductiontargetfortheAutomotiveManufacturingsector.Weunderstandthateachsector

234、sprogresstowardnet-zerowillnotbelinear,butwilldependonavarietyofeconomic,technological,regulatoryandothertrendsthatarebeyondthecontrolofanyoneparty.Wethereforeacknowledgethattheremaybecircumstanceswheresectoralemissions(andthereforeourfinancedemissionsinthesector)increaseforaperiodoftime.Nonetheless

235、,webelievethatouremissionsintensityreductiontargetscanhelpfacilitatethelonger-termtransitiontowardnet-zeroemissionsinthecoveredsectorsby2050.Weintendtocontinuereportingfinancedemissions,separateandapartfromemissionsintensityrelatingtooursectoralemissionsreductiontargets,forthosesectorsidentifiedasco

236、mprisingthesignificantmajorityofouroverallfinancedemissions.Ourapproachinadvancingtonet-zeroisinformedbytheNZBA,supportedbythePartnershipforCarbonAccountingFinancials1(PCAF).InDecember2023,PCAFpublishedamethodologyforfacilitatedemissionsforcertainsectors,2creatingafoundationforcalculatingandreportin

237、gmetricsforbusinessactivitiescoveredbythenewmethodology.Wewillcontinuetorevisit,andmayberequiredtoupdate,ourfinancedemissionsestimatestoreflectanyfuturechangesoradditionstotheexistingPCAFguidance.For more detailed information about our financed emissions footprint,and our emissions intensity reducti

238、on targets,please see the Metrics and Targets section of this report.In 2023,in an effort to improve data quality and availability,we continued our partnership with the software company Lightspark by sponsoring the pilot of Lightspark Engage in Calgary and Edmonton.Engage is an innovative technology

239、 platform that provides homeowners with information about home energy and carbon savings and a digital home energy audit.Over 40,000 homeowners learned about their home energy usage and retrofit options through the pilot.2023 CLIMATE REPORT 28INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS

240、AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION E N G AG E M E NT WITH CLI E NT SWebelieveournet-zeroandinterimemissionsintensityreductiontargetshelpfacilitateth

241、eorderlytransitiontoalow-carboneconomyovertime,and,atpresent,donotprecludeusfromdoingbusinessacrossallsectors.Therefore,weplantocontinuetoincreasinglyengagewithclientsinrelativelycarbonintensivesectorstohelpthemidentifyand,wherepossible,implementeffortstowardstheirownclimate-relatedgoals.Inthisregar

242、d,animportantpartofreducingourfinancedemissionsandmeetingemissionsreductiontargetsisenhancingourunderstandingofthetransitionplanningactivitiesofourclients.Throughengagement,wehavetheopportunitytocommunicatetoclientstheBanksownemissionsreductiontargets,providebenchmarkingondecarbonizationpracticesint

243、herelevantmarket,andintroduceclientstofinancialproductsandservicesthatmaysupporttheirdecarbonizationgoals.Infiscal2023,wecontinuedtodevelopandpilotadetailedinternalscoreaspartofourunderwritingprocess,withaviewtogeneratingastandardizedmeansofassessingofourclientsnet-zerogoalsandtransitionplans(“Net-Z

244、eroPreparednessScore”).TheNet-ZeroPreparednessScoreisbasedonareviewofsixcriteria:Long-termemissionsreductioncommitment Interimemissionsreductiontargetsandwhethertheymateriallyaligntoourtargets(Scope1,2and3)Performanceagainsttargets Emissionsdisclosures Capitalallocationagainstemissionsreductiontarge

245、ts DecarbonizationstrategyOnthebasisofinformationcollectedduringthepilotproject,severalrecommendationsweremadetoimprovethefunctionalityandscopeoftheNet-ZeroPreparednessScore,including:1.Movingfromadescriptivescaletoamoredetailed,numericscale,allowingforamorenuancedassessmentofprogress.2.Forsectorsin

246、whichtheBankhaspublishedemissionsreductiontargets,embeddingthefunctionalityintotheClimateChangeRiskAssessmentprocess(seetheRiskManagementsection,p.49,for a descriptionoftheseassessments).3.ExpandingthescopeofclientscoveredbytheNet-ZeroPreparednessScore.4.Leveragingresultstofurtherinformourclientenga

247、gementapproach.5.BuildingatrainingprogramtofacilitateadoptionoftheNet-ZeroPreparednessScore.In2024,wewillworktoimplementtheserecommendationsandcommittodisclosingfurtherdetailsonenhancementstoourclientengagementframeworkoncetheyareformalized.2023 CLIMATE REPORT 29INTRODUCTION GOVERNANCE STRATEGY RISK

248、 MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION S EC TO R A L A PPROACH I N A DVA N CI N G TO N E T-ZE ROClientsinthesectorsinwhichwehavesete

249、missionsreductiontargetsareallatdifferentstagesoftheirtransitiontonet-zero.Moreover,decarbonizationinanyoneindustryorsectorcannotbeachievedbyourclientsalone;decarbonizationrequirescoordinatedeffortsofgovernmentalandnon-governmentalactors,andfinancialinstitutionsalsohaveanimportantroletoplayinsupport

250、ingourclientsthroughthetransitiontoalow-carboneconomy.Indeed,aneffectiveresponsetoclimatechangerequiresrealandtangibleactionsfromthepublicandprivatesectoractorsincludingfinancialinstitutionsacrosseconomiesworldwide.Changesinconsumerpreferencesandregulatoryrequirementsareinfluencingthestrategicandinv

251、estmentdecisionsofourclientsinsectorswherewehavesetemissionsreductiontargets,andimpactthewayinwhich,andthespeedatwhich,wemeetourownnet-zeroobjectives.Below,weoutlinehowsomeofourclientsarepositionedforchange,theindustryandpolicycontextthatisneededtosupportthatchange,andthewayswecanhelpourclientsachie

252、vetheirnet-zerogoalsandobjectives.O I L A N D G A STheOilandGassectorislargeandmulti-faceted,consistingofupstreamactivities(explorationandproduction),midstreamactivities(storage,transportationandprocessing)anddownstreamactivities(refininganddistribution).Forcalculatingfinancedemissionsandsettinganem

253、issionsintensityreductiontargetfortheOilandGas1 Established in 2018,the federal Greenhouse Gas Pollution Pricing Act sets a federally managed backstop system,or minimum national standards,applicable to Canadas provincial and territorial governments;the pricing standards are organized in two parts:a

254、regulatory charge on fossil fuels(“federal fuel charge”)that applies to the distribution of fossil fuels and an Output-Based Pricing System for certain large emitters that are not subject to the federal fuel charge.At the time of writing,Albertas carbon pricing and emissions trading system through i

255、ts Technology Innovation and Emissions Reduction(TIER)Regulation may exempt regulated facilities from the federal fuel charge,provided that the TIER Regulation maintains minimum national standards under the Greenhouse Gas Pollution Pricing Act.sector,wefocusonexplorationandproduction(E&P).Scotiabank

256、hassetanemissionsintensityreductiontargetof30%inScope1andScope2emissionsby2030,anda15%to25%reductioninScope3emissionsby2030,relativetoa2019baseline.AsfurtheroutlinedintheMetrics and Targetssectionofthisreport,ourOilandGasemissionsintensityreductiontargetismeasuredintermsofphysicalintensity.Scotiaban

257、kssupportofourOilandGasclientsacrossE&P,midstreamanddownstream,willcontinueintothefuture.TheBankhasbeenengagingwithcustomersregardingemissions,andotherrelatedtopics,forseveralyearsandwillcontinuetodosoaswecollectivelyworkonseekingwaystoloweremissions.Potentialpathwaystoachievereducedemissions:1.Redu

258、cetotalenergyusebythesector.2.Seekopportunitiestoelectrifyindustrialactivities;successwillbedrivenprimarilybypowergeneratorsmorebroadly.3.Utilizeelectricitygeneratedfromnon-coalrelatedgenerationasispractical.4.Deploycarboncapture,utilizationandstorage(CCUS)technology.5.Reducefugitivemethaneemissions

259、utilizingappropriatetechnology.6.Supplylow-carbonfuelsandgases(biofuelsandhydrogengas);potentiallyreducingemissionsasanalternativefuelsourceforthetransportationsector.7.Pursueopportunitiestotheextentpossibletoutilizecleanersourcesofenergy(naturalgasandliquefiednaturalgas)todisplacelessemissionsfrien

260、dlysources.TheCanadiangovernmenthasimposedcarbonpricingonoilandgasfirmsthroughthenationalbenchmarkcarbonpriceestablishedunderthe Greenhouse Gas Pollution Pricing Act.1 Additionally,the Canadian governmentrecentlyproposedanemissionscapontheupstreamoilandgassectorof35%to38%below2019levels,atleast20%to

261、23%ofwhichmustbeachievedthroughemissionsreductionsatcoveredfacilities,andtheremainderthroughflexibilityinstruments,potentiallyincludingverifiedcarbonoffsetsand/orpaymentsintoadecarbonizationfund.Ifimplementedasproposed,thiscapwouldthenbeincrementallyloweredtowardnet-zerobetween2030and2050.Government

262、sinCanadaandtheU.S.areprovidingincentivesaimedatencouragingCCUSprojects.AlthoughgovernmentincentivesarelessprevalentinSouthandCentralAmerica,somecompaniesintheseregionsarebeginningtopilotCCUSprojects.TheColombiangovernmentnowprovidesfinancialincentivestoproducegreenandbluehydrogen,thelatterproducedm

263、ainlyfromnaturalgas,utilizingCCUS.Asourclientsorientthemselveswithinthecontextofachangingconsumerandregulatoryenvironment,ScotiabanksclientengagementstrategywilladapttoaddressthechangesandpotentialimpactinvestmentdecisionswillhaveontheirbusinessandtheBankslendingportfolioinanattempttoalignouremissio

264、nsreductiontargets.2023 CLIMATE REPORT 30INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION P OWE R AN D UT

265、I LITI E S1 Scope 3 emissions from this sector are deemed to be insignificant relative to its Scope 1 and Scope 2 emissions and were therefore not included in our calculations of baseline financed emissions or decarbonization targets.2 Clean Energy Canada.(2023).A Renewables Powerhouse report.Retrie

266、ved from:https:/cleanenergycanada.org/report/a-renewables-powerhouse.3 International Energy Agency(IEA).2021.Net Zero by 2050 A Roadmap for the Global Energy Sector.4 Smart grids use digital technologies,sensors and software to improve grid stability,reliability,and cost reductions in periods of flu

267、ctuating electricity supply and demand.Source:IEA,Smart Grids webpage.Retrieved from:https:/www.iea.org/energy-system/electricity/smart-grids.5 IESO.(2022).Pathways to Decarbonization report.Retrieved from:https:/www.ieso.ca/en/Learn/The-Evolving-Grid/Pathways-to-Decarbonization.6 IEA.Smart Grids we

268、bpage.Retrieved from:https:/www.iea.org/energy-system/electricity/smart-grids.7 Government of Canada.(2023).Proposed Clean Electricity Regulations(CER).August 25 2023.8 Government of Canada.Canadas coal power phase-out reaches another milestone webpage.Retrieved from:https:/www.canada.ca/en/environm

269、ent-climate-change/news/2018/12/canadas-coal-power-phase-out-reaches-another-milestone.html.9 Senate of the United States 117th congress(2021-2022)H.R.5376-Inflation Reduction Act of 2022.Public law No:117-169;August 16,2022.ThePowerandUtilitiessectorismadeupofcompaniesinvolvedinelectricitygeneratio

270、n,transmissionanddistributiontoresidential,commercialandindustrialcustomers.ScotiabanklendstoclientsacrossallpartsofthevaluechaininCanada,theU.S.,Mexico,andothercountriesinwhichweoperate.ForthepurposeofcalculatingfinancedemissionsforthePowerandUtilitiesportfolio,weincludeallelementsofthevaluechain:e

271、lectricitygeneration,transmissionanddistribution.Tocalculateouremissionsreductiontarget,however,wefocusonpowergenerationactivitiesgiventhatgeneration(relativetotransmissionanddistribution)istheprimarysourceofthesectorscarbonemissions.TheNZBAsuggestspowergenerationasoneofthemostcarbonintensivesectors

272、.TheBanksemissionsintensityreductiontargetisthereforeagoaltoreduceScope1and2emissionsintensityofourpowergenerationportfolioby55%to60%by20301againsta2019baseline.WhilefossilfuelscontinuetoplayaroleinpowergenerationinNorthAmericaandglobally,thepowerandutilitiessectorisinastateoftransition.Clientsinthi

273、ssectorrangefromstart-upstoFortune500companiesworkingtodevelopcleantechnologyenergybusinessesandlookingfortoolsandsolutionstosupporttheirclimate-relatedobjectives.ReducingScope1and2emissionsinthepowerandutilitiessectorwillrequire:Anincreaseinrenewablepowergenerationinstalledcapacity,spurredbydecreas

274、ingcostsinsolarandwindpowercomparedtogaspower;2 Anincreaseinnuclearpowergenerationinstalledcapacity;3 Improvementsinbatterystorageefficacy,coupledwithdecliningcostsforincreaseddeployment,toenableon-demandelectricitysourcesfromrenewablepower;2 and Enhancedsmart-gridtransmissionanddistributioninfrastr

275、ucturetosupportanincreaseininstalledpowergenerationcapacity.4,5,6 GovernmentsinmanyofthecountrieswhereScotiabankoperatesareencouragingthedevelopmentanduseofrenewableenergysupplythroughincentivesandregulations.InCanada,84%ofelectricitycomesfromsourcessuchashydroelectricity,solar,windandnuclear,whicha

276、refarlesspollutingthanelectricitygeneratedfromunabated(thatis,nocarboncaptureandstorage)fossilfuels.7In2018,theGovernmentofCanadaannouncedregulationstophaseoutcoal-firedelectricityby 2030,8withvariousprovinceshavingalreadycompletelyphasedoutcoalfiredelectricitygeneration.TheGovernmentofCanadahasalso

277、proposedcleanelectricityregulationswhicharedesignedtohelpachievenet-zeroemissionsfromtheelectricitygridby2035andisallocatingresourcestosupportthetransitiontotallingover$40billionoverthenext10years.In2023,theU.S.governmenttookadecisivesteptosupportthedecarbonizationofthepowerandutilitiessector,passin

278、gtheInflation Reduction Act(IRA),9whichdirectsnearlyUSD$400billioninfundingtocleanenergy,withthelargestshareallocatedtocleanelectricityandtransmission.2023 CLIMATE REPORT 31INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLI

279、MATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION TherenewableenergysectorisgrowinginmanyregionsinwhichScotiabankhasasignificantpresence.Forexample,Chileistargeting70%renewableenergygenerationby2030andhasrapidlygrownto37%ofcapacityan

280、d4.2GWunderconstruction,asofMay2023.1 Scotiabankhasdevelopedexpertisethatcanassistclientsinthissectorthroughtheenergytransition.WithexpertiseinrenewableenergymergersandacquisitionsinCanada,theU.S.,andinothercountriesinwhichweoperate,theBankfocusesonselectopportunities,includingprojectfinancerelating

281、torenewableenergy.ThroughourCleanTechEnergyInitiative,wecontinuetoservethissectorwithafocusontechnologiesandbusinesseswithemissionsreductionobjectives,includingsolartechnology,carboncapture,renewablefuels,cleanhydrogen,solarpowerandwindpower.AccordingtoourStatementonFinancingCoal,Scotiabankdoesnotfi

282、nancestandalonethermalcoalminingorcoalpowergeneration.Infiscal2023,webeganreviewingourapproachtocoalfinancing,andintendtoupdateScotiabanksStatementonFinancingCoalinfiscal2024.1 BNamericas.(2023).Chiles Energy Growing Pains report.2 International Energy Agency(IEA).2021.Net Zero by 2050 A Roadmap for

283、 the Global Energy Sector.3 IEA(2022),World Energy Outlook 2022,IEA,Paris,License:CC BY 4.0(report);CC BY NC SA 4.0(Annex A).4 IEA(2023),Global EV Outlook 2023,IEA,Paris,License:CC BY 4.0.5 Although global demand for EVs is recently reported to have slowed,this trend is not expected to influence aut

284、omotive manufacturers long-term goals.See Industry pain abounds as electric car demand hits slowdown.AUTO M OTI V E M A N U FAC TU RI N GThetransportationsectorisresponsibleformorethan20%ofglobalemissions,with50%ofthoseemissionsareattributabletolight-dutyvehicles.2AccordingtotheIEANZEPathway,electri

285、clight-dutyvehicleswillmakeup75%ofallnewvehiclessoldindevelopedmarkets,andapproximately50%ofnewvehiclessoldinemergingmarkets,by2030.2 TheIEANZEhasstatedthat80%ofalllight-dutyvehiclesontheroadin2030willbebasedoninternalcombustion.2Fornewlight-dutyvehiclessoldglobally,50%willbelow-emissionvehiclesincl

286、udingbatteryelectric,plug-inandhybridelectric,andfuelcellelectric.2Whileourfinancedemissionsaccountforanumberofsub-sectorswithinthebroadertransportationindustry,ouremissionsintensityreductiontargetisfocusedonautomotivemanufacturersoflight-dutyvehiclesand/orthewhollyownedsubsidiaryoftheautomotivemanu

287、facturerthatprovidesfinancingtowholesaleandretailcustomers.Inchoosingthissub-sectortosetanemissionsintensityreductiontarget,weconsideredanumberoffactors,includingbutnotlimitedtothesignificanceofemissionsrelatingtolight-dutyvehiclesrelativetoemissionsassociatedwiththeentiresectors(asnotedabove),theav

288、ailabilityofclient-levelemissionsandproductiondataand,asfurtheroutlinedbelow,nationalpolicyenvironmentsthatcouldsupportemissionsreductioninthissub-sector.Infiscal2023,theBanksetatargetforourAutomotiveManufacturingclientstoreduceemissionsbyameasureofgramsofCO2epervehiclekilometerdrivento93gCO2e/km,a3

289、6%emissionsintensityreductionby2030ascomparedtoabaselineof147gCO2e/kmin2019.EmissionsreductionsintheAutomotiveManufacturingsector,throughtheadoptionoflow-emissionlight-dutyvehicles,maybebolsteredbythefollowing:3,4 Expansionanddecarbonizationofelectricitygridstoreduce Scope1,2and3emissions;Increasedp

290、ublicelectriccharginginfrastructuretosupportcommercialandconsumerdecisionstopurchaselow-emission light-dutyvehicles;Fuelefficiencystandardsandregulationstoreduceemissionsof non-batteryelectricvehicles;IncreasedconsumerdemandforEVs;5 Establishmentofastablepolicyenvironmentthatservestoanchorstrategicd

291、ecisionsofOEMsrelatingtoEVproduction;and Investmentsinresearchanddevelopmenttoimprovebatterycapacityandcharginginfrastructure.2023 CLIMATE REPORT 32INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTO

292、NET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION WhileourAutomotiveManufacturingclientssellvehiclesglobally,andwhilemostwillcontinuetosellinternalcombustionenginevehiclesinallmarketsforatleastthenearfuture,themajorityofvehiclessoldbyourclientsaresoldinCanad

293、a,theU.S.andMexico.ThesethreecountrieseachhavepolicyframeworksorregulationsthatbroadlyaligntotheobjectivesofouremissionsintensityreductiontargetandsupporttheglobaltransitiontoEVs.Forexample,theGovernmentofCanadahascommittedtoamandatory100%zero-emissionvehiclesalestargetby2035forallnewlight-dutyvehic

294、les,1 the United States Environmental ProtectionAgencyreleasedafinalizedruleforfueleconomystandardstoreduceGHGemissionsbetween8%and10%forlight-dutyvehiclesinmodelyears202420262andMexicohasagoalofproducing50%zero-emissionlight-dutyvehiclesby2030.3 Insettingouremissionsintensityreductiontargetforautom

295、otivemanufacturers,theBankisundertakingthefollowing:Portfoliomanagementtoincreasefinancingtocompanieswell-alignedwithournet-zerogoals;and Providingfinancingthatwillsupportourclientsnet-zeroobjectives.ThismayinvolveconnectingfinancingsolutionsandexpertiseacrosstheBanktonewareasofexpansionclientsinthi

296、ssector,suchasfinancingEVbatteryoperationsandbuildingcharginginfrastructure.1 Canadas Zero-Emission Vehicle(ZEV)sales targets.2 Corporate Average Fuel Economy Standards for Model Years 2024-2026 Passenger Cars and Light Trucks.3 Government of Mexico on Energy and Climate Action.Scotiabank is proud t

297、o be an“Electrifying Sponsor”for Plug n Drive,a non-profit organization that is committed to accelerate EV adoption.Scotiabanks investment supports Plug n Drives Electric Vehicle Discovery Centre(EVDC)and the Mobile EV Education Trailer(MEET),educational and experiential learning facilities designed

298、 to engage consumers about the benefits of driving electric vehicles.For more information on how the Bank supports adoption of hybrid-electric and electric vehicles,please see the 2023 ESG Report,p.55.Reducing Our Own EmissionsOneoftheprimarywaysforbankstoreduceemissionsisthroughchangestotheirreales

299、tateoperations.Weownandleaseover1.9millionsquaremetresofrealestateforourofficesandbranchesglobally.Responsibleuseoftheresourcesrequiredtoconstruct,maintainandoperatethesefacilitiesnotonlyhelpsprotectlocalcommunitiesandourplanet,butcanalsoreduceoperatingcostsandriskstoourbusiness.Ourapproachtoreducin

300、gemissionsacrossourrealestatefootprintisto:1.Decarbonizeourrealestateoperationsthroughenergyefficiencyimprovementsandincreaseduseofemission-freeelectricity;2.Setandincrease aninternalcarbonprice,amechanismusedtosupportthedecarbonizationofouroperationsandimproveouroperatingefficiency;and3.Exploreoppo

301、rtunitiestoloweremissionsinthedesignandconstructionofbuildings,includingselectingmaterialswithlower embodiedcarbon.2023 CLIMATE REPORT 33INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|RE

302、DUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION E N E RGY E FFI CI E N C Y I N ITIATI V E SScotiabankhassetagoalofsecuring100%ofourelectricity(eitherphysicallyorvirtually)fromemissions-free1sourcesinCanadaby2025andgloballyby2030.In2023,Scotiabankinvested$16.4millioni

303、ntoinitiativesthatsupportdecarbonizationandimproveenergyefficiencyacrosstheBanksrealestatefootprint.Belowisasnapshotofprogressmadein2023onspecificemissionsreductioninitiatives.INITIATIVEWORK COMPLETED IN 2023Green Globes CertificationCompletedrenovationsattwobranchestoreachatotalof62branchesinCanada

304、renovated to meet Green Globes Certification,acomprehensive,science-based,three-in-onecertificationsystemthatevaluatestheenvironmentalsustainability,healthandwellness,andresilienceofalltypesofcommercialrealestate.Lighting retrofitInCanada,completedLEDsignageretrofitprojectsatselectedbranches,resulti

305、nginannualsavingsof655MWh,andareductioninGHGemissionsof107tCO2e.InMexico,implementedLEDlightingretrofitprojectinonelocation,resultinginannualsavingsof360MWhandaGHGreductionof281tCO2e.Heating,ventilation and air conditioning(HVAC)retrofitsInChile,Columbia,MexicoandPeru,replacedHVACsystemsin314locatio

306、nswithhigherefficiencyequipment,resultinginannualenergysavingsofover660MWh,equallingover410tCO2einGHGemissionsreductions.Solar panel installationsIntheDominicanRepublic,installedsolarpanelsatZonaFrancaLasAmericas,generatinganestimated528MWhofenergyandreducingCO2e by an estimated 302tonnes.Building e

307、nvelope windows replacementInTrinidadandTobago,investedinwaterproofinga20,000squarefootroof,resultinginincreasingroofreflectivityandheattransferresistancetoreduceenergyconsumption.Electric vehicle charging stations in CanadaInOntario,addedthreemorevehiclechargingstationsinOntario,reachingatotalof46s

308、tationsacross42branches.Thesestationsareavailabletothepublic24hoursaday,sevendaysaweek.1 Emissions-free sources include renewable(hydro,solar,wind,geothermal,tidal)and nuclear sources.Virtual power purchase involves the purchase of renewable energy certificates(RECs)or other environmental attributes

309、 reflecting the environmental benefit of emissions-free power production which,according to current carbon accounting methodologies such as the Greenhouse Gas Protocol,are a generally acceptable means of reducing Scope 2 emissions from electricity use.I N CRE A S I N G OU R I NTE RN A L C A RBO N PR

310、I CEIn2018,ScotiabanksetaninternalcarbonpriceofCAD$15/tCO2epertonneofemissionsassociatedwiththeBanksglobalScope1and2emissions.Settinganinternalcarbonpriceservesacriticalfunctioninreducingemissionsfromourownoperationsbyembeddingaprocessthatallowsforearmarkingoffundsfordecarbonizationprojectsandenergy

311、efficiencyinitiatives.In2023,weincreasedourinternalcarbonpriceto$65/tCO2e,leading toa$16.4millionspendondecarbonizationandenergyefficiencyprojects,andacumulative$76.3millionspendsince2018.Weintend toraiseourinternalcarbonpriceto$80/tCO2ein2024.Wealsocontinuetoassesscurrentandfuturephysicalclimatevul

312、nerabilitiestoScotiabankspropertyassets,integrateclimateresilienceandconsideropportunitiestofurtherreduceouroverallcarbonfootprintthroughvarioussustainabilityandenergyefficiencymeasures.Formoreinformation,seeour2023 ESG Report(pp.5153).CLI M ATE TR A NS ITI O N PL A NScotiabankiscurrentlyintheproces

313、sofdevelopingaClimateTransitionPlanthatwilladvanceourthreeclimatepillarsthroughembeddingournet-zeroandotherclimateobjectivesintorelevantdecision-makingenterprise-wide,inlinewithguidancefromtheTaskForceonClimate-relatedFinancialDisclosures,theGlasgowFinancialAllianceforNetZeroandtheUnitedKingdomsTran

314、sitionPlanTaskforce.WeexpecttopublishourinauguralClimateTransitionPlanbeforetheendofthe2024fiscalyear.PleaseseeourRoadmaponp.23forahigh-levelsummaryoftransitionplanningactivities.2023 CLIMATE REPORT 34INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRES

315、HEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION Culture,Skills and Competencies to Support Climate Transition1 Scotiabanks Climate Change Centre of Excellence.Ensuringwemeetourclimategoalsrequiresinterna

316、leducation,thoughtleadership,research,outreachandengagementwithourclients,investors,industryandregulators.Anareaofstrategicimportanceinitsownright,culture,skillsandcompetenciesrelatingtoclimatecreatethefoundationforourclimategoals.TheBankstransitiontonet-zeroisamulti-yeareffort,requiringcommitmentto

317、enterprise-wideinnovation,aclearunderstandingofthetaskathand,andtrainingforemployeesthatisrelevantandpractical.ArmedwithawarenessandknowledgeoftheBanksclimategoals,ouremployeescanbecometheagentsofinnovationandchangerequiredtosuccessfullyreachthosegoals.Infiscal2023,theBankfocusedondrivingculture,ski

318、llsandcompetenciesthrougheducationandtraining,thoughtleadershipandresearch,partnershipsandprogramswithtangibleclimate-relatedoutcomes.Theseeffortsaresummarizedonthefollowingpages.CLI MATE-RE L ATE D I N FO RM ATI O N A N D TR A I N I N GInformationandtrainingonclimate-relatedmattershasbecomeincreasi

319、nglyimportantincertainpartsofourbusiness,asameansofsupportingprogramsimpactingrolesandresponsibilitiesacrosstheBank.Examplesoftrainingandinformationprovidedin2023include:In-personandvirtualESG-trainingforrelevantemployeestodevelopandimproveknowledgeandtoolstoenhanceclimateriskmanagementthroughduedil

320、igenceanddatacapture.ThisincludestrainingontheBanksnewsustainability-linkedcreditfacilityprocedure,aswellastrainingtosupporttrackingandmonitoringofourclimate-relatedgoals,includingour$350BTarget.Amoduleonclimatechangerisk,whichformspartofannualmandatoryenvironmentalrisktrainingforallbankingofficersa

321、ndcreditadjudicators,providesareviewofenvironmentalandclimatechangeriskduediligencepoliciesandprocessesforbusinessbankingcredits,aswellasanoverviewoftheEquatorPrinciplesFrameworkandprocessesforverifyingcompliance.Deliveryof“Climate101”trainingtoover1,500employeesrelatingtoclimatechange,includingseni

322、ormanagementacrossbusinesslines,branchpersonnel,andtheBoard,focusingonthescientificbasesofclimatechange,typesofphysicalandtransitionrisksassociatedwithclimatechange,andhowvariousareasoftheBankcantakeactiontosupportourclimategoals.AttendancebytheCanadianBankingleadershipteamofafulldayclimateworkshop,

323、includingareviewofhowfinancialinstitutionscancreateclimateopportunitiesintheretail,smallbusinessandcommercialbankingsectors,andaseriesofworkshopsleadingtothecreationoffocusgroupsdevotedtodefininghowtheCanadianBankingdivisioncanaddressclimateopportunitiesgoingforward.MorespecializedtrainingonPartners

324、hipforCarbonAccountingFundamentals(PCAF)standardsandpracticeswasdeliveredtotheBanksGlobalSustainability,Data&Analytics,ESGRiskandCorporateCreditRiskteamsbythePresidentofPCAFCanada.InformationrelatingtoclimatechangeandtheBanksresponsetotheissueisalsoinhighdemand.Aspartofa2023EarthDayeducationwebcast,

325、ScotiabankinvitedDr.ThomasWagner,aleadingplanetaryandclimatescientistwhohasworkedwithNASAandtheU.S.NationalScienceFoundation,toprovidehisuniqueinsights,todiscusstheroadtoaglobalnet-zero,andtoofferideasforcollectivesolutions.Morethan1,550Scotiabankemployeesattendedthiswebcast.Tofurtherencourageintere

326、stintheBanksclimateprograms,wemaintainaClimateChangeCentreofExcellence,availableinternallyandtothepublic,1housinginformationandresourcesrelatingtoourclimate-basedinitiativesandallowingfortransparencyintoouractivities.2023 CLIMATE REPORT 35INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND

327、TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTURE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION MA N AG I N G CLI MATE RI S K S A N D PRO M OTI N G RE S I LI E N CETheBankidentifies,assessesandmonitorspotentialcli

328、mate-relatedriskstoourbusinesssothatwecanmitigateitsimpacttoouroperations,customersandcommunities,aswellaspromoteresiliency.ScotiabankhasputinplaceaglobalprogramtocomplywithcurrentandupcomingESGregulations,includingOSFIB-15.Please see the Risk Managementsectionofthisreportforadiscussionofhowweintegr

329、ateclimateriskintoourRiskManagementFramework;howweidentify,assessandmanageclimaterisks;ourexposuretocarbon-relatedassets;andourworkonclimate-relatedscenarioanalysis.Climate Adaptation and ResilienceTheimpactsofclimatechangeonourplanet,thehealthofecosystemsandourwayoflifearesystemicandtransformativef

330、oundationalrisksfacingtheworldtoday.Nocountry,sectororcommunityisimmunetothesocial,environmentalandeconomicchallengesitposes.Scotiabankisimplementinganoperationalpreparednessandresilienceprogram,whichtakesintoconsiderationextremeclimate-relatedweatherevents.AswedevelopourClimateTransitionPlan,wewill

331、reviewwhatfurtherroletheBankcanplayinpromotingsocietalclimateadaptationandresilience.2023 CLIMATE REPORT 36INTRODUCTION GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS APPENDIXINTRODUCTION|OURREFRESHEDCLIMATEGOALS|FINANCINGCLIMATESOLUTIONS|ADVANCINGTONET-ZERO|REDUCING OUR OWN EMISSIONS CULTU

332、RE,SKILLSANDCOMPETENCIESTOSUPPORTCLIMATETRANSITION E N G AG E M E NTThought Leadership Thoughtleadershipintheformofresearch,engagementwithindustryandclients,andhostingofconferencesinareasofstrategicimportanceintheclimate-changearenaisacriticaltoolinthefulfilmentoftheBanksclimategoals,creatingconditi

333、onsformeaningfulandinsightfulexchangeofideasandinformationwithinournetworks.In2023,wepublishedaseriesofpapersandarticles,organizedthematicallybysector,ontopicsofinteresttoourclientsinAgriculture,AutomotiveManufacturing,CementManufacturing,OilandGas,andResidential Mortgages:1.Cultivating Resilience:Supporting Canadas Agriculture Industry to Achieve Sustainable Growth2.30 Thoughts:EV Adoption Speed