Climate Risk Management System

Implementation of CRMS & TCFD Framework

BCA is committed to ensuring business growth goes hand in hand with efforts to protect the environment by adopting the global CRMS and TCFD frameworks.

Objectives of CRMS & TCFD Framework Implementation

Climate Risk Management & Scenario Analysis (CRMS) 2024, as an improvement on CRST OJK 2023, is prepared in accordance with TCFD framework to identify and disclose the impact of climate on financial performance. Through its implementation, BCA strengthens its climate risk management strategy while capturing opportunities from the transition to a sustainable economy to maintain and grow the company's value.

Implementation of CRMS & TCFD Framework at BCA

The implementation of this management and analysis is in line with the initial phase of Bottom-Up Climate Risk Stress Testing (CRST) conducted by BCA in 2023 and 2025, covering 100% of the company's productive credit financing.

Governance

BCA's directors and management are committed to monitoring and managing risk impacts, including climate change risks. This commitment is realized through:

Established Key Performance Indicators (KPIs) cover ESG and Sustainable Finance aspects, as well as through clear mapping of roles and responsibilities across the organization to ensure that climate change risk management is carried out in an integrated and transparent manner.
Climate change initiatives are under the responsibility of the Director of Planning and Finance (CFO), who ensures that climate change-related risks and opportunities are integrated into the company's business strategy and reported regularly.
The ESG Division collaborates with various relevant work units that play a role in analyzing, assessing, and managing climate change risks.

Strategy

BCA integrates the potential impact of climate change risks into its business strategy to maintain the long-term sustainability of the company's operations and credit portfolio. Risk mitigation measures are carried out through assessments of debtors that produce greenhouse gas (GHG) emissions.

BCA's Board of Directors leads the management of physical and transition risks related to climate change, ensuring that sustainability strategies and achievements are discussed in board meetings at least four times a year and reported transparently through the Annual Report, Sustainability Report, and forums such as analyst meetings, public exposes, and the Annual General Meeting of Shareholders.

Risk Management

Physical environmental impacts and invisible risks are challenges posed by climate change. BCA has established a robust risk management framework to identify, anticipate challenges, and navigate the future to protect the value we have built together with our customers and stakeholders.

Physical Risks

We proactively map how natural disasters can affect customer assets and credit portfolios. By utilizing data such as the Indonesian Disaster Risk Index (IDRI) from the OJK, we can assess potential changes in collateral value and anticipate operational disruptions.

Transition Risk

We conduct in-depth analysis of how policy transitions, technological innovations, and market preferences affect the cash flow and financial health of our debtors. By considering the impact on liquidity, investment costs, and market prices, we protect the bank and help customers navigate an ever-changing future.

Metrics and Targets

In line with the implementation of OJK's CRMS/CRST, BCA continues to expand its climate risk analysis. After achieving 50% reporting of its credit portfolio, by 2025, GHG emissions coverage will include all productive sectors, accompanied by updated data and analysis of sectors vulnerable to climate transition.

Risk Type	Triggers	Impact on BCA	Timeframe
Credit	Physical and Transition Risk	Credit quality NPL remains stable at <5% CAR remains stable at a level >20%	Short, Medium, to Long
Market	Physical and Transition Risks	Affecting unrealized profit/loss Changes in Fair Value Through Profit or Loss (FVTPL) portfolios, risk weights for credit spread risk calculations, and default risk charges
Liquidity	Transition Risk	Decrease in High Quality Liquid Assets (HQLA) Increase in Net Charge-off Rate (NCO)
Liquidity	Physical risk	High Quality Liquid Assets (HQLA) at a fixed level Increase in Net Charge-off Rate (NCO)
Operational	Transition Risk	Potential increase in investment costs in: Infrastructure and Buildings IT infrastructure development CSR activities LST-oriented capacity building
Operational	Physical risks	Potential costs of damage/depreciation of assets Implications for disruption/cessation of bank operations and services

BCA's commitment to improving data quality on an annual basis aims to ensure a more adaptive response to the dynamics of climate change risk. This approach is not only focused on reducing potential financial losses, but also supports low-carbon development and the achievement of sustainable development goals at the national and global levels. These strategic steps reflect BCA's ongoing efforts to manage climate risk in an integrated manner, both from a financial and non-financial perspective.