FINANCIAL STATEMENTS
STRATEGIC REPORT
GOVERNANCE
OUR PILLARS
OUR COMMITMENT
HOW WILL WE ACHIEVE OUR AMBITION?
LINK TO JUST’S STRATEGIC PRIORITIES
Improve diversity and inclusion Use progressive targets to guide our development of a diverse and inclusive group of colleagues.
5. Be proud to work at Just
Support the health and wellbeing of our colleagues
Maintain focus on the wellbeing of our colleagues and encourage healthy lifestyles and working practices.
Supporting our later life community
Continue our thought leadership, helpful advice to customers and charitable activities.
3. Get closer to our
CREATING A FAIR WORLD
customers and partners
risks and to take advantage of the opportunities presented. There are many uncertainties about how the impacts of climate change will develop, with future government policy playing a significant role in the coming years. The ways Just could be affected by climate change are interconnected with other sustainability issues. What climate change means for Just Our assessment is that our lifetime mortgage and investment portfolios are the areas with the largest potential exposure to climate transition and physical risks. Transition risks relate to the business impact from government policy developments and market changes as part of the evolution to a low carbon economy. The impacts will depend on the nature and rate of these changes. Physical risks could arise from the acute impacts of climate change, such as more frequent and intensive floods or gradual chronic impacts such as a rise in sea level. Lifetime mortgage portfolio Climate-related factors that cause property values to underperform the market could lead to losses for Just if the outstanding lifetime mortgage exceeds the sale proceeds when the property is sold. • Transition risks: The potential requirement to transition to more energy efficient housing could be a significant influence on our lifetime mortgage portfolio over the coming decade. Sale prices of less energy efficient housing could be affected by the cost of improvements to bring them up to the government’s target of energy performance certificate (“EPC”) rating C, where this is feasible. • Physical risks: More properties may become exposed to a high flood risk over time unless actions are taken to mitigate the risks. Subsidence may also become more of a concern in some areas than it is at present if there are prolonged droughts. Credit investment portfolio Our credit investments are held as long-term investments. Although the value of the investments may be affected over time by the market’s view of the borrower’s credit standing, it is the borrower’s ability to repay the debt that affects us the most. • Transition risks: The companies to which we lend could face additional costs according to the nature and rate of transition to a low carbon economy in their main countries of operation. • Physical risks: These businesses may face higher costs from asset damage and business interruption due to impacts from weather hazards. Material increased costs to the borrower, as a result of climate change, may affect their ability to meet their debt repayment obligations, increasing the risk of default. POTENTIAL FINANCIAL IMPACT ON JUST We have assessed the risks to our lifetime mortgage and investment portfolios using information that is available, as explained above. The timescales over which the risks are projected are driven by the availability of data. This understanding of the drivers and potential scale of the risks has provided confidence that the potential for future financial loss appears to be very limited at present.
Key sustainability initiatives form part of the Group’s strategic execution plan, with progress overseen by our sustainability steering group. The Group intends to become signatories to the Science Based Target initiative (“SBTi”) during 2022 to help the focus on our decarbonisation target. The Group’s plans to meet our emissions targets are being adapted to align with the methodology set out by SBTi last autumn. The direct costs of meeting these commitments include £800,000 to upgrade the energy efficiency of our office properties and computer equipment over the next few years, plus an estimated £600,000 a year to invest in planting a tree for each new customer. TCFD DISCLOSURES The Taskforce on Climate-related Financial Disclosures (“TCFD”) was established by the Financial Stability Board to develop recommendations to enable a better understanding of climate-related risks and opportunities. The TCFD recommend that companies provide information about their governance, strategy, risk management, metrics and targets in relation to climate change risks. Disclosures consistent with TCFD recommendations about the potential implications of climate change for Just are included in this report with the following exceptions: Strategy recommendation disclosure (b): A methodology to model the potential financial impacts of climate change on our illiquid credit portfolio has not yet been established for the reasons stated in section headed “Illiquid investments” on page 27. We are in discussion with data providers and expect to have a methodology in place during 2022. Metric and targets recommendation disclosure (b): At present we are only able to estimate scope 3 emissions for the Group’s business travel, for our lifetime mortgage property portfolio and for our liquid bond portfolio where public data is available. The nature of illiquid investments means that the borrowers are not required to disclose their emissions. A methodology will be developed to estimate the emissions for these investments, as well as for our supply chain. We will keep stakeholders updated on the progress of these methodologies with the aim of reporting consistently against the recommended disclosures as soon as we have reliable data to report on. The TCFD disclosures are in the main included in pages 24 to 29; disclosures related to governance are set out on page 74; disclosures related to the Group’s own emissions are on pages 18 to 19; and those relating to risk management are on pages 58 to 63. Just’s purpose is to help people achieve a better later life. To fulfil our purpose, Just must ensure its business model is sustainable and resilient to the risks posed by climate change. We also seek opportunities to reduce our impact on the environment and to help our customers and colleagues do the same. Just has taken steps to embed climate change into our business governance and guidance issued so that climate risks are taken into account in decision making, such as in product development and change initiatives with oversight from second line functions. As a life insurer we look at risk over the long term and recognise that we need to keep working to understand and manage our climate-related CLIMATE CHANGE Why climate change is important for Just
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