Management groups or sub-committees also have responsibility for identifying and assessing climate-related risks and reporting potential exposures to their respective standing committees.

Enterprise Risk Committee: Responsible for all risks across the company, including emerging risks. Management has currently placed climate risk in the emerging risk category within its risk taxonomy, which is defined as a risk that could impact the company within five years.

• The Emerging Risk Committee, a subcommittee of the Enterprise Risk Committee, monitors and assesses new risks and evaluates if they have a material impact on Pacific Life. 
• The committee then assesses which management entity should own the risk which will then be integrated into the Business Impact Assessment (BIA) process.
• Reports to the Audit Committee

Management Investment Committee: Responsible for identifying and assessing ESG risk factors related to financial risks in the investment portfolio.

• Accountable to the Board’s Investment and Finance Committee

Corporate Social Responsibility team: Updates the full Board once per year on relevant developments regarding the CSR program with respect to the company’s impact on people, communities, customers, and the environment.

• One update is given through the Governance and Nominating Committee and includes a deeper dive into full Pacific Life CSR strategy

Pacific Life has engaged various stakeholders and business functions throughout the organization, including Board and management committees (see the ‘Governance’ section response), Enterprise Risk Management (ERM) and Business Continuity (see the ‘Risk Management’ section response), Investment, Actuarial, Legal & Compliance, and Corporate Affairs. Below is additional information on the work done within each business area regarding climate-related risks and opportunities.

• Investment
  Climate-related risks which may pose a risk to the investment portfolio, though not currently deemed to be material, have been an area of focus for Pacific Life. This focus led to initiatives such as the adoption of Pacific Life’s Principles for Responsible Investing, initially published and updated in November 2022. These principles, which continue to be refined, outline Pacific Life’s desire to achieve sustainable, long-term returns in a balanced and responsible manner by acknowledging the evolving materiality of environmental, social, and governance (ESG) factors and increasingly integrating them into the investment portfolio.
  
  Pacific Life has also developed a roadmap which outlines plans to enhance the company’s ESG investment strategy through 2025. This plan aims to allow Pacific Life to deliver consistent risk-adjusted returns to policyholders in a responsible manner through the integration of ESG factors into the investment decision making process, and it will allow for continued mitigation of climate-related transition risks within Pacific Life’s investment portfolio.
  
  Pacific Life has taken steps to take advantage of climate-related opportunities through the creation of the Sustainable Financing Framework. The framework was created to help improve the quality of life of individuals and families, and the social responsibility programs focus on doing this in the communities where Pacific Life employees live and work. Pacific Life will not provide funding through its Sustainable Financing Framework and sustainable note offerings if the borrower is associated with the following climate-related risks: activities related to the exploration, production, or transportation of fossil fuels (e.g., coal, oil, and gas); consumption of fossil fuels for power generation; large hydroelectric power generation (e.g., plants with a capacity of greater than 20 megawatts or dams with a height greater than ten meters); and nuclear energy. Through the transition to a low carbon economy, Pacific Life is seeing more opportunities to invest in projects that use renewable energy such as solar and wind power, liquefied natural gas, and battery technology. This financing framework, and subsequent note issuances, highlight the investment Pacific Life is making to support the transition to a low carbon economy

• Actuarial
  Assessing and understanding climate-related risk is important for proper underwriting and accurate identification of new risks that may impact policyholders or operations. Volatility in frequency and severity of weather events are expected to make certain geographic locations more prone to climate risk. To monitor this risk, geographical concentration risks assessments of Pacific Life’s insurance portfolio are done regularly to understand what areas are policy-dense and how these areas may be impacted by future changes in weather events.
  
  Research has also been done into the ways climate-related risks may impact mortality in the future. To quantify these impacts, excess mortality stress testing is performed on the underwriting portfolio to understand how the stressed mortality may impact the business. Results of this stress testing have been immaterial thus far, but Pacific Life plans to continue to test and integrate climate risk assumptions and factors into pricing and valuation models as appropriate.

• Corporate Affairs
  Pacific Life’s Corporate Social Responsibility team sits within the Corporate Affairs team and is responsible for climate-related disclosures and company-wide environmental initiatives aimed at reducing emissions and promoting sustainability programs. Scope 1 and 2 greenhouse gas emissions were calculated for the first time in 2022 using 2019 as a baseline and emissions targets may be set in the future. Current company and employee efforts to limit emissions include:
  • Providing the option for policyholders to receive electronic account statements and e-delivery of required mailings
  • Increased use of digital files in lieu of paper files
  • Office buildings that incorporate green concepts and technology, including smart thermostats, efficient reflective roofs, high energy efficiency lighting, systems, as well as sustainable materials
  • Proactive electronic waste, bottle & can recycling, and trash recycling programs
  • Landscaping with drought-tolerant plants to reduce water consumption
  • Completed work with Southern California Edison Electric company to reduce energy usage and still meet business needs
  • Changes to kitchen equipment and air conditioning optimization to reduce gas consumption.
  • Energy-efficient LED lighting in office buildings’ common areas
  • Data center optimization to reduce energy usage and increase efficiency
  • Purchase of hardware certified to be energy efficient including Energy Star

Pacific Life’s Management Investment Committee is tasked with determining investment portfolio resilience, testing credit risk of the portfolio. Various impact pathways are identified to assess how changing corporate bonds and commercial loans will affect the portfolio. Effects driven from the climate scenarios can result in losses due to default which is then used to calculate projected actual loss value. The analysis has affected strategies for credit decisions in various aspects of the investment portfolio. Divestments and investment opportunities are being analyzed for new types of financial investments that are more resilient to climate risk under each scenario.

BCM and the BIA process help inform risks that are considered by Enterprise Risk Management (ERM). ERM is responsible for identifying, assessing, and working to mitigate risks. Management committees are also used to assess risks on a group level which can be directly integrated into ERM. The Enterprise Risk Committee is responsible for overseeing all risks present to the company including people, processes, and systems. The Emerging Risk Committee is a sub-committee of the Enterprise Risk Committee responsible for monitoring and assessing new risks and evaluating if they have a material impact on Pacific Life. The committee then assesses ownership, estimated impact, and likelihood. When risks are fully managed, they are removed from the emerging risk list. Climate risk is considered an emerging risk that is regularly monitored for material impact to Pacific Life. 

BCM and the BIA process help inform risks that are considered by Enterprise Risk Management (ERM). ERM is responsible for identifying, assessing, and working to mitigate risks. Management committees are also used to assess risks on a group level which can be directly integrated into ERM. The Enterprise Risk Committee is responsible for overseeing all risks present to the company including people, processes, and systems. The Emerging Risk Committee is a sub-committee of the Enterprise Risk Committee responsible for monitoring and assessing new risks and evaluating if they have a material impact on Pacific Life. The committee then assesses which management entity should own the risk, and when risks are fully managed by an entity, they are removed from the 9 emerging risk list. Climate risk is considered an emerging risk that is regularly monitored for material impact to Pacific Life.

• Operational Risk Management
  Climate change may result in increased frequency and more severe weather-related events such as hurricanes, tidal waves, sea level changes, wildfires, heatwaves, drought and tornados. With operations in Newport Beach, California; Omaha, Nebraska; Lynchburg, Virginia; and various internal cities though our global reinsurance business, the company has exposure to business disruption and operational risk associated with these events. There are Business Continuity Plans (BCP)in place to ensure the availability, recoverability and integrity of critical business and technology-driven processes with minimal impact to normal operations. 
• Underwriting Portfolio Risk Management
  Extreme weather events could result in higher than anticipated mortality experience. Given a well-balanced portfolio of life and annuity products - with offsetting mortality exposures, the net financial effect for Pacific Life is expected to be manageable. Additionally, the risk management team handles excess mortality stress tests within the economic capital models, which is linked to climate-related risk. The models assess a wide range of scenarios and potential impact pathways. Drivers by region are also considered. For example, floods, wildfires, insect-born flus, heatwaves, cold fronts, and air quality impact different regions in different ways. Thus far, the mortality testing results have been immaterial but will continue to be monitored to identify potential risks. Geographic concentration analysis of the insurance portfolio is done to monitor the number of policyholders per region. There are not currently any parameters influenced by climate risk in pricing or valuation models, but evolving underwriting practices and modeling methodologies may lead to future assumption changes. 
• Investment Portfolio Risk Management
  Pacific Life’s investment team has made significant progress in identifying climate risk in the portfolio and in incorporating climate risk assessments into the underwriting process. To help prepare the investment portfolio for transition risks, Pacific Life created a roadmap through 2025 that outlines a process to better measure and manage these risks. Significant resources have also been invested to estimate the financial impact of climate risk on the portfolio in different climate scenarios with an aim to chart the next set of tangible actions at the conclusion of the analysis. This includes analysis on investments such as real estate, integrating operational risk assessment.

Insurance
Pacific life monitors geographic concentration risk of the underwriting portfolio, which aids in the analysis of how exposure to physical risks may impact the insurance portfolio. Catastrophe modeling is not used to assess climate-related risks at this time and is not incorporated into underwriting assumptions or factors given climate change events are not yet expected to be material to business operations.

Investment
To better plan for the transition to a low carbon economy, Pacific Life is incorporating investment criteria, metrics, and targets into portfolio management. The Sustainable Financing Framework aims to finance green and social projects that align with Pacific Life’s sustainability priorities. The framework encourages issuers to structure and administer their issuances of green bonds, social bonds and sustainability bonds in alignment with the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines, respectively. The Principles are intended to promote integrity in the Sustainable Bond market through recommendations relating to transparency, disclosure and reporting. Pacific Life’s Sustainable Bond issuances will target 90% eligible green investments and the remainder eligible social investments, metrics which will be regularly tracked. Examples of eligible projects include green buildings, renewable energy, energy efficiency, and clean transportation.

Pacific Life updates investors annually regarding the allocation of net proceeds from issued Sustainable Bonds, until such time Bonds are fully allocated. Where feasible, the allocation reporting includes qualitative and quantitative key performance indicators.

• Green Building
  • Green building certifications
  • Total number of buildings certified
  • Total square feet certified
  • Percentage of overall company square feet certified
• Renewable Energy
  • Renewable energy capacity sourced and developed (MW)
  • Renewable energy procured and produced from the capacity above (MWh)
  • Emissions (including metric tons of CO2e) avoided or reduced
  • Annual renewable energy procured and produced as a % of annual global electricity consumption
• Energy Efficiency
  • Energy savings (MWh)
  • Emissions (including metric tons of CO2e) avoided or reduced
  • Office energy consumption/square foot
  • Office energy consumption/employee
  • Data center Power Usage Effectiveness
• Clean Transportation
  • Commuter carbon emissions (including metric tons of CO2e) avoided or reduced

Credit risk Scenario analysis is being performed by the Investment Committee, which provides metrics for tracking climate-related risks within Pacific Life’s investment portfolio. Corporate bonds and commercial loans are assessed with carbon prices being a key input. Through the analysis, information pathways are identified and used in other models and management decisions. Outcomes of the testing may affect strategies for credit decisions in various aspects of the investment portfolio, and potential opportunities may be analyzed for new types of financial investments.

Emissions
Greenhouse Gas (GHG) emission disclosures inform investors of Pacific Life’s carbon footprint and track progress as society transitions to a low carbon economy. Scope 1 and Scope 2 emissions were calculated for the first time in 2022 with an established baseline of 2019 using emission quantification methodologies drawn from the Greenhouse Gas Protocol developed by the World Resources Institute and World Business Council for Sustainable Development (GHG Protocol). The emission manual is reviewed and updated at least annually based on developments in data collection, calculation, and data quality review process in future years.  Emissions are calculated in metric tons of carbon dioxide emissions, or MTCO2e.

2022 Scope 1 emissions are 872.6 MTCO2e, a decrease of 11% over the prior year, and 2022 Scope 2 emissions are 5982.1 MTCO2e, a decrease of 1% over the prior year. Pacific Life defines its GHG emissions inventory organizational boundaries using the Operational Control Approach. Offices over which Pacific Life has operational control are included in the GHG emissions inventory, including owned and leased properties, globally with the exception of the following: 1) Field offices and 2) Any office that is smaller than 500 sq.ft. Progress will be monitored year over year. Scope 3 emissions are not yet calculated, but are planned to be assessed in the future.