Moody's 2021 TCFD Report

1 A MESSAGE FROM OUR 2021 SUSTAINABILITY Moody'sMoody's 2021 TCFD. PRESIDENT & CEO. INTRODUCTION. HIGHLIGHTS ABOUT Moody's TCFD. better DISCLOSURE. BUSINESS better LIVES LOOKING FORWARD. better SOLUTIONS APPENDIX 2021 Report Stakeholder Sustainability Report 11. 2021. TCFD Report INTRODUCTION TCFD DISCLOSURE LOOKING FORWARD Moody's 2021 TCFD Report 2. Table of contents 1 2 3. Introduction TCFD Disclosure Looking Forward A message from the CFO Governance Safe Harbor Statement About TCFD Strategy Moody's and TCFD Risk Management Metrics and Targets INTRODUCTION TCFD DISCLOSURE LOOKING FORWARD Moody's 2021 TCFD Report 3. A Message From Mark Kaye, Chief Financial Officer As climate experts warn of the widespread consequences To best serve our customers, we continue to make Following our active engagement at COP26, we published of climate change, and as the world moves to a new phase considerable strides in enhancing our climate offerings.

2 Ready or Not?, a widely cited Report that combined of pandemic management and responds to evolving We expanded our data coverage of the physical risks posed insights from various perspectives across Moody's . The geopolitical conflicts, Moody's commitment to climate by climate change with new sub-sovereign climate risk Report analyzed the climate risk exposure of carbon- leadership and our role in the transition to net-zero remain scores and introduced Temperature Alignment Data, a intensive sectors those whose transformation will be vital as important as ever. new tool that provides increased transparency on whether to the world's ability to halve emissions by 2030. companies' net-zero commitments align to the actions Although our company is not a major greenhouse gas necessary to restrict global warming to below C.

3 We are honoured to have been acknowledged for these emitter, we know that our actions serve as a role model milestones and for our corporate climate and sustainability for responsible corporate climate practices, and as such, Additionally, we acquired RMS, a leading global provider of efforts, including a top A score on climate action by CDP. we have adopted ambitious, forward-looking sustainability climate and natural disaster risk modeling and analytics. As for the second consecutive year, and a designation as a practices not only within our organisation but across our a result, we are now able to accurately capture the impact supplier engagement leader. value chain. of numerous climate perils, such as floods, hurricanes and wildfires, both today and through the end of the century. In our fourth TCFD Report , we reaffirm the alignment of I am proud to say that 2021 was a year of considerable This enables our customers to assess the financial impact of our climate disclosures with TCFD's recommendations, as progress and accomplishment for Moody's .

4 In support of our climate risk on their assets and investments, and to inform well as the evolutionary implementation of climate risk Decarbonization Plan, we accelerated our commitment to proactive risk management and organisational resilience. awareness into our business activities and overall strategy, achieve net-zero emissions across our operations and value as well as corporate governance and risk management chain to 2040 ten years earlier than the Paris Agreement With the understanding that collective effort is required activities. Looking ahead to our shared future, we remain goals. In this Report , we further announce that we were one to solve climate challenges, we built on our long-standing committed to leading as a resilient company that supports of only a handful of companies to obtain the SBTi validation commitment to work with a wide range of partners.

5 In 2021, better business, better lives and better solutions through a on our long-term net-zero science-based target by 2040. we became a Founding Member of the Net Zero Financial more sustainable global world. Hear more from Mark Kaye, CFO Services Provider Alliance (NZFSPA), part of the Glasgow We also bring clarity to the complex and interrelated Financial Alliance for Net Zero (GFANZ), and committed to macroeconomic, financial and social impacts of climate align our relevant products and services to net-zero. Further, change through our comprehensive suite of award-winning we expanded our involvement in the development of new environmental, social and governance (ESG) and climate climate and environmental financial disclosures through Mark Kaye solutions. By providing our unique insights, we can help our continued work with the Task Force on climate -related Chief Financial Officer market participants advance their strategic resilience and Financial Disclosures (TCFD) Secretariat and by joining the Moody's Corporation transition to greener, more sustainable practices.

6 Taskforce on Nature-related Financial Disclosures (TNFD). INTRODUCTION TCFD DISCLOSURE LOOKING FORWARD Moody's 2021 TCFD Report 4. ABOUT TCFD Moody's AND TCFD. The Financial Stability Board established the Task Force on Moody's Corporation ( Moody's ) is a global integrated risk This publication is Moody's fourth annual TCFD Report , 2021 Report HIGHLIGHTS. climate -related Financial Disclosures (TCFD) to develop assessment firm that empowers organizations to make building on the public affirmation of support for the TCFD. recommendations for more effective climate -related better decisions. The company's data, analytical solutions that the company's CEO and CFO signed in June 2017. reporting. The disclosure recommendations released by and insights help decision-makers identify opportunities Since then, Moody's has strengthened its own position on Updated physical risk analysis to cover all global and manage the risks of doing business with others.

7 climate action, making significant progress in integrating Moody's office locations and data centers the TCFD are designed to i) "promote more informed assessed for exposure to six physical climate investment , credit and insurance underwriting decisions," Moody's believes that greater transparency, more informed climate and environmental, social and governance (ESG). impacts (flood, windstorm, wildfire, heat stress, and ii) "enable stakeholders to better understand the decisions and fair access to information open the door to considerations into the products and services offered to its water stress and sea-level rise). concentrations of carbon-related assets in the financial shared progress. customers, and in turn, supporting their strategies. sector and the financial system's exposure to climate - Enhanced physical risk analysis to assess downtime related risks.

8 " Addressing climate -related risks is crucial for global This edition of Moody's TCFD Report includes the results and remote working implications to Moody's office economies to move toward more sustainable outcomes. of its updated and enhanced climate scenario analysis. locations with the highest occupancy, including The TCFD disclosure elements are structured around four Moody's strives to achieve best practice in transparency It also includes a progress update on how the company its headquarters, using newly acquired capabilities thematic areas in which organizations operate: Governance, via the TCFD framework, which advances the standard for embeds climate considerations throughout its product and from RMS, a Moody's company. Strategy, Risk Management, and Metrics and Targets. These consistent and comparable climate -related disclosures.

9 Services offering, as well as outcomes from comprehensive Expanded transition risk analysis that considers overarching themes are supported by key climate -related The use of innovative data and advanced analytics TCFD engagement workshops across Moody's key business both carbon pricing and renewable electricity costs. financial disclosures, referred to as recommendations, that provides Moody's stakeholders with an in-depth units to re-assess its current status, and future climate - populate the framework with information tailored to help understanding of risk exposure across the company's related priorities. As per Moody's previous TCFD Report , Updated Moody's financial risk profile capturing investors and other stakeholders understand how reporting operations, suppliers and customers, as well as mitigation forward-looking statements are applied to reflect its current broader climate considerations.

10 Organizations assess and manage climate -related issues. through its strategy and planning. By being a leader in this expectations and assumptions given the best available Assessed climate maturity of critical suppliers. Adoption of the TCFD framework helps promote climate area, Moody's realizes its ambition of playing a pivotal research and modeling as of the date of this Report . These resiliency, and can also support the identification and role in accelerating market transformation to create more statements may differ materially over time due to the Incorporated Moody's customer exposure to high- assessment of climate -related opportunities. inclusive, sustainable economies. In addition, Moody's complexity of variables and outcomes that contribute to emitting sectors. Chief Credit Officer serves as a member of the TCFD, Moody's future emissions scenarios.