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Environmental and social risk in loan (credit) activities

SMBC believes that it is important to factor in environmental risk when deciding whether to extend credit. Factoring environmental risk into credit assessment (environmental credit risk) is stipulated in our Credit Policy, which clearly indicates general and basic concepts, guidelines and standards based on our mission and Code of Conduct.
For example, to deal with the risk of soil and asbestos contamination in real estate pledged as collateral, certain conditions are set, and a risk assessment is compulsory. When the risk is judged to be too high for a collateralized property, the assessed value of the potential risk is deducted from its value.
In our Credit Policy, the production of cluster bombs is also stipulated as one area of fund use where credit is prohibited.

Managing environmental and social risk in large-scale development projects

Large-scale development projects may have significant impacts toward society and the environment; therefore, international civil society requires financial institutions to assess the environmental and social impacts of projects when providing financial support. SMBC adopted the Equator Principles in December 2005 and established the Environment Analysis Department (EAD) within the International Banking Unit in January 2006 in order to not only ensure that the projects we finance are developed in a manner that is socially and environmentally responsible but to also fulfill SMBC’s corporate social responsibility (CSR) and provide high-quality financial services across the globe. The Equator Principles are a set of guidelines developed by private financial institutions for managing environmental and social issues related to project financing.