- *As of FY2016. SMBC Friend Securities has formed a merger with SMBC Nikko Securities in January 2018.
Promotion of Environmental Businesses
SMFG group considers that environmental businesses are means to preserve and improve the global environment while each company pursues its core business operations as a financial institution.
Here we introduce SMFG group’s environmental products and services.
Please refer to the following regarding project finance for renewable energy projects overseas
Promoting Business with Proceeds from Bond Issuance (SMBC)
SMBC has issued “green bonds” on overseas markets since October 2015. The funds procured from these bonds (proceeds from issuance) go to environmental projects such as renewable energy and energy conservation initiatives (qualified “green” projects). (Issue proceeds prior to being appropriated to qualified green projects are placed in short-term assets such as cash.) SMBC also has a strong track record in project finance for renewable energy projects in Japan and overseas, including solar and wind power generation. Issuing the bonds allows the bank to contribute even more to maintaining and improving the global environment through the abovementioned project finance initiatives.
Appropriation of issue proceeds to qualified green projects is reported every year on SMBC’s website. The reports include green impact assessments from the qualified green projects. The assessments involve comparing quantitatively under fixed conditions the difference in environment benefits between implementing and not implementing a project with investment and financing.
For further details about the bonds, please refer to the following website.
For further details about the bonds, please refer to the following website.
Promoting Environmental Finance
SMBC is developing financial solutions to support to work of a wide range of customers engaged in tackling various social issues such as of environmental problems for resource and energy conservation or, global warming; countermeasures for natural disasters; or ensuring food safety.
Assessment-Based Finance Programs (SMBC)
|This loan product offers reductions of interest rates up to 0.25% for SMEs certified with environmental management systems by more than 20 organizations, including NPOs and local governments.|
|Terms and conditions for these loans and bonds are set forth according to the assessment conducted on the company’s environmental measures, pursuant to the environmental assessment standards originally created by SMBC and JRI, and SMBC determines terms and conditions for loans or private placement bonds according to the results of such assessment.
The financing method may be selected from either loan or private placement bond.
|SMBC revised and improved evaluation methods for existing "SMBC Environment Friendliness Assessment Loans and Private Placement Bonds" especially made for medium-sized and small-to-medium-sized companies which have more assessment needs for the degree of environment friendliness. As for fund raising, SMBC conducts quantitative assessment according to the assessment criteria created by SMBC and follows with a qualitative assessment based on interviews conducted by environment friendliness assessment agency, and the final and comprehensive assessment results will be provided to clients in the form of "Environmental Management Analysis Report."|
|Assesses and supports the measures taken by clients for safety and security of food, and agriculture|
|Terms and conditions for those loans and bonds are set forth according to the assessment conducted on the buildings owned or to be constructed by companies, pursuant to the assessment criteria created by SMBC and Woonerf Inc. (previously CSR Design & Landscape Co., Ltd.), for environment friendliness for “energy” and “water,” etc., seismic adequacy required to maintain the sustainability, measures taken for “risk management” of such matters as BCP; and “business manager’s policies and practices” promoting such assessment criteria.|
|Assesses and supports the measures taken by clients for business sustainability in the event of emergencies such as earthquakes, floods, etc.|
|Terms and conditions for those loans and bonds are set forth by SMBC, according to the assessment conducted on the measures taken by clients for the Environment, Society and Governance (“ESG”) and appropriateness of information disclosure, pursuant to the assessment criteria created by SMBC and JRI.|
Ministry of the Environment and Ministry of Economy, Trade and Industry subsidized-interest financing program
|The subsidized-interest financing program from the Ministry of the Environment and the Ministry of Economy, Trade and Industry provides interest subsidies under certain conditions on loans for capital investments that reduce CO2 emissions. SMBC has been certified for utilization of this program as a financial institution and thereby supports companies engaged in environmental measures.|
|Assess and support initiatives for women’s advancement|
|Assess and support initiatives that promote innovation management|
Recycling / Reuse Initiatives Through Leases (SMFL)
SMFL promotes the implementation of leasing low-carbon emission equipment which meets the criteria set forth by the Ministry of the Environment, by utilizing the subsidies provided by the Ministry for such leases.
In addition, real property with expired leases or machinery and equipment purchased from clients are being sold to other clients. SMFL strives to become a leasing company that is environmentally friendly, implementing measures for recycling and reuse by purchasing and selling the second-hand machinery.
Initiatives for Environmental Protection through Investment
Environmental Campaign Program for Japanese Government Bonds for Individuals (SMBC)
SMBC runs the “SMBC Green Program” to contribute to the environment using a portion of the proceeds when customers purchase Japanese Government Bonds (JGBs) for individual investors. Under the program, for each customer purchasing the bonds, greenhouse gases equivalent to 100 kg are reduced or the equivalent of 1 m2 of trees is planted (through forest maintenance, etc.). Purchases of JGBs for individual investors by the bank’s customers are transformed into effective measures for protection of the global environment.
Main Environment-Related Products Handled (SMBC Nikko)
|Nikko Eco Fund||This is the SRI fund, which was first offered in Japan in 1999 and takes into account environmental perspectives and invests in shares of potential growth companies which either excel in appropriately responding to environment-related issues or conducting businesses associated with the environment.|
|Invesco Women’s Power Focus Japan Equity Fund (nickname: Kabu Komachi)||This fund researches the economic effects, etc. of women’s consumption and employment and invests in the stock of companies whose growth potential can be expected to recover through improvement in internal and external fundamentals and other factors and companies projected to provide inexpensive variations while maintaining growth potential.|
|Nikko DWS New Resource Fund (nickname: Rising Tomorrow)||This fund invests mainly in shares of companies around the world with growth potential and that conduct businesses associated with the three most discussed issues of (1) water; (2) agriculture; and (3) alternate energy, to accommodate fluctuating or increasing global demand.|
|UBS Climate Change Fund (nicknamed “Cool Earth”)||This fund invests in shares of countries around the world that have innovative technology with respect to preventive measures for global warming and are anticipated to have substantial growth in the future.|
|Schroder Asia Pacific Excellent Companies||This fund primarily invests in the stock of Asia Pacific companies, including Japanese companies, through the Schroder Asia Pacific (Ex. Japan) Equity Sustainable Investment Mother Fund and Schroder Japan Equity Sustainable Investment Mother Fund.
The fund selects the issues of companies for which sustained profit growth is expected while also incorporating an ESG perspective.
Currency hedges are not conducted in principle for foreign-denominated assets.
|Asahi Life SRI Social Contribution Fund (nickname: Asu no Hane)||This fund invests in the stock of companies that contribute to society through active engagement in social issues through their businesses.|
|Sompo Japan SRI Open (nickname: Mirai no Chikara)||This fund invests in the stock of companies with exceptional CSR (corporate social responsibility) initiatives.|
|Japan SRI Open (nickname: Kizuna)||This fund evaluates companies from both financial and CSR perspectives and invests in companies with a high potential for sustained growth through fulfilling social responsibilities.|
|Social Responsibility Fund (nickname: SRI Keikaku)||This fund invests in the stock of companies that conduct activities with an active awareness of CSR (corporate social responsibility).|
|Nikko World Trust-Nikko Green New Deal Fund||This fund invests in shares of companies located in countries where high growth is anticipated through their environmental preservation activities, focusing on the “Green New Deal” policy for economic recovery based on measures required for global environment.|
|DWS New Resource Technology Fund (nickname: Global Shift)||This fund invests mainly in shares of companies around the world with growth potential and that conduct businesses associated with the three most discussed issues of (1) local infrastructure; (2) food; and (3) clean energy, to accommodate fluctuating or increasing global demand.|
|Fidelity Three Basic Fund (nickname: Energy of Water and Land)||This fund invests in the stock of companies involved in clean energy, the water business, and food business.|
|Tokio Marine Select World Equity Fund (nickname: Premium World)||This fund invests in global equities related to the three areas of the environment, water and food, and medicine and health, which must be maintained and improved globally.|
|Eco-Fund Pension Fund||This fund actively invests in shares of Japanese companies that are implementing excellent responses to environmental issues or conducting business related to the environment.|
|The World Bank (Green Bond)||SMBC and SMBC Nikko Securities offer the Nikko World Bank Bond Fund co-developed with the World Bank (nicknamed, "The World Bank Green Fund"). This fund was the first in the world to invest in green bonds* (data provided by Nikko Asset Management Co., Ltd.).
A portion of earnings from the fund is donated to the Japan Committee for UNICEF and the Japanese Red Cross Society to be used to resolve any social conflicts around the world.
*This fund invests in green bonds, which are one of the bonds issued by the World Bank. In principle, the funds procured through the issuance of these bonds are used only for lending to global warming countermeasure projects in emerging countries.
Environmental Sustainability Bonds (SMBC Friend)
SMBC Friend Securities plans and sells products that allow clients through investment in securities to support businesses and projects that address environmental problems and other social issues.
One of the company’s core products is Environmental Sustainability Bonds, which are issued to support environmental projects like natural energy development and reforestation. The company also works to provide information on support recipients, for example by introducing on its website environmental projects that have received financing.
Environmental Sustainability Bonds System
Issue of “Chikyuni Yasashii Card” for Environmental Contributions through Credit Cards (Cedyna)
Cedyna issues “Chikyuni Yasashii Card,” a social contribution-type credit cards that supports global environmental protection. When card members use their cards for everyday things like shopping and dining out, a portion of the money spent is donated by Cedyna to organizations involved in global environmental protection at absolutely no charge to card members. The card has been issued since 1991, and in fiscal 2016 approximately ¥17.0 million was donated, bringing the cumulative total to approximately ¥716.0 million.
For details regarding various activities, please refer to the following website.
Emissions Credit-Related Business (SMBC)
SMBC has promoted business activities related to emissions credits* since 2005.
- *Emissions credits are also referred to as offsets or carbon credits, but in this context “emissions credit” is a general term for emissions quotas or certified reduction amounts, etc., established under the Kyoto Protocol.
Emissions Trading Related Business (Advisory and Consulting Services)
SMBC provides a wide variety of services in collaboration with its overseas affiliates, including referrals of developing country sellers to customers looking to acquire emissions credits, advisory services to support transactions, and financing. For example, the Japanese government is working to build a mechanism for technology transfers, etc. to developing countries to enable Japan to contribute to the reduction of greenhouse gases globally. SMBC has in response proposed a joint crediting mechanism (JCM) and provides advisory services in partnership with Group companies for customers in Japan.
SMBC Brazil partnered with the Bank of Brazil, the largest bank in the country, in July 2006 to strengthen its system for identifying products under the Clean Development Mechanism (CDM) program, and in December 2006 introduced emissions credits equivalent to 1.5 million tons of CO2 to Japan’s Chugoku Electric. It was the only project involving a Japanese bank to be nominated for a Sustainable Banking Award 2007, an awards program run by the Financial Times newspaper and others. SMBC also has a consulting subsidiary in Brazil that supports CDM project development and owns a stake in a sustainability fund led by the Brazilian Development Bank while providing environment-related advisory services for the fund.
Handling of Joint Crediting Mechanism Projects
SMBC provides financial support for energy conservation and renewable energy development projects being conducted overseas with environmental technologies from Japan in connection with the Joint Crediting Mechanism (JCM) being promoted by the Japanese government to help reduce emissions of greenhouse gases. Since fiscal 2010, the bank has conducted various business surveys for over twenty projects, primarily in Asia and Central and South America, while planning and developing financing schemes.
In fiscal 2014, the bank participated in a study of an energy conservation project involving switching from a mercury-based process to ion exchange membranes at a caustic soda and chlorine manufacturing facility in Central and South America. The study focused on converting from the conventional, energy-inefficient mercury-based process to the highly energy efficient ion exchange membrane method. The ion exchange membrane method is an environmentally considerate technology that conserves energy while also helping reduce use of mercury.
Use of mercury in the manufacturing process for caustic soda and chlorine will be banned beginning in 2025 under the Minamata Convention on Mercury, which goes into force in August 2017. Thereafter, mercury use is expected to decrease as worldwide caustic soda and chlorine manufacturing plants convert from a mercury-based process to ion exchange membranes.
Going forward, SMBC intends to utilize JCM to support overseas application of exceptional Japanese environmental technologies. It will also take on environmental problems such as climate change and mercury, and continue to contribute to the development of a sustainable society.
Consultation for Environment-Related Business
Consultation Business for the Amended Energy Saving Act (SMFL)
It strengthens its advisory services by appropriately accommodating the Amended Energy Saving Act for proposing comprehensive energy saving measures by utilizing leases.
Environmental Advisory Business (JRI)
It engages in numerous environmental projects mainly in the energy and smart community fields.
It strives to contribute to the resolution of global-warming issues and development of environment-friendly businesses by the creation of new businesses.
Proposals for Energy-Related Policies (JRI)
The Great East Japan Earthquake led to the substantial review of the Japan’s energy policy.
JRI makes recommendations and proposals for energy systems of next-generation and energy strategies for Japan.
For detailed examples from JRI, please refer to the following website.
Creation of Environmental Business (SMBC)
Initiatives for Growth Sectors
SMBC has identified eight specific growth sectors as a growth industry cluster: new energy, the environment, water, natural resources, infrastructure, healthcare, agriculture, and robotics, and promotes the creation of new business opportunities in these sectors for customers. Drawing on broad-ranging knowledge and networks developed through industry-government- academia alliances in Japan and overseas, the bank provides support for renewable energy projects, conducts commercial feasibility surveys for the water business, and provides business support in healthcare, agriculture and other areas.
Wastewater Treatment Business Research in Vietnam’s Da Nang Industrial Zone
In the water sector, one of eight growth fields, we worked with multiple Japan-affiliated companies to conduct surveys for a wastewater treatment project in the Da Nang Industrial Zone in Vietnam, a fiscal 2011 Ministry of the Environment model project for environmental improvement in Asia. Drawing attention as a manufacturing alternative to China (in the “China Plus One” model), Vietnam is facing the issue of improving its water environment as industrialization proceeds. Going forward, we intend to continue helping improve the water environment through surveys and other activities.
Project Financing for Renewable Energy (SMBC)
For many years now, SMBC has been providing project finance for renewable energy businesses such as solar power generation and wind power generation in Japan and overseas. The bank as a strong track record in this area.
For further details on project finance, please refer to the following website.
Project Finance in Japan
In Japan, SMBC has provided financing for solar power projects since before the introduction of a feed-in tariff scheme in July 2012. Making maximum use of its accumulated know-how, SMBC actively engages in renewable energy products, including solar, wind, and biomass, which has been gaining momentum in recent years.
Overseas Project Finance
The bank actively conducts project finance for renewable energy projects overseas as well, in the Americas, Europe, the Middle East, Africa, and Oceania and Asia regions.
For further details, please refer to the following website.
Environmental Benefits of Renewable Energies
SMBC is involved in project finance for numerous power generation projects using renewable energies.
Renewable energy does not, in principle, emit CO2, so generating electricity with it makes it possible to reduce by that same amount the CO2 emitted from use of non-renewable energies like coal, petroleum and natural gas at conventional power plants. Supporting these projects and helping thereby to reduce CO2 emissions serves to reduce environmental impact.
The following shows annual CO2 reductions from project finance initiatives in fiscal 2016 that involve renewable energy projects overseas. CO2 reductions are calculated by determining annual estimated power generation based on the type of renewable energy and on generating capacities and facility utilization ratios, etc. at the target facilities in each country and then multiplying that value by the electric power emissions factors of each of the countries. The calculations do not take into account the proportion of financing provided by SMBC with respect to total project costs (financing share).
|Type||By Country||Facility’s generating capacity*1 (MW)||Annual estimated power generated*2 (MWh)||Annual CO2 reduction*3 (t-CO2)|
|Wind power generation||Chile||115||241,776||97,194|
|Solar power generation||Chile||215||263,676||105,998|
|Hydro-electric power generation||United States||296||1,166,832||567,080|
|Biomass power generation||United Kingdom||299||2,300,000||949,900|
- *1Facility capacity = Financed project total (total output)
- *2Annual estimated power generated = Facility capacity × Annual time × Facility utilization rate
- *3CO2 reduction = Annual estimated power generated × Power emissions factor
- *4Source: Facility utilization ratios for wind power use figures for onshore and offshore wind farms from the European Wind Energy Association.
Solar, hydro and geothermal figures are from the "Report on Verification of Power Generation Costs, etc. to the Long-term Energy Supply and Demand Subcommittee" dated May 26, 2015. Figures for biomass power are calculated based on information disclosed by project operators.
Emissions factors are from the IEA’s "CO2 Emissions from Fuel Combustion 2016 Edition."
Overseas Alliances Related to Environmental Business (SMBC)
In emerging countries, the need for economic development that is balanced with the global environment is driving remarkable progress in local environmental business markets. SMBC has signed multiple memorandums of understanding (MOUs) for building bridges with Japanese companies with environmental technologies in emerging countries, financing environment-related projects, and providing know-know on emissions credit trading. Through these and other efforts, the bank continues to work to strengthen its environmental business networks with emerging countries.
Going forward, we will utilize our environmental business knowledge and experience as a diverse financial group to meet a variety of needs in environment and energy and other fields.
List of Service Agreements
|February 2011||Uzbekistan||A memorandum of understanding was concluded with the National Bank for Foreign Economic Activity of the Republic of Uzbekistan, the country’s largest state-run bank in terms of assets, in connection with a business alliance to provide various trade financing related to trade between Japan and Uzbekistan as well as financial services for Japan-affiliated companies doing business in the country and local Uzbekistani companies to acquire new business opportunities in the environmental sector, including development projects in Uzbekistan and emissions trading, and to strengthen a collaborative framework for yen settlement operations.|
|June 2011||Estonia||A memorandum of understanding was concluded with Enterprise Estonia, a government institution that handles foreign investment incentives and trade promotion in the Republic of Estonia, in connection with a business alliance to provide financial services for Japan-affiliated companies entering the country’s markets as well as local companies and to acquire new business opportunities in the environment sector, such as development projects in Estonia and emissions trading.|
|March 2012||Mongolia||A memorandum of understanding was concluded with Development Bank of Mongolia (DBM), Mongolia’s only government-affiliated development bank, for financial cooperation for environment and infrastructure projects which reduce greenhouse gas emissions.|
|March 2012||Mexico||A memorandum of understanding was concluded with Petróleos Mexicanos (PEMEX), the largest state-run corporation in Mexico, to support initiatives for reduction of greenhouse gases at the company’s facilities.|
|March 2013||Mongolia||A memorandum of understanding was concluded with Khan Bank, the largest commercial bank in Mongolia, in connection with a business alliance related to cooperation in resource and infrastructure development, financing for the renewable energy and new energy sectors, trade finance, client referrals, and exchange of market entry related information, etc.|
|March 2013||Colombia||Partnering with the Japan Bank for International Cooperation (JBIC), we established a JBIC GREEN credit line for Banco de Bogotá, the second largest commercial bank in Colombia, to provide support for local projects that contribute to greenhouse gas reduction in a two-step loan format.|
|July 2014||Mexico||A memorandum of understanding was signed with Petróleos Mexicanos (PEMEX), the largest state-run corporation in Mexico, related to cooperation in environmental sectors (for reduction of greenhouse gases).|
|October 2014||Chile||A business collaboration agreement was concluded with Production Development Corporation (Corfo), a Chilean government organization, related to collaboration in fund procurement related to renewable energies and mining-related projects.|