Response to climate change

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Climate change is one of the primary global issues to be addressed in the 21st century. Based on this recognition, the Paris Agreement was adopted and came into force in 2016. In order to attain the long-term goals set under this agreement, including restricting the rise in average global temperature to within two degrees Celsius above preindustrial levels, countries have presented their greenhouse gas emission reduction targets to the United Nations and are implementing relevant measures. Developed countries are pressing forward with measures to create a decarbonized society while according to the report by International Energy Agency (IEA), constructions of new coal-fired power plants are still underway in some Asian countries. In addition, the Japanese government has set the target of reducing the country'fs greenhouse gas emissions by 80% by 2050.

We have announced our support of the TCFD*1 at the "One Planet Summit" held in Paris in December 2017. Simultaneously, we will continuously support our customers in their efforts to reduce greenhouse gas emissions by such measures as promoting the introduction of environment-friendly technologies through their business operations. Being committed to reducing greenhouse gas emissions, we will conduct business in a manner that contributes to the growth of both our customers and society, and will further enhance our actions towards climate change.

  • *1The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board(FSB) in April 2015 to urge individual companies to disclose their impact on climate change in their financial reports.

Governance on Climate Change

We deem the creation of a sustainable society as one of the priority issues and have established environmental policies to continuously implement measures to harmonize corporate activities with protection of the global environment and prevention of pollution.

Also, to mitigate the impact of climate change, we will review our credit policy for specific sectors on regularly and also report to Management Committee and the Board of Directors appropriately.

Climate Change-Related Opportunities

Discussion with French investors about green bonds

To create a low-carbon society with low emissions of greenhouse gases, we will give support to the following initiatives: projects that contribute to the mitigation of the impact of climate change, including those related to renewable energy and green buildings; investments made by companies to increase their energy efficiency; projects to improve infrastructures and others for the creation of cities and communities that are resilient to climate change; and efforts to establish sustainable lifestyles. For renewable energy projects, our syndicated loan amount reached about 300 billion yen in fiscal 2017. We will continue to give support proactively to such projects.

Kawazu wind farm project

In addition, we have issued green bonds following the guidelines set by the International Capital Market Association (ICMA) and the Japanese Ministry of the Environment, in order to facilitate environmental businesses and reduce the environmental impact. We also support the issuance of and investment in green bonds by our customers as part of our ceaseless effort to help customers meet their climate change-related needs.

Management of Climate Change-Related Risks

We will identify the sectors that have assets which might suffer loss due to abnormal weather, assets that are vulnerable from the viewpoint of climate change, such as fossil fuels, and assets that might be stranded, and appropriately evaluate the influence from climate change on the risk exposure of those sectors.

Especially for new financing to a coal-fired power plant, we will conduct examinations in line with the certain criteria depending on where the plant will be constructed. In addition we will make effort to reflect the results of risk quantified through scenario analysis and stress test carried out to assess the impact of climate change, to our managerial decisions.

Simultaneously, we are well aware of the need to make assumptions about the influence on our own business from regulations set for climate change mitigation and adaptation, revisions made to these regulations, including the possible introduction of a carbon tax, and by the changes made to our stakeholders' behavior due to climate change issues.