Activity Report

Sumitomo Mitsui Financial Group, Ltd. (President and Group CEO: Toru Nakajima, hereinafter, the group is collectively referred to as the "SMBC Group") participated in the United Nations Climate Change Conference, also known as the Conference of the Parties of the UNFCCC (COP29), held in Baku, Azerbaijan, and disseminated three key recommendations for accelerating climate change measures through seminars and events at the pavilions.

COP29, often referred to the Finance COP, resulted in an agreement to raise the target for climate finance to support climate action in developing countries. At the venue, various stakeholders actively discussed addressing the financing gaps in climate change countermeasures.

Masayuki Takanashi, Group Chief Sustainability Officer, took the stage at seminars and events on energy transition, adaptation, natural capital, and more, held at the pavilions of various countries and international organizations. He delivered messages and deepened discussions from three main perspectives.

1. 1. To achieve a decarbonized society, it is important to support efforts in regions and sectors where technological and economic alternatives are limited, making a swift transition challenging. It is necessary for society as a whole to engage in energy transition by formulating decarbonization roadmaps for each country and sharing the additional costs associated with decarbonization.
2. 2. In energy transition, considering a "just transition"* is crucial. The SMBC Group has established a working group consisting of various stakeholders and has begun discussions to formulate guidelines that financial institutions can use in practice.
   1. * A just transition ensures that all stakeholders transition to a decarbonized society in a fair and inclusive manner, maintaining appropriate employment and leaving no one behind.
3. 3. Climate change measures should not only focus on reducing greenhouse gas emissions but also address the introduction of adaptation strategies to avoid and mitigate damage from climate change impacts, contribute to the conservation and restoration of natural capital, including biodiversity, and address funding gaps across a wide range of areas.

In conjunction with COP29, the SMBC Group has released the "Transition Finance Scorebook 2024" (hereinafter referred to as the "Scorebook") [1], which compiles practical operational results and challenges related to transition finance. In May 2023, the SMBC Group published the "Transition Finance Playbook" (hereinafter referred to as the "Playbook"), which outlines the company's definitions and criteria for transition finance.

Based on the Playbook, the SMBC group has been steadily building a track record in supporting clients' transitions by engaging in dialogue with stakeholders both domestically and internationally to achieve a decarbonized economy.

The Scorebook summarizes the lessons learned, challenges identified, and recommendations for solutions from this experience. It aims to contribute to the further development and deepening of discussions with stakeholders and to assist in realizing a decarbonized society.

The SMBC Group will continue to deepen discussions with various stakeholders in the international community and work as a group toward the realization of a decarbonized society.

[1] Publication of "Transition Finance Scorebook 2024"