Responsible investment and financing
Mizuho positions "responsible investment & financing, and respect for human rights" as one of our key sustainability areas (materiality). Additionally, regarding our stance on responsible investment and financing from a risk management perspective, we are addressing issues based on the changes in the external environment and the status of responses by internal management.
An overview of responsible investment and financing
Environmental and Social Management Policy for Financing and Investment Activity
Our Environmental and Social Management Policy for Financing and Investment Activity specifies the transactions which are prohibited or require additional due diligence regardless of sector, and certain sectors (such as weapons, coal–fired power generation, coal mining, oil and gas, palm oil, lumber and pulp), where there is a particularly high possibility of contributing to adverse environmental or social impacts. We will determine whether to extend credit or assist with capital raising for such projects and clients after confirming the measures which the client is taking to avoid or mitigate such risks, and other due diligence as appropriate based on the characteristics of the services we are providing.
These policies will be periodically revised according to changes in the external environment and the results of policy implementation, with the aim of enhancing policy management.
As a global financial institution, Mizuho is committed to meeting the banking needs of the communities in Japan and around the world where it operates. To deliver on its responsibilities as a bank, and for the sound development of economies and societies, Mizuho draws on its sophisticated risk–taking capabilities structured within its firm risk management framework.
Additionally, Mizuho’s Credit Code, which stipulates our basic approach, guidelines, and lending criteria, emphasizes the importance of utilizing the provision of credit as a means of contributing to the sustainable development of the economy and the society as well as solving social issues. In fact, one of the lending criteria in this Code is whether the extension of credit will contribute to the sound development of the economy and the communities we serve.
Credit decisions must be made after examining the recognized risks based on our Environmental and Social Management Policy for Financing and Investment Activity, and we also engage in dialogue with customers regarding medium– to long–term environmental and social issues.
We also seek to take environmental and social impact into consideration and manage risk through the following initiatives.
We recognize that large–scale development projects may have adverse impacts on the environment and local communities. To minimize and/or mitigate the environmental and social risks associated with such large–scale developments, Mizuho Bank works together with the project proponents (clients) to conduct appropriate environmental and social risk assessment/due–diligence as required under the Equator Principles*.
- *The Equator Principles are a set of voluntary guidelines adopted by financial institutions to ensure that large–scale development or construction projects appropriately consider the associated potential impacts on the natural environment and the affected communities.
Mizuho Bank takes seriously our obligations to conduct appropriate environmental due diligence based on our environmental and social risk assessment expertise when providing finance for projects under the Japanese Ministry of Environment's interest subsidy program for promoting environmental impact assessments.
Assessments of Environmental Risk related to Real Estate Collateral
To deal with environmental risk in real estate, including pollution of the soil, usage of asbestos, and other issues related to real estate collateral, we implement assessments of environmental risk when certain established conditions apply. When risks are judged to be above a specified level, the amount corresponding to the assessed risk is deducted.
Investment (Asset Management)
Mizuho believes that giving appropriate consideration to ESG (environment, social, and corporate governance) and other aspects through responsible investment initiatives to improve and foster the investee companies' sustainability and enterprise value will enhance the medium– to long–term investment return for its customers, and furthermore contribute to the flow of funds supporting the development of a sustainable society.
Mizuho's trust banking arm, Mizuho Trust & Banking, and Asset Management One have established the following policy and are working to promote responsible investment initiatives. MHTB and Asset Management One are taking initiatives to implement their stewardship responsibilities and promote ESG investing by accepting and setting policies to put into practice Japan's "Principles for Responsible Institutional Investors (Japan's Stewardship Code)." Mizuho believes these activities are important for fulfilling their proper roles as responsible institutional investors.
In addition, these two entities have signed on to the UN Principles for Responsible Investment (PRI), which ensure that institutional investors and pension funds, etc., incorporate environmental, social, and corporate governance (ESG) considerations into their decision–making processes.
MHTB and Asset Management One are also strengthening their ESG investment initiatives by incorporating ESG–related issues and engagement into their investment strategies and giving consideration to ESG issues in exercising their proxy voting rights.
Mizuho publishes details of Asset Management One's stewardship activity framework and its ESG investments.
Based on its internal regulations, MHTB confirms the presence or absence of environmental risk not only when real estate assets are placed in trust but also periodically thereafter with the objective of promoting appropriate liquidity in real estate markets. Moreover, with a view to the possibility of taking remedial action that may become necessary following changes in regulations, MHTB specifies measures to be taken and time limits in relevant trust contracts for implementing such measures and monitors the progress.