Responsible investment and financing
Mizuho positions the promotion of responsible investment and financing as key initiatives in the FY2016–18 CSR Initiative Policy. Additionally, we are strengthening our stance on responsible investing and financing from a risk management perspective.
Some of the ways in which we have already been focusing on responsible investing and financing include our subsidiary Mizuho Bank applying the Equator Principles in relation to the financing of large–scale development projects, and our subsidiaries Mizuho Trust & Banking and Asset Management One putting an emphasis on stewardship responsibilities.
As part of our commitment to further strengthening our stance on responsible investing and financing, in May of 2018, we established Policies on Specific Industrial Sectors, which takes into account our Policies for Environmental Initiatives as well as our Human Rights Policy.
Policies on Specific Industrial Sectors
The Policies on Specific Industrial Sectors affirm our commitment to considering risks such as environmental and social risks when engaging in business with clients in certain industries (such as weapons, coal–fired power generation, palm oil, and lumber) where there is a high possibility that our involvement with the client could contribute to adverse environmental or social impacts. We will determine whether to extend credit or assist with capital raising for such 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.
Additionally, Mizuho Bank, Mizuho Trust & Banking, Mizuho Securities, and Mizuho Americas have put in place an operational framework for implementing these policies which will be in effect from June 15, 2018.
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. Not only must our credit decisions abide by our Policies on Specific Industrial Sectors, but 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 private 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 improving and fostering the investee companies' enterprise value and its sustainable growth through constructive and purposeful dialogue (engagement) as well as exercise of its proxy voting rights will enhance the medium– to long–term investment return for its customers.
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.