Addressing Climate Change (Initiatives based on TCFD Recommendations)
Climate change is closely tied to various economic and social issues, and we recognize that addressing climate change is an important issue over the medium to long term. As a financial services consulting group, we are dedicated to engaging in dialogue with clients and other stakeholders as a trusted consultant, and we are proactively addressing climate change to support the shift to a low–carbon society. While engaging in such efforts, we will also take care to properly consider the stable energy supply in the related countries.
We support the intent and aims of the Task Force on Climate–related Financial Disclosures* (TCFD)’s proposals and will conduct initiatives based on the TCFD framework and work toward more advanced disclosure.
- *A task force led by representatives of the private sector, established in December 2015 based on recommendations from the Financial Stability Board in order to enhance availability of corporate information related to climate change; issued final report (recommendations) in June 2017.
We have identified key sustainability areas, including responses to climate change, and incorporated them into our 5–Year Business Plan, based on deliberation by our Executive Management Committee and Board of Directors. These will enable us to advance our sustainability initiatives in line with our strategy.
We have also developed an action plan for staged implementation of initiatives matching the Recommendations of the TCFD. The Executive Management Committee has deliberated on the action plan, and it has been presented to the Board of Directors and Audit Committee.
When designing our new business plan, we identified climate–related risks and opportunities for each in–house company, unit, and group.
Mizuho recognizes the following risks, opportunities and impacts on business activities related to climate change, and based on this will actively promote financial products and services that help mitigate climate change or facilitate adaptation to it in order to support the transition to a carbon–free society such as financing for renewable energy projects and issuance of green bonds. At the same time, we will conduct appropriate risk management based on international concerns, trends and other factors.
- Promotion of environmental financing
- Surveys and studies on environment and energy policy; promotion of environmental management consulting
- Issuance of green bonds
- Increased business opportunities, including provision of solutions that support customers in transitioning to a de–carbonized society, such as financing for renewable energy projects
- Improvement of capital markets and social reputation through appropriate initiatives and disclosure; etc.
- In terms of climate–related risks, we are taking into account both physical risks and transition risks.
- Our physical risks include operational risk and credit risk related to the possibility of extreme weather causing damage to Mizuho's assets (such as data centers) and to customer assets (such as committed real estate collateral).
- Our transition risks include increased credit risk related to investments in and loans to clients who are impacted by their own transition risks in the form of more stringent carbon taxes, fuel efficiency regulations, or other policies.
- Using the definitions from the Recommendations of the TCFD, our energy sector and utility sector1 credit exposure comes to approximately 7.2% of our total credit exposure.2
- 1Excluding water utilities, nuclear power and renewable energy.
- 2Total of Mizuho Bank and Mizuho Trust & Banking's loans, foreign exchange assets, acceptances and guarantees, and committed lines of credit etc. as of March 31, 2019.
We continue to look into methods for climate–related scenario analysis of physical risks and transition risks through participation in the UNEP FI pilot project and other means.
We recognize the physical and transition risks associated with climate change and have constructed a system for addressing these risks through a comprehensive risk management framework that includes credit risk management and operational risk management.
We are also applying the Equator Principles* and acting in line with our Environmental and Social Management Policy for Financing and Investment Activity. As part of this, we are engaging in dialogue with some of our clients in the energy sector and utility sector.
As a financial institution, we are working to reduce climate–related risk for our clients and ourselves by supporting our clients' transition to a carbon–free society.
- *A financial industry benchmark for determining, assessing, and managing environmental and social risk in investment projects.
Management systems for responsible investment and financing
Mizuho promotes the following initiatives for reducing environmental and social risks, including those related to climate change.
- Application of Equator Principles to project finance, etc.
- Creation of Environmental and Social Management Policy for Financing and Investment Activity to reduce or avoid environmental and social risks and reinforcement of due diligence
- Engagement with portfolio companies through Asset Management One
Indicators and targets
Mizuho sets environmental targets and manages indicators as follows.
CO2 emissions basic unit: CO2 emissions / total floor area
(electricity usage at Japanese facilities of Mizuho Financial Group and core group companies)
Long–term target: Reduce by 19.0% from FY2009 levels by the end of FY2030
Medium–term target: Reduce by 10.5% from FY2009 levels by the end of FY2020
Green finance/sustainable finance amounts
Scope 1 (direct energy consumption) and Scope 2 (indirect energy consumption) CO2 emissions and energy usage
Scope 3: Environmental impact of new large-scale power projects (CO2 emissions) and environmental conservation (CO2 emission reductions)
We are continuing to look into setting science–based targets.