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Response to TCFD

Demonstrating our support of the TCFD, we will develop a framework in conformity with its recommendations while maintaining the appropriate disclosure of climate-related financial information.

Governance

The Board of Directors receives periodic (at least once a year) reporting on the status of Group initiatives to counter climate change, with the aim of ensuring that these initiatives receive robust supervision.

In fiscal 2019, the content of such reporting included the current status and the future direction of RSC2030 initiatives. Moreover, the Board of Directors received reports on the top risks the Group may face during the MMP period. These risks were identified based on criteria that name climate change as a major impactor affecting the business environment.

The Board of Directors, including outside directors who account for the majority, engages in multifaceted discussion and reflects its conclusions in the Group’s management strategy and risk management.

Also, the Group SDGs Promotion Committee chaired by president of Resona Holdings meets on a quarterly basis to exercise consolidated supervision of important matters concerning the identification, evaluation, and management of climate change-related opportunities and risks. Members of this committee include presidents of subsidiary banks and the heads of the Corporate Administration Division and risk management divisions as well as officers in charge of corporate and retail banking sales and KMFG’s heads of departments charged with promoting SDGs.

This committee strives to identify and assess climate change-related opportunities and risks while discussing policies on and targets for the Group’s measures to reduce risks and increase opportunities. Conclusions reached by this committee are reflected in the Group’s management strategy and risk management.

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Management Strategy

Business Opportunities and Risks Arising from Climate Change

To measure the impact of climate change, which is highly unpredictable, we have undertaken the qualitative evaluation of opportunities and risks based on two different scenarios involving, respectively, a 2°C and a 4°C rise in global temperatures.

The purpose of this evaluation includes the assessment of estimated impact in the short-, medium- and long-terms, which are defined as approximately 5-, 15- and 35-year periods, respectively.

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  • *Referenced scenarios: IEA Energy Technology Perspectives 2°C Scenario, IPCC Representative Concentration Pathways 8.5, Japan’s Intended Nationally Determined Contribution (INDC), etc.

Status of Carbon related assets (As of March 31, 2020)

Ratio* of lending to energy and utility sectors in the entire portfolio (based on definitions under the Task Force on Climate-related Financial Disclosures (TCFD) recommendations) 1.3%
  • *Total of loans and bills discounted, acceptances and guarantees, foreign exchange, etc. (sum of Resona Bank and Saitama Resona Bank)

Our Management Strategies and Initiatives

The Resona Group anticipates that climate change is highly likely to have a financial impact on its loan assets, the largest category of assets in the Group’s possession. Accordingly, the Group recognizes that the opportunities and risks facing its customers will directly affect the Group through these loans.

The majority of the Group’s loan assets are accounted for by loans furnished to individual and SME customers, suggesting that climate change-related lending risks are dispersed. However, compared with large corporations, SMEs are typically in a disadvantageous position. For example, they have few opportunities to study about how climate change and other social issues may impact their operations while lacking sufficient resources to plan and execute countermeasures.

With this in mind, the Resona Group helps its individual and SME customers, first to expand their knowledge of social issues, including climate change, and then encouraging them to join efforts to resolve such issues. The Group also helps customers identify latent related issues in order to resolve their anxiety about the future. Our service lineup is designed to deal with varying customer needs arising from these actions.

We will continuously expand and step up the initiatives described above with the expectation that this approach will help the Resona Group and its customers work hand in hand to reduce future risks and increase business opportunities.

Initiatives to Help Customers Expand Their Knowledge of Climate Change and Other Social Issues

We create pamphlets and leaflets that communicate the SDGs in a straightforward manner. In turn, these are used for constructive dialogue and informing customers about relevant environmental and social issues.

An introductory booklet on SDGs

An easy-to-read booklet explaining the importance of tackling environmental and social issues and an overview of the SDGs and the Resona Group’s relevant initiatives. This booklet is available at branches and distributed to customers.

The Significant Impact of SDGs on Businesses

Targeting SME customers, this booklet is utilized in the course of sales activities to facilitate dialogue and call attention to the impact of environmental and social issues, including those specified by SDGs, on businesses and the risk of being excluded from supply chains by failing to address them.

Encouraging Customers to Join Efforts to Address Social Issues

We respond to the customer need of supporting solutions to environmental and social issues through the provision of financial products.

Private placement SDGs promotion bonds
Private placement SDGs promotion bonds

To support organizations pursuing SDG-related causes, we donate a portion of proceeds from the commission fees we receive upon the issuance of private placement corporate bonds. By doing so, we meet needs of corporate customers wishing to support the realization of SDGs.

Mirai E-us Project “Mirai Earth”

This investment trust project is aimed at supporting eco-friendly tech companies worldwide via the purchase of relevant stocks or green bonds.

Also, a portion of proceeds earned by Group banks is donated to the Resona Foundation for Future and the Minato Bank Scholarship Society with the aim of assisting children in their pursuit of higher education and thereby nurturing future leaders.

Initiatives to Help Customers Identify and Resolve Latent Issues

We provide financial products and services that support customers' initiatives for addressing a changing environment and society appropriately.

SDGs Consulting Fund
SDGs Consulting Fund

Customers who have registered for funding via this product are also eligible to receive on-the-spot consulting with Resona Research Institute. This consulting service is free of charge and includes the following three options to meet differing needs in light of the areas of customers’ interest.

  • Assistance in implementing supply chain risk countermeasures
  • Assistance in executing a mapping method aimed at clarifying relationships between customer businesses and SDGs
  • Assistance in facilitating an SDG-oriented corporate culture
Private placement Green Bonds

In February 2020, the Resona Group initiated the underwriting of private placement bonds to assist in fundraising for green projects, such as those aimed at curbing global warming, popularizing renewable energy and otherwise addressing environmental concerns.

Looking ahead, we will continue to deliver a variety of products and services designed to help resolve environmental and social issues.

Risk Management

Based on risk categories , such as credit risk, operational risk and reputational risk, the Group strives to address climate change-related risks via periodic Group SDGs Promotion Committee sessions aimed at identifying and evaluating the status of such risks, and renews the content of relevant risk management methods on a quarterly basis.

Having identified climate change-related risks as contributing to uncertainty, the Group began to update its existing risk management process to incorporate issues arising from such risks into definitions and risk management methods in each risk category.

Furthermore, the Resona Group aims to mitigate risks that may affect itself, its customers and society as a whole by, for example, introducing Initiatives for Socially Responsible Investing and Lending. In these ways, we are implementing a stepped up corporate management approach aimed at helping realize a low-carbon, recycling-oriented society.

Initiatives for Socially Responsible Investing and Lending

Metrics and Targets

In line with the RSC2030 action plans, the Resona Group has formulated metrics and targets in an effort to help as many customers as possible understand the significance of climate change response and supporting their initiatives.

These action plans consist of annual action plans to secure a PDCA framework for annually evaluating the outcomes of the aforementioned efforts.

Also, in FY2019, we drew up new medium-term reduction targets for the entire Group including Kansai Mirai Financial Group, with the progress of targets published in "Environmental Load Reduction in Our Offices".

Key action plans for FY2020

  • Promote SDG-themed dialogue with investees
  • Step up the integration of ESG issues into investment judgements
  • Employ an external agency to practice and promote engagement with investees, via, for example, the exercise of voting rights
  • Extend a total of ¥126.0 billion in SDG-related financing
  • Provide SDG-related consulting services to a total of 130 clients
  • Provide a total balance of ¥31.2 billion in SDG- and ESG-related funds, including those associated with the “Mirai E-us Project,” to 28,500 clients
  • Hold seminars themed on environmental concerns that should be addressed in the course of real estate management
  • Proactively extend funding for the popularization of renewable energy and otherwise support environmental preservation activities