Strengthening Efforts against Climate Change
May 15, 2024
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Summary (Major Updates Over the Past Year)
Contributing to Decarbonization of | P.5~ |
the Real Economy | |
- Established Transition Finance Playbook(Power, Oil & Gas, Steel, Automobile)
- Expanding support for energy transition such as early retirement of coal-fired power plants, introduction of renewable energy, etc.
- Support for customers' initiatives by non-financial methods such as visualization of non-financial data and development of business
Governance | P.19~ |
- Established the Sustainability Division for Fulfilled Growth as a dedicated organization aimed at further promoting social value creation
- Held study sessions and roundtable discussions for the Group executives lectured by experts
- Expanded and enhanced training programs for employees
Achieving Net Zero within | P.12~ |
SMBC Group |
Policy
- Revised Policies for Specific Businesses and Sectors(Coal-Fired Power Generation, Thermal Coal Mining, Biomass Power Generation)
Portfolio
Management
- Established new reduction targets for the automobile, steel, and real estate sectors, with the completion of setting mid-term targets in accordance with the NZBA guidelines
- Reduced GHG in investment and loan portfolios for sectors with established mid-term targets (Power, Oil & Gas, Coal)
Customer/Project
Management
- Introduced environmental and social due diligence
Operations
Emissions
- Advanced group-based initiatives to reduce our own GHG emissions towards net zero by 2030
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Approach to Net Zero
Current Medium-Term Management Plan
New | ||||||||
2021 | 2022 | 2023 | 2024 | 2025 | 2030 | 2040 | 2050 | |
Scope1,2 | 2030 | Switch to renewable energy | Mid-term | |||||
SMBC | Self-owned | Target | ||||||
Net Zero | Data centers | Net Zero | ||||||
(Operational GHG) | 40% reduction | |||||||
head office | buildings | |||||||
Commitment | from FY21 | |||||||
Scope3 | 2050 | Set mid-term | Set mid-term | Set mid-term | Achieve | |||
Net Zero | target | target | target | mid-term | Net Zero | |||
(Portfolio GHG) | Power, Coal, | Steel, | targets | |||||
Commitment | Real estate | |||||||
Oil & Gas | Automobile | 6 sectors | ||||||
Loan balance for | Established | Tightening policies | Project finance | Zero Balance for | ||||
coal-fired power | phase-out | for specific | 50% reduction | Project finance and | ||||
generation | strategy | businesses and | from FY20 | Corporate finance | ||||
sectors | tied to facilities | |||||||
Coal | ||||||||
Loan balance for | Established | Tightening policies | Zero Balance | Zero Balance | ||||
thermal coal | phase-out | for specific | OECD | non-OECD | ||||
businesses and | ||||||||
mining sector | strategy | countries | countries | |||||
sectors | ||||||||
Sustainable | JPY 50 tn | |||||||
Finance | Cumulatively | |||||||
Transition Finance | TF | TF | ||||||
Playbook | ||||||||
Playbook | ||||||||
(TF) | Steel, | |||||||
Power, Energy | ||||||||
Automobile | ||||||||
Assessment of | ESG Risk | Company-Specific | Introduction of | |||||
customers' | Transition Strategy | Environmental | ||||||
Summary Tool | Assessment | and Social Due | ||||||
transition plans | ||||||||
Framework Pilot | Diligence | |||||||
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Towards Achieving Net Zero
Maximizing contributions to the decarbonization of the real economy while achieving net zero within SMBC Group
Contributing to Decarbonization | Achieving Net Zero within |
of the Real Economy | SMBC Group |
Coexist
1
2
3
4
5
Risk-taking in new energy and new technologies
Supporting Transition in the world, including Japan/Asia
Visualization of ESG related challenges within the whole supply chain
Co-creation of businesses with our customers towards decarbonization
Offering diverse and group-based solutions
Considerations | Main Items | |
Policies for Specific | ||
Policy | Businesses and Sectors | |
Phase-out Strategy | ||
Portfolio | Climate-related RAF | |
Management | ||
Environment/Social Risk | ||
Customer/Project | Assessment | |
Management | Environmental and | |
Social Due Diligence |
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Contributing to Decarbonization of the Real Economy
As a global solution provider, firmly support our customers' initiatives towards transition and technological innovation by leveraging our strengths
Customers' needs
High investment risks in R&D of new energy and
technologies
Challenges in adopting currently costly
decarbonization technologies
SMBC Group's strengths
1 Risk-taking in new energy and new technologies
- Establishing a market leader position in the field of new energy and new technologies as a pioneer in project finance
Still high dependence on fossil fuels in energy
consumption in Japan and Asia
A lack of resources and know-how about
understanding the GHG emissions from both the
company and the entire supply chain
Finding partners to transform fuel procurement and
business structures for decarbonization
2 SupportingJapan/Asia Transition in the world, including
- In pursuit of decarbonization in Asia, which is essential for achieving the Paris Agreement goals, accelerating initiatives, disclosure, and dialogue to support transition finance
3 | Visualization of ESG related challenges within the |
whole supply chain |
- Utilizing Sustana/Asuene ESG as a lever to visualize non-financial data in the supply chain and using it for the dialogue with customers and providing solutions
4 | Co-creation of businesses with our customers |
towards decarbonization |
- Leveraging a global customer base and deep insights into the decarbonization field to connect companies and create businesses aimed at decarbonization
5 Offering diverse and group-based solutions
One-stop and speedy response to various phases and
challenges towards decarbonization⚫ Supporting our customers' efforts towards decarbonization with a diverse range of solutions from the entire SMBC Group
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Risk-taking in New Energy and New Technologies
Establishing a market leader position in the field of new energy and new technologies as a pioneer in project finance
Foundation of socio-economic development
Power | Natural | Theme Parks |
Resources | ||
Infrastructure | PFI | Chemical |
2020s~
New Energy and New Technology
Green | Onshore/ | Hydrogen | ||
Data Center | Offshore Wind | Reduced Iron | ||
Storage Battery | Green Hydrogen | |||
Solar Power | ||||
Americas
Data Center deal 国内外の太陽光案件
Global
国Renewable内外の陸上Energy・洋上風Projects力案件
Global Ranking
#3
(IJ Global)
Australia
Appointed as a FA for a グリーン水素の製造・液化
green hydrogen project
ファイナンシャルアドバイザー就任
Europe
World's 1st large scale
green steel Project
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Transition Finance
Accelerating initiatives, disclosure, and dialogue to support transition finance based on the challenges that have become apparent through actual deals
Transition Finance Playbook | Challenges | |
Summary
Goals
Shows SMBC Group's definition and criteria of Transition Finance and its decision-making process
- Develop an objective and rational criteria
- Ensure accountability towards stakeholders
- Utilize the Playbook within customer engagement
- Engaged: 100 meetings
1 | Increase in short and mid-term portfolio GHG emissions | ||||||
Transition Finance (TF) | Divestment | ||||||
TF | |||||||
Portfolio | Divestment | ||||||
Net Zero | |||||||
GHG | Increase | Decrease | |||||
Pre-investment | Post- | ・・・ | 2050 | Pre-investment | Post- | ||
investment | divestment | ||||||
2 | Addressing companies currently having difficulties with | ||||||
alignment with the 1.5°C scenario | |||||||
• | Net zero targets of their governments are not aligned with the 1.5°C scenario | ||||||
• | Industrial structural transformation is necessary, | etc. | |||||
3 | Cost Burden |
Results
Approved: 21 deals | Pass on transition | Balancing economy | No price | |||
• | efficiency, stable supply, | |||||
costs! | increase! | |||||
Companies | Govt. and decarbonization... | Citizens | ||||
Goals for FY3/25
FY24 first half
Playbook
Progress
Report
- Summary of FY2023's initiatives
- Challenges from operational perspective
- Recommendations towards customers, financial institutions, and governments to promote transition finance, etc.
Continue engagement to resolve issues
Customers Govt. Engage
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Contributing to Decarbonization in Asia
In pursuit of decarbonization in Asia, which is essential for achieving the Paris Agreement goals, strengthening financing and industry-academia-government collaboration, considering the circumstances of the region.
Examples of transition finance
Early retirement of coal-fired power plant in Australia
- Transition finance to a major Australian electricity and gas supply company in establishing new energy storage facilities, which will contribute to the early retirement/decommissioning of coal fired power plants
Completion of retirement
10 years earlier than initially planned
Reduction in GHG emissions equivalent to 16MT/year
Industry-academia-government collaboration
Participating in | Supported one of Asia's | |
largest sustainability | ||
WG of various | ||
Supported drafting | events organized by | |
countries | ||
Temasek | ||
GFANZ report | ||
Industry
Financing plenty of projects for energy transition
India
2,000MW Solar
Australia
Wind・Solar
Taiwan
1,000MW Offshore
Wind
India
300MW Wind・Solar
India
380MW Solar
India
Solar gigafactory
AcademiaGovernment
Accumulating knowledge | Considering the creation of |
through collaboration with | credits from early retirement |
universities and authorities | of coal-fired power plants |
in Singapore |
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Visualization/Co-creation of Business
Thoroughly supporting our customers' pain points in decarbonization from non-financial aspects through data visualization and creation of new businesses, etc.
Data visualization
Sustana GHG emission calculation/reduction support cloud tool developed by SMBC Group
Linking data with other companies
Number of users | ||
(cumulative) | ||
more than | ||
E | Insights derived from data | 1,800 |
Companies |
Identify priority | May 2024 | |||||
Carbon productivity | ||||||
analysis | issues |
Supporting tool for identification/solution of
ASUENE ESG ESG issues in supply chains
S
In October 2023
Started business alliance
with Asuene Inc.
G
Co-creation of business
Companies with | Companies with | |
technology for | decarbonization | |
decarbonization | Connect | needs |
Global customer | Deep insights in | In-house sector |
base | decarbonization | experts |
Examples of business co-creation
Installation of renewable energy in SCSK's data center
- First corporate PPA with the issuance
of I-REC in Japan
Installation of renewable energy in DHL Group's logistics facility
- An agricultural solar power project that contributes to regional revitalization and sustainable farm management
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Decarbonization | Net Zero | Governance |
of the Real Economy | within SMBC Group | |
Various Solutions Across SMBC Group
SMBC Group offers a range of solutions to support our customers' efforts towards decarbonization, leveraging the collective capabilities of the entire group.
Major solutions for decarbonization
Banking | • | Project finance |
• | Sustainable finance, etc. | |
Trust banking | • | Green ABL Trust |
• | Sustainability related | |
real estate | ||
Leasing | • | Solar power PPA |
• EV adoption support, etc | ||
Securities | • | Green bond |
• | Transition bond, etc. | |
Card payments | • | CO2 emissions calculation |
based on card payment data | ||
Consulting | • | Target/strategy setting, |
disclosure support | ||
• | Decarbonization consulting | |
Asset | • | ESG investments |
management | ||
• | Impact investments | |
Examples of solutions
Grid-scale battery storage project
-
Japan's first project finance structuring and equity
participation ~Renewable Energy Deal of the Year in IJ Global Awards 2023 APAC
Solar power | |||||
Renewable energy project | generation capacity(MW) | ||||
• Expanding primarily in | 6 times | 1,200 | |||
solar power generation | |||||
FY3/20 | FY3/26 | ||||
Carbon credits
- Intermediate J-Credit creation support, buying and selling services with BYWILL
Collaborating with stakeholders
With companies
- Joint study with Boeing and Mitsubishi Heavy Industries to scale up SAF in Japan
With academia
- Established consortium with Kyoto University and others, with the aim of the implementation of the carbon cycle
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Sumitomo Mitsui Financial Group Inc. published this content on 29 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 June 2024 09:33:01 UTC.