January 27, 2021

JBA Comments on the TCFD Consultation “Forward-Looking Financial Sector Metrics,” published on October 29, 2020
Q1. Questions about forward-looking metrics.
1-1 Multiple-choice question
Answer- For internal risk management, strategy, or financial planning(Select all that apply)
In what way are forward-looking - For investment/portfolio allocation decisions- For engagement with companies in which we invest
climate-related metrics used
- For communication with investors or other stakeholders
within your organization?
1-2 [1-1 Open-ended question]

AnswerOne of the JBA member bank conducts scenario analyses for energy and utility sectors using the following scenarios: (i) theInternational Energy Agency (IEA)'s Sustainable Development Scenario (SDS) to assess transition risk and (ii) RCP8.5
scenario to assess physical risk. Although the sectors in scope are currently still limited, we are considering expanding thetarget in the future.
When conducting an Environmental & Social Review under Equator Principles, our member banks collect some metrics
from clients to conduct Climate Change Risk Assessment for applicable projects. There are some cases that a client uses
implied temperature rise for physical risk assessment and future potential carbon tax or internal carbon pricing fortransition risk assessment.
In addition, there is a case we use forward-looking metrics such as ITR disclosed by an asset management affiliatecompany for the assessment of financial impact within a group and for investment strategy.

1-3 Multiple-choice question(Select all that apply)
Select any metrics yourorganization uses for financial
decisions, monitoring, or toconsider the positioning of yourtotal portfolio with respect to thetransition to a lower-carbon
economy:Answer(Others) Environmental impact of project finance in the Power Generation Business in the form of CO2 emissions
intensity index (CO2 emissions divided by electricity output in proportion to funds extended by banks (for monitoring)1

1-4 [1-3 Open-ended question]
You said you do not use any
metrics. Please tell us more
about your response.

AnswerNA

1-5 Multiple-choice question(Select all that apply)
Which of the following metrics
does your organization disclose?

AnswerA forward-looking estimate of the amount or percentage of carbon-related assets in each portfolio over the course of theirplanning horizon (Currently Disclose)

1-6 [1-5Open-ended question]

Answer
“A forward-looking estimate of the amount or percentage of carbon-related assets in each portfolio over the course of theirplanning horizon” => limited to project finance in the coal power generation business
It is disclosed by one of our member banks which has set a target to reduce the outstanding loan balance of project financefor coal-fired power generation to 50% compared with FY 2019 in FY 2030, and to zero in 2040.
“Implied temperature rise or warming potential”
For bank sector, it is still too early to disclose ITR because the methodologies for these metrics have not yet been globally
standardized nor it is not examined which metrics are useful yet. For asset management sector, we would like to refer to an
example of ITR disclosure by a trust and banking affiliate of JBA member bank. As an asset manager, the trust and banking
affiliate undertook and disclosed the results of a climate-related portfolio risk assessment. They worked with the Institutional
Shareholder Services (ISS) and used the methodology which is based on the forecast by the International Energy Agency(IEA). They assessed and disclosed the implied temperature rise up to 2050 due to greenhouse gas emissions by the investee
companies within its portfolio which includes domestic bonds and stocks and foreign bonds and stocks.

21-7 Multiple-choice question(Select all that apply)
Which types of financialorganizations should disclose
forward-looking climate-related
metrics? That is, which would be
most useful to you?

Answer- Asset owners- Asset managers- Banks- Insurers

1-8 [1-7Open-ended question]

AnswerWe believe that it is important to broaden the scope of forward-looking climate metrics which can be disclosed. However, we
also think it is important that the definition of each metrics is consistent among financial institutions.

1-9 Multiple-choice question(Select all that apply)(In addition to asset owners,)
who else should disclose such
“metrics considered ininvestment decisions andmonitoring?”

Answer- Asset managers, for investment decisions and monitoring- Banks, for lending decisions and monitoring- Insurance companies, for underwriting decisions and monitoring

1-10 [1-9 Open-ended question]

AnswerWe believe it is important for banks to disclose basic information that what kinds of climate related metrics are considered for
lending decisions and monitoring from ESG perspectives and it could mitigate ESG risks of lender banks.

32. Questions about the usefulness of various metrics and challenges associated with these metrics
Answer
2-1 Multiple-choice question
The benefits will outweigh the challenges if there is further standardization of metrics
How do you currently view
disclosure for forward-looking
climate-related metrics?
2-2 [2-1 Open-ended question]

Answer- Currently there is an issue on consistency in metrics used by each financial institution. This may cause concern that when
we disclose metrics, investors might misunderstand or have difficulty in comparison with other financial institutions.
- In relation to the metrics on GHG emission, we understand that Carbon footprint (Scope 3) is useful for investment / loan
and management decision-making and stakeholder communications (e.g. investor, NGO), so we would like to estimate
GHG emissions from our portfolio as soon as possible. On the other hand, there are many companies that do not collect ordisclose their carbon footprint and there is also an issue on lack of comparable methodologies.
- These issues could be relieved by standardization of metrics related to carbon footprint measurement or disclosure ofcarbon footprint reference data of each sector by the government, which will encourage banks to disclose their Scope 3
GHG emissions and to utilize it for investment / loan and management decision-making.
- In order to start using or disclosing forward-looking metrics such as CVaR and ITR, it is necessary to estimate GHG
emissions from banks' portfolio. It would be appreciated if TCFD/FSB could start with standardizing metrics related tocarbon footprint measurement.

2-3 Multiple-choice question

AnswerIt’s somewhat of a barrier

How does the lack ofreliable or comparable
GHG emissions data impact
the usefulness of forwardlooking metrics as part offinancial decisions?
2-4 [2-3 Open-ended question]

Answer- In order to conduct detailed analysis and reflect into financial risk analysis, it is suitable to cover the GHG emission data asmuch as possible. However, these metrics still have challenges in lack of comparable GHG emission data methodologies
and need further validation on relationship between GHG emission and credit risk/reputational risk.
- In addition, the lack of comparable GHG data would be one of the challenges for banks to measure the impact of the
carbon-pricing (when it is fully implemented) on their customers' performance by using forward-looking metrics, and tomonitor the progress of their actions to transition to a decarbonized society by using forward-looking metrics.”
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2-5 Multiple-choice question(Select all that apply)
Which GHG emissions scopes
should be covered in an ideal
forward-looking methodology?
2-6 [2-5 Open-ended question]

AnswerScope 1 and Scope 2

2-7 Multiple-choice question
How important is it tounderstand which scenarios andpathways were used in thecalculation of forward-looking
metrics to make them decisionuseful?

AnswerVery important

2-8 [2-7 Open-ended question]

Answer
As a basic standpoint, we believe that it is better to standardize the scenarios and pathways from the comparability perspective.
We also think it is a company’s decision and strategy which scenarios and pathways to use. A company may need to choose
them considering the features of sector specific environment and their ideal society to pursue.
Therefore, it is useful from the view point of financial institutions to have some common scenarios and pathways but better not
too much standardized.

2-9 Multiple-choice question(Select all that apply)
Which of the following metrics
do you find useful for financial
decision-making?

AnswerCould be useful with improvements to methodology- Amount of apportioned emissions over/under a 1.5 0C alignment trajectory- forward-looking estimate of the amount or percentage of carbon-related assets in each portfolio over the course of theirplanning horizon- Unpriced carbon cost
- Implied temperature rise or warming potential

AnswerWe realize that stakeholders are willing to know about the Scope 3 emissions of financial institutions.

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2-10 [2-9 Open-ended question]

Answer- We need more validations on how these metrics above are useful in financial/credit decisions and it is essential tounderstand carbon-related risks and impact on P/L and B/S of each company with specified time horizon.
- Regarding “A forward-looking estimate of the amount or percentage of carbon-related assets in each portfolio overthe course of their planning horizon”:
In the supplemental guidance for bank sector in the Section D of Supplemental Guide - Implementing the
Recommendations of the Task Force on Climate-related Financial Disclosures, the “carbon-related assets” means
assets of energy sector and utilities sectors defined by the Global Industry Classification Standard (GICS). If weclassify the industries in more detail, the risks are different for each industry and for each company's approach. So,
the metric does not necessarily reflect the level of credit risk exposure by banks. Therefore, the meaning of disclosing
the metric by banks should be examined.
- Regarding “Implied temperature rise or warming potential (ITR)”:The ITR may be a useful metrics to help evaluate whether or not the bank is making efforts consistent with the Paris
Agreement’s target. However, given that the TCFD recommends disclosure of information to help investors assess banks’
climate change-related credit risk exposures, the relationship between ITR and banks’ credit risk should be validated andclarified.
- Regarding “The proportion of underlying investments that are aligned with the EU Taxonomy”, it is not reasonable toadopt this metric based on the EU taxonomy as TCFD framework will globally apply.

2-11 Multiple-choice question
Which of the following metrics
would you find useful if
disclosed by the following
groups?

Answer- Carbon earnings at risk [Banks]- Climate value-at-risk [Asset Owners]- A forward-looking estimate of the amount or percentage of carbon-related assets in each portfolio over the course of theirplanning horizon [Banks]- Implied temperature rise or warming potential [Banks]- Unpriced carbon cost [Banks]- Amount of apportioned emissions over/under a 1.5°C alignment trajectory [Banks]2-12 [2-11 Open-ended
question]

AnswerNA62-13 Multiple-choice question
Which challenges has yourorganization faced in using or
disclosing forward-looking
metrics?

Answer (for using and disclosing)Lack of/ poor quality GHG emissions data
Metrics are useful internally but not suitable for public disclosure
Distrust in the reliability of outcomes
Lack of /poor quality of other data (non-GHG emissions)Concerns around reliance on assumptions required to derive future company-level emissions
Lack of comparable metric calculation methodologies
Difficult to understand or opaque metric calculation methodologies
Concerns around reliance on assumptions and future uncertainty
Resource constraints

2-14 [2-13 Open-ended
question]
Please describe any further
information on challenges yourorganization has faced in using
or disclosing forward-looking
metrics.

Answer
Generally, we are still in a development stage on how to utilize metrics and trying to find a way to disclose withcomparable and consistent metrics.
It is still too early for banks to use and disclose advanced forward-looking metrics such as Climate VaR and ITR because
these metrics have not yet been globally standardized nor it is not examined which metrics and methodologies are usefulyet. It is important to consider the current practice and level of maturity of methodologies for any next steps taken by the
TCFD. As it is necessary to estimate GHG emissions from banks’ portfolio to calculate and disclose forward looking
metrics, it would be appreciated if TCFD/FSB could start with standardizing metrics related to carbon footprint
measurement.
AnswerBetter availability and quality of GHG emissions data
More comparable approaches to calculation methodologies
More clarity and transparency in calculation methodologies

2-15 Multiple-choice question
Which of these changes would
improve the usefulness of
forward-looking disclosures foryou?

NA
2-16 [2-15 Open-ended
question]
3. Questions about implied temperature rise (ITR)
Answer
3-1 Multiple-choice question
No, we don’t disclose any implied temperature rise metrics(Select all that apply)
Does your organization disclose
an implied temperature rise
metric?
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3-2 [3-1 Open-ended question]

AnswerFor bank sector, it is still too early to disclose ITR because the methodologies for these metrics have not yet been globally
standardized nor it is not examined which metrics are useful yet. Until the standardized methodologies of ITR are
established, banks can utilize Scope 3 GHG emission for stakeholder communication or financial decision making. As it isnecessary to estimate GHG emissions from banks’ portfolio to calculate and disclose ITR, it would be appreciated if
TCFD/FSB could start with standardizing metrics related to carbon footprint measurement.
ITR may be a useful metrics to help evaluate whether or not the bank is making efforts consistent with the Paris
Agreement’s target. However, given that the TCFD recommends disclosure of information to help investors to assessbanks’ climate change-related credit risk exposures, the relationship between ITR and credit risk should be validated andclarified.
For asset management sector, we would like to refer to an example of ITR disclosure by a trust and banking affiliate of
JBA member. As asset manager, the trust and banking affiliate undertook and disclosed the results of a climate-related
portfolio risk assessment. They worked with the Institutional Shareholder Services (ISS) and used the methodology which
is based on the forecast by the International Energy Agency (IEA). They assessed and disclosed the implied temperaturerise up to 2050 due to greenhouse gas emissions by the investee companies within its portfolio which includes domestic
bonds and stocks and foreign bonds and stocks.

3-3 Multiple-choice question
To what extent does yourorganization find current ITR
disclosures useful in financial
decision-making?
3-4 Multiple-choice question
Has an ITR rating influenced a
specific financial decision yourorganization has made?

AnswerSomewhat useful

3-5 [3-4 Open-ended question]
Please provide any further
information on why an ITR
rating has or has not influenced
a decision, as applicable.

Answer
If we find out that specific sector/business have significant impact by temperature rise or significant impact on temperature rise,
it is helpful for considering the portfolio allocation decision.

AnswerNo8

3-6 Multiple-choice question(Select all that apply)
What are the benefits of ITR as a
metric?

AnswerUseful for assessing climate-related risks
Easy to understand
Useful for engagement

3-7 [3-6 Open-ended question]

AnswerNA

3-8 Multiple-choice question
How much would each of thefollowing improve the rigor andusefulness of ITR disclosures?

AnswerBetter availability and quality of GHG emission data [Improve a lot]
More clarity and transparency in calculation methodologies [Improve a lot]
More comparable approaches to calculation methodologies [Improve a lot]
Use of standard forward-looking emission pathways [Improve a little]

3-9 [3-8 Open-ended question]
Please provide any additional
information about how the rigor
and usefulness of ITR
disclosures could be improved.

AnswerNA

3-10 Multiple-choice question
How useful would disclosure of
ITR rating be from the following
types of financial organizations?

AnswerAsset owners [Somewhat useful]
Asset managers [Somewhat useful]
Banks [Somewhat useful]
Insurance companies [Very useful]Index providers [Very useful]

3-11 [3-10 Open-ended
question]
Please provide any additional
information about how
disclosure of an ITR rating froma financial organization could
be useful.

AnswerFor banks, disclosure of the ITR rating will be useful as one element of metrics but it is necessary to consider other aspects
including sector or geographical differences.

93-12 Multiple-choice question
How useful would an ITR rating
be for each of the following asset
classes?

AnswerListed Debt [Somewhat useful]Real Estate [Somewhat useful]
Sovereign Debt [Somewhat useful]
Loans to corporate [Somewhat useful]Mortgages [Somewhat useful]
Listed equity [Somewhat useful]

3-13 [3-12 Open-ended
question]

AnswerNA

3-14 Multiple-choice question
For each sector listed below,
how useful would you find an
ITR rating in financial
decisions?

AnswerTransportation [Very useful]
Materials and buildings [Somewhat useful]
Energy [Extremely useful]
Agricultural food, and forest products [Extremely useful]
Other sectors: Medical [Somewhat useful]

3-15 [3-14 Open-ended
question]

AnswerNA

3-16 Multiple-choice question
How useful would disclosures ofan ITR metric be at each of thefollowing levels?

AnswerCompany level [Somewhat useful]
Portfolio level [Somewhat useful]
Fund level [Somewhat useful]
Investment strategy level [Not very useful]
Asset level [Not very useful]

3-17 [3-16 Open-ended
question]

AnswerWe think disclosure of portfolio level is enough and not of asset level which may cause misunderstanding to stakeholders.
(End)

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