Sumitomo Mitsui Banking Corporation (GreenDeposit)
Type of Engagement: Annual Portfolio Review
Date: 3 June 2024
Engagement Team:
Akshay Chandrakapure, akshay.chandrakapure@morningstar.com
Sidharth P R, sidharth.pr@morningstar.com

Introduction
In 2019, Sumitomo Mitsui Banking Corporation (“SMBC” or the “Bank”) launched green deposit products (the“Green Deposits”) to facilitate lending towards environmental projects. The Green Deposits required the Bank
to hold an equivalent amount of proceeds raised to effectively finance eligible loans that are expected tocreate positive environmental impact (the “Eligible Loans”). As of December 2023, SMBC had raised USD 662
million under the Green Deposits. In 2024, SMBC engaged Sustainalytics to review a portfolio of the Eligible
Loans funded through the proceeds raised from the Green Deposits (the “Eligible Portfolio”) and assess
whether the Eligible Portfolio met the eligibility criteria outlined in the Sumitomo Mitsui Banking Corporation
Green Deposit Framework 2023 (the “Framework”). The Framework, as a standalone document, was reviewed
by Sustainalytics in May 2023 to verify the alignment with market practice.1 This is Sustainalytics’ third annual
review of allocation of the instruments issued under the Framework, following previous reviews in May 2022,2and May 2023.3

Evaluation Criteria
Sustainalytics evaluated the Eligible Portfolio based on whether they:1.

Meet the use of proceeds and eligibility criteria outlined in the Framework.

Table 1: Use of Proceeds Categories and Eligibility Criteria
Use ofProceeds
Category

Eligibility Criteria

Exclusion Criteria

Acquisition, development, construction, operation, or
maintenance of projects/assets generating electricity from:

RenewableEnergyi)

Solarii)

Solar thermal energy, with less than 15%
fossil fuel back-upiii)

Wind (on and offshore)iv)

Geothermal, with the direct emissions
intensity of less than 100 gCO2/kwhv)

Hydropower, which meets one of thefollowing criteria:i.

Run-of-river without artificial
reservoir or with low storage
capacity,ii.

Facilities that became operational
before 2019 with life cycle GHG
emissions intensity of 100i.

Hydropower: Projects
which have not undertaken
an environmental andsocial impact assessmentthat ensures no significant
controversy surrounding
the project.

ii.

Waste biomass energy:
Plastics, rubber, tire-derived
fuel (TDF) to energy, or fuelconversion from wastematerials.

iii.

Non-waste biomassenergy:a) Feedstock that is
produced on land with high

1 SMBC, “Green Deposit Framework, SMBC”, (2023), at: https://www.smbc.co.jp/global/greendeposit/resources/pdf/index_pdf_01.pdf
2 Sustainalytics, “Annual Review, SMBC”, (2022), at: https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.com/docs/default-

source/spos/sumitomo-mitsui-banking-corporation-green-deposit-annual-review-(2022).pdf
3 Sustainalytics, “Annual Review, SMBC”, (2023), at: https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.com/docs/defaultsource/spos/sumitomo-mitsui-banking-corporation-green-deposit-annual-review-(2023).pdf URL%20active%20hyperlink© Sustainalytics 2024

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Sumitomo Mitsui Banking Corporation (Green Deposit)

iii.

gCO2e/kwh, or power density ofgreater than 5 W/m2, orbiodiversity within the last
10-15 years

Facilities that became operational
after 2020 with life cycle GHG
emissions intensity of 50
gCO2e/kwh, or power density ofgreater than 10 W/m2b) Feedstock that is
produced on land with ahigh amount of carbon has
been converted forfeedstock production, orFor refurbishment, the project that meets theabove hydropower criteria. If the projectincreases the size of the dam or reservoir, a
new environmental and social impact
assessment needs to be undertaken.
vi)

vii)

Waste biomass energy, with feedstock limitedto a) residues from forestry and agriculture, b)
residues from fisheries certified with MSC,4ASC,5 or MEL,6 c) waste from palm oil
operations certified with RSPO,7 or RSB,8 or d)wastewater and sewage sludge.
Non-waste biomass energy with life cycle
GHG emissions intensity of less than 100
gCO2e/kWh, using feedstock restricted to a)wood and wood pellets certified with FSC,9 orPEFC,10 or b) non-wood crops.

c) Feedstock thatcompetes with foodproductiond) Feedstock from palm oil,wood pulp or waste frompeate) 10% or more offeedstock is non-certified
oil, energy crops, including
corn, soy, sugarcane, andwood pellets without
sustainable sourcing andGHG emissions reduction
commitments.

4 Marine Stewardship Council (MSC), at: https://www.msc.org/
5

Aquaculture Stewardship Council (ASC), at: https://www.asc-aqua.org/

6 Marine Eco-Label Japan (MEL), at: https://melj.jp/eng/about_us
7 The Roundtable on Sustainable Palm Oil (RSPO), at: https://rspo.org/
8 The Roundtable on Sustainable Biomaterials (RSB), at: https://rsb.org/
9 Forest Stewardship Council (FSC), at: https://fsc.org/en
10

Programme for the Endorsement of Forest Certification (PEFC), at: https://www.pefc.org/
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Sumitomo Mitsui Banking Corporation (Green Deposit)
Issuer’s Responsibility
SMBC is responsible for providing accurate information and documentation relating to the details of thefunded projects, including descriptions of projects and amounts allocated.

Independence and Quality Control
Sustainalytics, a leading provider of ESG research and ratings, conducted the verification of the use ofproceeds from SMBC’s Green Deposits. The work undertaken as part of this engagement included collectionof documentation from SMBC and review of said documentation to assess conformance with the Framework.
Sustainalytics relied on the information and the facts presented by SMBC. Sustainalytics is not responsible
nor shall it be held liable for any inaccuracies in the opinions, findings or conclusions herein due to incorrect
or incomplete data provided by SMBC.
Sustainalytics made all efforts to ensure the highest quality and rigor during its assessment process andenlisted its Sustainability Bonds Review Committee to provide oversight of the review.

Conclusion
Based on the limited assurance procedures conducted, 11 nothing has come to Sustainalytics’ attention thatcauses us to believe that, in all material respects, the reviewed Eligible Portfolio is not in conformance withthe eligibility criteria outlined in the Framework. SMBC has disclosed to Sustainalytics that the proceeds ofthe Green Deposits were fully allocated as of 31 December 2023.

Detailed Findings
Table 2: Detailed Findings
Framework
Requirements

Procedure Performed

Factual Findings

Error orExceptions
Identified

Use ofProceeds
Criteria

Verification of the Eligible Portfolio todetermine if the Eligible Loans alignedwith the eligibility criteria outlined in theFramework and above in Table 1.

All Eligible Loansreviewed complied withthe eligibility criteria
defined in theFramework.

None

11 Sustainalytics’ limited assurance process includes reviewing documentation relating to details of projects, as provided by the issuing entity, which isresponsible for providing accurate information. These may include descriptions of projects, estimated and realized costs, and reported impact.
Sustainalytics has not conducted on-site visits to projects.
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Sumitomo Mitsui Banking Corporation (Green Deposit)

Appendix
Appendix 1: Allocation of Green Deposit Proceeds12
SMBC raised USD 662 million from the Green Deposits to effectively finance Eligible Loans that finance newor existing renewable energy projects, and the proceeds were fully allocated as of 31 December 2023. Theloan balance as of 31 December 2023, was USD 697.4 million.
Table 3: Loan balance (USD million) by category
Sub-category

Loan balance(USD million)

Loan balanceWind energy

531.4

76.2%

Solar energy

166.0

23.8%

697.4

100%

Country

Loan balance(USD million)

Loan balance (%)

Japan

148.2

21.2

Malaysia

23.3

3.3

The Netherlands

59.9

8.6

Taiwan69.2

9.9

United Kingdom

263.2

37.7

United States of America

38.2

5.5

Canada

95.4

13.7

Total

697.4

100%

Use of Proceeds Category

Renewable Energy
Total

Table 4: Loan balance (USD million) by country

12 SMBC provided a confidential summary of deposits and allocations to Sustainalytics, and confirmed to Sustainalytics that all deposits were allocatedto the Eligible Loans.
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Sumitomo Mitsui Banking Corporation (Green Deposit)

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Sumitomo Mitsui Banking Corporation (Green Deposit)

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