A DV ER TIS E ME N T

Uniting to tackle the climate challengethrough climate-related financial disclosures
Building on the success of the first-ever TCFD Summit in 2019, a second Tokyo-based summit was held online on
October 9, 2020, as one of the six leading international conferences held during Tokyo “Beyond-Zero” Week.
Global leaders from finance, industry, government and academia came together to explore how more financial disclosure canhelp create a positive cycle benefiting both economic growth and environmental protection. Home to a world-leading 300organizations supporting the TCFD, Japan was the logical place to host this important summit.

WELC O M E M ES S AG E

SPECIAL DISCUSSION

A conference to promote cooperation
Suga Yoshihide, Prime Minister of Japan

Climate change is both a challenge and an opportunity. Momentum to create
new industries and markets is rising around the world, and Japan is using its
advanced technological capabilities in efforts uniting industry, academia andgovernment to contribute to global decarbonization.
Japan is home to over 300 TCFD-supporting companies, more than any
other country, and organized the TCFD Summit as one of six international
conferences during Tokyo “Beyond-Zero” Week. I hope these conferences
will promote cooperation between Japan and the international community as the world moves towards
the resolution of climate issues.

Disclosures create opportunities for innovation
Kajiyama Hiroshi, Minister of Economy, Trade and Industry (METI)

Last year, the world’s first TCFD Summit brought together global leaders ofindustry and finance in Tokyo. We agreed that information disclosed according
to TCFD recommendations should lead to constructive engagement, not disinvestment. Disclosures aid risk assessment and create innovation opportunities.
Artificial synthesis, for example, is a new technology being discussed this week.
With investor support, such tech seeds can bring social change.
I look forward to dialogue between investors and businesspeople on financing
these opportunities. It is through these mechanisms that Japan will innovate faster and realize a positive
cycle of economic growth and environmental protection.

OPENING REM A R K S

EU–Japan cooperation on sustainable financeValdis Dombrovskis, Executive Vice-President, European Commission

The European Commission remains a firm supporter of the TCFD recommendations on how companies should report climate information. The TCFD is closely
linked to sustainable finance, which is vital in the context of the European GreenDeal, Europe’s strategy to become climate-neutral by 2050. Climate change is a
global challenge and our response should also be global. This is why the EU willkeep sustainable finance high on the international agenda.

Financial decisions must consider climate changeMark Carney, Finance Advisor to the Prime Minister for COP26 and UNSpecial Envoy for Climate Action and Finance

I commend METI both for convening this summit and putting in place the typesof strategies necessary to achieve net zero and a sustainable climate. The Japanese
private sector’s efforts have been remarkable: Japanese firms account for 20 percent of all organisations supporting TCFD. The focus now is the shift from voluntary standards to finding pathways to mandatory implementation in different
jurisdictions. Japan’s leadership makes it well placed to help shape that process.

Disclosures illuminate the path ahead
Mary Schapiro, Head of The TCFD Secretariat, Vice Chair for Global
Public Policy at Bloomberg and Senior Advisor to the FounderJapan is a global leader driving support for TCFD recommendations and an allyin encouraging implementation. Convening this discussion gives institutions andindustries knowledge critical to successfully adopting and implementing the Task
Force’s recommendations. Our goal is for the information elicited by the recommendations to become commonplace in financial reporting. Organizations
successfully implementing climate risk disclosure will illuminate the path ahead.

OPENING S ES S IO N

Rewarding sustainability
with lower-cost capital

From disclosure toinnovation

Peter Bakker, President and CEO, WBCSD

Ito Kunio, Chair of the TCFD Consortium,
Director of Hitotsubashi CFO Education andResearch Center

TCFD recommendations
are an important tool for
linking climate changerisks to decision-making
and capital market evaluations. Over the last year, wehave seen more disclosuresof higher quality, but room
for improvement remains.
Through simple accounting
rules around meaningful ESG indicators, we must
create a market that rewards sustainable businesswith lower capital costs and thus allocates more
capital to the critical systems transitions ahead.

While collecting and disseminating best practices
as “homework” after thelast TCFD Summit, theconsortium found thatover 90% of members believe disclosure has benefited them. The challenge
for many now is further
integrating disclosure intocorporate activity. I look forward this year to ongoing discussion of topics such as sector-specificanalysis and TCFD-driven initiatives for transition
and innovation.

Green technology investment
as a path to corporate profit

Sustainability is the newstandard of investing

Miyazono Masataka, President, Government
Pension Investment Fund (GPIF)

Laurence Fink, Chairman and CEO,BlackRock

As a universal owner andcross-generational investor, GPIF relies on sustainable, stable growth in thecapital market as a whole
to ensure consistent longterm returns. Climatechange and related issues threaten this, and theTCFD framework is one
way asset owners like GPIF can take the lead in
addressing these risks.
One interesting finding from our most recent
portfolio analysis was that investment in green
technology may actually increase corporate value,
especially among Japanese equities. This meansthat investment in emissions reduction is morethan just a way to mitigate risk—it could also be anew path to corporate profit.

I’m delighted over 1,000
global organisations now
support TCFD, including
private-sector companies with a market capitalization of nearly $12tn.
During the past year,
BlackRock’s stewardshipteam engaged with 600
companies on TCFD to advocate enhanced disclosure. Finance is fundamentally changing, and climate risk is investment risk.
COVID is forcing us to focus on business models
that are resilient, and we believe that sustainable
investing is the strongest foundation for client
portfolios going forward. While we are likely atthe beginning of a fundamental reshaping of finance, we continue to remain agile and focus onsustainability as a powerful driver for change.

ABBREVIATIONS
COP 26: “Conference of the Parties” 2021 UN Climate Change Conference / JFSA: Japanese
Financial Services Agency / SASB: Sustainability Accounting Standards Board / TCFD: Task
Force on Climate-related Financial Disclosures / UNEP FI: United Nations Environment
Programme Finance Initiative / WBCSD: World Business Council for Sustainable Development

TCFD progress during thepandemic and beyondModerator Mizuno Hiromichi
of METI asked panelists about
TCFD progress. Japan leads theworld in TCFD support, said Nissay AssetManagement’s Ozeki Hiroshi, noting
two-thirds of nonfinancial players backit and positive correlations between ESG
ratings and stock performance are clear.
One example of change is Shiseido: Aoki
Jun said young Japanese are joining thefirm because of its ESG values, including
its pledge to be carbon-neutral by 2026.
Internationally, companies and investors are following suit. Shell’s Alan
Maclean said, “We have stepped up ourambition and now
aim to be a netzero emissions
energy businessby 2050, moving in step with societyand customers. Some necessary zeroemissions technologies do not exist yet,so our business plans will have to changeover time.”
As California’s historic wildfires show,
climate change is a present threat, said
CalPERS’ Marcie Frost. It’s one of the
top three dangers to the $410bn portfolio run by the pension fund, which ispushing for mandatory TCFD standards

in corporate reporting.
Principles for Responsible Investment’s
Fiona Reynolds said her organisation isworking with Climate Action 100+ topush companies for TCFD disclosures.
It also teamed with UNEP FI to launch
the UN-convened Net-Zero Asset Owner
Alliance. Reynolds called it “groundbreaking…it’s about asset owners making their own commitment to net zeroby 2050.”

PANEL DISCUSSION 1

Different industries, different
climate risks: Evaluating sectorspecific materialityT

his session was set up, explainedmoderator Nagamura Masaakiof Tokio Marine, after sectorspecific financial materiality wasidentified as a topic deserving further
discussion in last year’s TCFD Summit.
BHP’s Fiona Wild stressed that disclosure is “very much a process” andthat it’s always better for companies
to take a first tentative step towards
disclosure rather than wait for everything to be perfectly aligned with
TCFD recommendations.
Yamauchi Toshihiro explained how
his company, Sumitomo Chemical, isdem onst r at i ng
what the chemical industry can
do both by cutting its own GHG emissions and through a designated line ofproducts and technologies solutions
that contribute to overall GHG emission reduction at the use stage. David
Parham of SASB made the point thatclimate risk is both pervasive andindustry-specific. Energy-intensive
heavy industry is exposed to regulatory risk on emissions reduction, for example, while the lean supply chains ofapparel and electronics manufacturers

can be disrupted by physical climate
risk. Comparable performance metrics can provide decision-useful information to capital markets.
Manulife Investment Management’s
Oshida Shunsuke expects issuers to takethe balance between comparability anduniqueness in materiality on TCFD and
ESG disclosure. Comparability is needed
for identifying their own materialityand disclosing outcomes, and uniqueness for strategies to manage it.

PANEL DISCUSSION 2

Winning over investors and top
management with scenario analysis

Scenario analysis is a vital tool for
our transition to carbon neutrality.
As Didiem Nisanci of Bloomberg
noted in her comments, useful analysis
requires engagement at the highest levelsof the company and must be a continuous process rather than a “one anddone” exercise. Panel facilitator Tezuka
Hiroyuki of JFE Steel agreed, noting theimportance of emphasizing opportunities, not only risks, when analysing
different climate scenarios.
For investors, insight into corporate strategy drives better decisions.
“Scenario analysis should reduce

information
asymmetry andbolster ESG integration,” said
Iwanaga Yasunori of Amundi Japan.
Shibukawa Atsushi of Mizuho Financial
Group explained how the group’s analysis of its own business showed the importance of action plans for climatechange risks, and how disclosure fromclients improves risk assessments.
Panellists also shared specific examples and practices. Francesca Gostinelliof Enel described her company’s use of
scenario analysis to capture market

dynamics over different time frames forbetter “storytelling” in integrated reports.
Mizouchi Ryosuke of Kirin Holdings
explained how the company’s analysis
showing that tea would be less affectedby climate change than coffee is already
improving product development andmarketing decisions. For sustainability officers, he said, TCFD and scenario
analysis can be effective for securing thesupport of top management.

PANEL DISCUSSION 3

Transition finance and disclosuredriven enviro-innovationT

he summit’s final panel was awide-ranging discussion of recent thinking on how climatetransition can be achieved. Takatsuki
Yo of AXA Investment Managers offered a broad overview of the concept,
noting that, since we cannot moveimmediately to a net-zero world, significantly and rapidly changing how
industries operate was “the key challenge point of transition finance.”
Shiomura Kenji of GPIF cited thefund’s research suggesting low-carbon technology-related revenue opportunities for Japanese companies,

with more potential upside
underlower
temperature scenarios. Kajikawa Fumihiro of METI
welcomed these ideas, but warned oftechnocentrism as a potential pitfall.
“We must keep asking how to bring
the technology to market,” he said.
The panel then moved to the second topic: disclosure and innovation. Fujimura Takehiro of Mitsubishi
Corporation, a TCFD Consortium
member, described growing awareness of the need for flexible disclosure

KEYNOTE

requirements varying with corporate
scale. Ikeda Satoshi of the JFSA agreed,calling for a kind of “soft law” thatwould urge companies to use disclosure as a tool for describing the typeof transition they intend to achieveby identifying risks and pursuing opportunities. In his closing statements,
facilitator Ito Kunio called for morediscussion on the theme of opportunity at next year’s summit.

CLOSING REMARKS

Financing the carbonzero transition

A framework forcompetitivenessYamashita Ryuichi, DirectorGeneral, Industrial Scienceand Technology Policy andEnvironmental Bureau, METI

Mizuno Hiromichi, SpecialAdvisor, TCFD Summit
Ambassador, METI

METI’s Climate Innovation Finance
Strategy 2020 is a vision of a carbonfree future on a global scale. It calls for multiple types ofclimate innovation to effect a discontinuous transition from“brown” to carbon-free economies. A shared understanding oftransition finance as catalyst in this process will be essential.

(Reference: https://www.meti.go.jp/english/press/2020/0916_001.html)

https://tcfd-summit.go.jp/indexEn.html

TCFD disclosure began as a framework for financial investors, but
increasing corporate participation
allows measures against global warming to be disclosed andassessed as a source of competitiveness. Our speakers and panellists at this summit have shown that this is already inspiring
better decision-making and climate action around the world,a trend in which Japan will continue to play its part.