November 2, 2023
Japanese Bankers Association
JBA comments on the Consultative Document “Defining Transition Finance and Considerations for Decarbonization Contribution Methodologies”
by the Glasgow Financial Alliance for Net Zero (GFANZ)
Questions

Comments

Part I: Transition Finance
Climate Solutions
Q1: Are the proposed attributes sufficient and flexible enough to help you identify

・ Somewhat sufficient

assets to this segment?
Q4: Are separate and/or additional attributes required for Enablers?

・ No

Aligned and Aligning
Q6: Are the proposed attributes sufficient to help you identify entities to this・ Somewhat sufficientsegment?
Q9: Are there any other considerations for Aligned/Aligning attributes, especially・ Alignment to pathways is proposed as one of Aligned/Aligning attributes.

relating to hurdles to implementation (e.g., data limitation, lack of disclosure

Under the current corporate disclosure practice, however, the expected year ofalignment and target performance are often disclosed at a particular point inregarding capex, other KPIs for degree of alignment)?

time, without disclosing annual progression towards alignment to pathways.
Given this, how the alignment is assessed for such disclosures should be
included to address such a practical issue.

Managed Phaseout
Q10: Are the proposed attributes sufficient to help you identify assets to this・ Somewhat sufficientsegment?
Segmentation Method
Q13: If you were to implement the proposed approaches today, what could be some・ While we understand that Test A is the assessment performed at the asset or1

Questions

Comments

challenges you might encounter?

project-level, the Proposed Attribution in Climate Solutions states that “if notalready aligned, entity should aim to become net-zero aligned over time,”
indicating that the assessment is required on an entity-basis as well. However,
we also recognize that Test B is the assessment on an entity-basis, and hence
request GFANZ to clarify how these two tests are regarded in performing thisassessment.

Other
Q15: Any additional feedback regarding Part I of this consultation?

・ Since the four key financing strategies proposed for transition finance havedifferent targets (e.g., technologies and/or entities), we consider that these fourkey financing strategies may overlap (for example, there may be a strategy that
finance or enable both Climate Solution and a 1.5 degrees C Aligned). Further,in our view, proposed GFANZ’s four key financing strategies are one of theapproaches, and do not cover the whole picture of transition finance as
specified below. Therefore, we request GFANZ to clarify such relations.
・ Under current practice, whether an activity constitutes transition finance isoften determined based on Climate Transition Finance Handbook publishedby the International Capital Market Association. This handbook, however, isnot fully consistent with the requirements and the elements of four key
financing strategies defined by GFANZ. Therefore, criteria for determining
transition finance should not be designed to be exclusive, excluding any
activities that do not meet GFANZ’s definition from transition finance (weunderstand that the existing criteria are not designed to be exclusive).
・ When considering the inclusion of quantitative criteria and further clarifying
criteria for determining transition finance, the criteria should not result ineliminating the options of certain transition technologies for financial
institutions even such technologies have potentiality, and enable financial
institutions to provide support for corporates which are committed to2

Questions

Commentsdecarbonization.

Part II: Decarbonization Contribution Methodologies
Potential Approaches for Climate Solutions and Managed Phaseout Finance Strategies
Q28: Any additional considerations/feedback regarding impact methods for・ Given that the Guidance on Avoided Emissions published by the World

Climate Solutions, Enablers and Managed Phaseout (e.g., alternative approaches toBusiness Council for Sustainable Development recommends the use of
attributional life cycle accounting (LCA) for calculating avoided emissions,avoided emissions; apportioning EER to Enablers, for example using a pro-rata

we believe that the LCA should be used in the future, in principle. However,approach)?

since the LCA still has certain challenges in data collection, we also support
the approach of using end-use emission for the first few years.
(End)3