MUFG
New Zealand
Climate Report
For the year ended 31 March 2024

MUFG Bank, Ltd.
A member of MUFG, a global financial group

Contents

Important Information

03

About This Report04

1. About MUFG

05

2. Governance08

3. Strategy

10

4. Risk Management13

5. Metrics and Targets

17

6. Future Action Plan

19

Index

20

Appendix

21

MUFG New Zealand Climate Report FY2023 |2

Important Information
MUFG Bank, Ltd. (Auckland Branch) is a climate reporting entity under the Financial Markets Conduct Act 2013.
Reference to ‘MUFG New Zealand’, ‘we’, ‘us’ and ‘our’ mean MUFG Bank, Ltd. (Auckland Branch), and ‘MUFG
Oceania’ and ‘Branch’ mean MUFG Oceania branches (MUFG Oceania branches consist of Auckland, Sydney,
Melbourne and Perth Branch).
Any reference to ‘MUFG’, ‘MUFG Group’ and ‘Group’ mean Mitsubishi UFJ Financial Group, Inc. and its subsidiaries.

Disclaimer
This Climate Report includes forward-looking statements, strategy and metrics, which are not and should not be
considered guarantees, predictions or forecasts of future climate-related outcomes or financial performance, andare not intended to be advice to existing or potential investors, lenders or other creditors. These forward-looking
statements are based on information currently available to MUFG New Zealand and MUFG Group and are statedin this document on the basis of the outlook at the time that this document was produced. In producing theseforward-looking statements, certain assumptions (premises) have been utilised that are subjective and may prove
to be incorrect. Should any underlying assumption prove to be incorrect, actual results in the future may varymaterially from some of the forward-looking statements in this document. MUFG New Zealand and MUFG Group
have no obligation or intent to update any forward-looking statements contained in this document. In addition,
information on companies and other entities outside MUFG Group that is included in this document has beenobtained from publicly available information and other sources. The accuracy and appropriateness of that
information has not been verified by MUFG New Zealand and MUFG Group and cannot be guaranteed.
Statements in this Climate Report are subject to known and unknown risks, challenges, significant uncertainty andother factors. Readers are cautioned not to place reliance on such statements as these are subject to significant
risks, uncertainties, and/or assumptions many of which are outside of our control.

Other Information
Please refer to our global website, along with MUFG New Zealand latest disclosure statements and MUFG Report
2023 (JGAAP) for more information on our sustainable value creation mechanism and financial data.


MUFG Bank, Ltd. (Auckland Branch) Disclosure Statement:- MUFG; MUFG Bank, Ltd.



Mitsubishi UFJ Financial Group, Inc. site
- Annual Reports - MUFG; Annual Reports | Mitsubishi UFJ Financial Group- Sustainability initiatives - https://www.mufg.jp/english/csr/index.html

MUFG New Zealand Climate Report FY2023 |3

About This Report
Our Approach
MUFG Group recognises climate change as one of the most serious issues facing the world, and as one of themost important risks facing the organisation. MUFG Group has defined its Purpose as “Committed to Empoweringa Brighter Future”. In recognition of this, MUFG Group has declared its support of the recommendations formulatedby the Task Force on Climate-related Financial Disclosures (TCFD) and is developing specific initiatives and actionplans in support of its Purpose, corporate and social responsibility and the TCFD recommendations.
This Climate Report therefore includes references to MUFG Group commitments, strategies, processes andtargets to manage the impact of climate change.
MUFG New Zealand, a branch of MUFG Bank, Ltd. under MUFG Group, is committed to supporting Groupsustainability and risk management initiatives in tackling the impact of climate change and is developing its
strategy, governance structures and risk management processes accordingly, as articulated in this Climate Report.
This Climate Report is compiled to provide stakeholders with a better understanding of MUFG Group and MUFG
New Zealand sustainability initiatives, aimed at realising a sustainable environment, and society.
For more details, please visit MUFG Group's website. https://www.mufg.jp/english/profile/index.html

Statement of ComplianceThis Climate Report complies with the Aotearoa New Zealand Climate Standards (NZ CS) issued by the External
Reporting Board.
In preparing this Climate Report, MUFG New Zealand has selected to use the following adoption provisions:
•
•
•
•
•
•
•

Adoption provision 1: Current financial impacts, paragraph 10 and 11;
Adoption provision 2: Anticipated financial impacts, paragraph 12, 13 and 14;
Adoption provision 3: Transition planning, paragraph 15 and 16;
Adoption provision 4: Scope 3 GHG emissions, paragraph 17;
Adoption provision 5: Comparatives for Scope 3 GHG emissions, paragraph 18 and 19;
Adoption provision 6: Comparatives for metrics, paragraph 20 and 21 ; andAdoption provision 7: Analysis of trends, paragraph 23.

MUFG New Zealand has not developed a transition plan to an extent that would meet the requirements of NZ CS 1
and therefore has applied Adoption Provision 3 (Paragraph 15), which provides exemption in the first reporting
period from the requirements to disclose transition plan aspects of MUFG New Zealand. We will align with theGroup’s Transition plan and incorporate it into our local business and investment strategy.

Period Subject to Reporting
FY2023 (April 1, 2023 to March 31, 2024)

MUFG New Zealand Climate Report FY2023 |4

1. About MUFG

Mitsubishi UFJ Financial Group, Inc. (MUFG Group) is one of the world’s leading financial groups. Headquarteredin Tokyo and with over 360 years of history, MUFG Group has a global network with over 2,000 offices in morethan 40 markets. The Group offers services including commercial banking, trust banking, securities, credit cards,
consumer finance, asset management, and leasing.

PurposeValuesVisionCommitted to empowering a brighter
futureWe act on these values to nourish
our growth, and to support ourlongstanding commitment to serve
customer and society at large.

Be the world’s most trusted financial
group

1. Integrity and Responsibility
2. Professionalism and Teamwork
3. Challenge and Agility

MUFG WayMUFG Way serves as the basic policy in conducting our businessactivities, and provides guidelines for all group activities.
MUFG Way also is the foundation for management decisions, including
the formulation of management strategies and management plans, andserves as the core value for all employees.

History+360 yearsof history+30 years
in New ZealandGlobal Reach

40+
Markets

2,000+

Location globally

300

Group company globally

120,000

Professionals globally

MUFG New Zealand Climate Report FY2023 |5

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

MUFG’s Group Network
Global locations - Most extensive overseas network among Japanese financial groups

Europe, Middle East
& Africa

29

Bank of Ayudhya(Krungsri)
Japan

585
Bank Danamon2

431

Americas36863

Asia &
Oceania58

Number of locations as of end-Mar 20241

MUFG Oceania

PerthSydneyMelbourne

AucklandMUFG Oceania is ranked as a top tierinternational bank based on therelationship strength index, overallcustomer satisfaction survey anddomestic banking penetration inAustralia and New Zealand 3.

MUFG Oceania forms part of the broader Asia Pacific (APAC) region, with APAC being one of three key regions(outside of Japan) of the MUFG Group along with the Americas and EMEA.
MUFG New Zealand forms part of MUFG Oceania along with the Sydney, Melbourne and Perth Branches.
All back-office operations, including risk and compliance functions, are based in Sydney Branch which support the
spoke branches across Oceania.
1) Bank Danamon Indonesia including Adira Finance is as of end Dec 2023
2) Including 466 locations of Adira Finance3) Peter Lee and Associates 2023 Survey

MUFG New Zealand Climate Report FY2023 |6

Committed toempoweringa brighter future
MUFG New Zealand
We have had a banking presence in New Zealand for over 30 years and became a registered branch in 1996.
As the only Japanese bank in New Zealand, we place a particular focus on expanding our business with majordomestic companies as well as providing support to Japanese companies operating in New Zealand.
In New Zealand, we are a key provider of banking services to a wide variety of domestic and Japanese Corporate andInstitutional clients across a range of sectors, and has invested heavily in building out our coverage capability andcapacity over the past 10 years.
MUFG New Zealand focusses on providing finance to key industry sectors, including utilities, infrastructure, diversified
industrials, financial institutions, and also supports MUFG Group’s Japanese Corporate and Global Subsidiary Banking
businesses.
MUFG New Zealand is aligned to MUFG Group’s global climate change and sustainability strategy and commitment to
net zero GHG emissions from its financed portfolio by 2050.

Message from New Zealand Management
Takahiro Iino – Managing Director, Head of Oceania
MUFG is Japan's largest financial institution with a balance sheet of circa $3 trillion and acomprehensive footprint that spans Asia-Pacific, Americas, and EMEA. Our presence in Oceania issubstantial and is marked by over 100+ years of dedication and commitment. With great bilateralrelations, strong trade ties and a shared appreciation for the natural environment, MUFG is devoted
to understanding the energy transition needs of its New Zealand clients and facilitating finance forstrategies that support these. We look forward to continued mutual success as we build asustainable future together.

Managing Director, Head of Oceania
Co-Head of Sydney Branch
Dated (Sydney): 30 July 2024

Nick Congdon - Managing Director, Head of New Zealand
MUFG New Zealand has been a material capital provider to a wide range of Corporate andInstitutional clients for over 30 years in New Zealand. As part of MUFG’s global commitment tocontributing to building a sustainable environment and society we look forward to working with our
New Zealand client base and supporting their decarbonisation goals in driving a brighter future for
New Zealand.

Managing Director, Head of Auckland Branch(New Zealand Chief Executive Officer)
Dated (Auckland): 30 July 2024
MUFG New Zealand Climate Report FY2023 |7

2. Governance
2.1 MUFG Group Governance for Countering Climate Change
At MUFG Group, the Sustainability Committee under the Executive Committee regularly discuss policies andinitiatives to address opportunities and risks related to environmental and social issues, including climate change.
Group-wide project teams have also been established to support these initiatives.
MUFG Group has positioned climate change-related risk as one of the Top Risks4 that it must pay close attention to.
Accordingly, these risks are discussed by the Credit & Investment Management Committee, the Credit
Committee and the Risk Management Committee, all under the direct supervision of the Executive Committee.

The Regional Offices in Singapore (the Region) act as the Hub for APAC region. At the APAC Sustainability Forum,
various climate-related opportunities along with ESG related initiatives are reported and discussed. For the climaterelated risk management side, the Regular Call for Climate Change Management is held on a monthly basis with
APAC branches to provide latest information and guidance from the Group and the Region and to assist meeting
local regulatory requirements in a standardised way.
MUFG Group regularly holds meetings for exchanges of ideas between external advisors and members of the Boardof Directors to leverage expert knowledge from outside the Group in our sustainability initiatives. The Board of
Directors and other relevant members actively exchange ideas spanning wide-ranging areas, including the latest
trends in the most important issue of climate change response, and other important topics of ESG.
At MUFG Group level, the executive compensation system has been revised to support the Group’s sustainability
targets and to achieve the Medium-term Business Plan. ESG-related external rating metrics have been installed as a
medium- to long-term performance-linked evaluation indicator for Executives’ stock-based compensation.
Additionally, Executives’ contribution to the Group initiatives to address environmental and social issues,
including climate change, forms part of the Executive performance evaluation and remuneration scheme.
4) MUFG Top Risks MUFG: Risk Management | Mitsubishi UFJ Financial GroupMUFG New Zealand Climate Report FY2023 |8About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

2.2 MUFG Oceania Governance for Countering Climate Change
Local governance is operated at Oceania level to have an oversight of all branches in Oceania, including
MUFG New Zealand. The top governing body in Oceania is the Oceania Executive Committee (OEXCO) which consistsof senior management and is chaired by the Head of Oceania.
OEXCO, which is held twice a month, is responsible for the running of the Branch in respect of safety and soundness
as well as local business strategies. This includes developing the Branch’s response to climate change and ensuring
the Branch’s alignment with MUFG Group policies and initiatives on climate change and sustainability.
MUFG Oceania has established a climate change working group to support OEXCO through the identification andassessment of climate-related risks and opportunities, the establishment of appropriate governance structures, andsupporting the development of the Branch’s strategies to deal with climate-related risks and opportunities.
The working group has a cross departmental membership with a primary responsibility for climate-related risk andopportunity management, and reports directly to OEXCO. The working group is also responsible for ensuring
MUFG New Zealand complies with local regulatory and legal requirements (e.g., NZ CS requirements).
More broadly, the working group contributes and assists OEXCO in its efforts to promote decarbonised society.
Key decisions, issues and action items taken or raised at the working group are reported to OEXCO on at least amonthly basis.
At MUFG Oceania, to enhance it’s understanding of climate-related risks and opportunities, the OEXCO and MUFG
Oceania Senior Leadership Team participated in workshops and training delivered by both internal and external
subject matter experts in these fields.
To enable each employee to further contribute to empowering a brighter future, MUFG Oceania is currently planningclimate-related and ESG training for all MUFG Oceania employees, and scheduled to take place in FY2024.
MUFG Oceania has specific ESG-related business KPIs. Wider employee KPIs are currently under discussion at theregional level to be integrated into the employee performance management process.
As the importance of climate-related risks and opportunities increases, MUFG Oceania’s governance structure forclimate change continues to evolve.

MUFG New Zealand Climate Report FY2023 |9

3. Strategy
3.1 MUFG Group Climate Strategy
Committed to empowering a brighter future
In April 2021, MUFG Group defined the Group’s purpose as being “Committed to empowering a brighter future” anddeclared its support of relevant recommendations formulated by the Task Force on Climate-related Financial
Disclosures (TCFD)5, a special taskforce established by the Financial Stability Board (FSB).
The following describes MUFG Group’s position on climate change that guide the Group’s underlying actions toaddress climate change:• Carbon neutrality cannot be achieved by financial institutions alone; it is enabled through the carbon neutralityof clients, which means decarbonising the real economy. To this end, it is crucial to achieve steady progress indecarbonising carbon intensive industries and regions through client engagement and support, includingtransition finance.
• Decarbonisation pathways depend on regional characteristics, such as geographic conditions and industrial
structure. Asia, in particular, is in the midst of economic development, and its increasing energy demand is
expected to continue. It is therefore important to strike a balance between decarbonisation and economic
development.
• To both support clients and achieve MUFG Group’s interim target for 2030, management for transition support
and target achievement are necessary, and it is important to establish an effective framework to support these
activities.
MUFG Group has also set interim targets by sector, of which further details are made available in Section 5.2.
We have included a high-level timeline of MUFG Group targets and initiatives contributing towards our Climate
Strategy.

2021
•
•

Joined Net Zero Banking Alliance(NZBA) and Net Zero AssetManagers Initiative (NZAM)
Set target to achieve carbon
neutrality by 2050

2030
•
•

Net Zero GHG emissions in our own
operations
Set interim 2030 targets by sector inline with the Paris Agreement

2050
•
•

Achieve carbon neutrality
Net Zero GHG emissions in our
financed portfolio

The MUFG Carbon Neutrality Declaration and the NZBA
In line with the MUFG Group target to achieve carbon neutrality by 2050, the Group is pursuing various initiatives
based on three commitments:• Helping achieve the 1.5°C target by achieving carbon neutrality by 2050,• Supporting a smooth transition to a decarbonised society, and• Creating a sustainable society by fostering a virtuous cycle between the environment and the economy.
In support of these commitments, MUFG Group’s Medium-term Business Plan includes a heightened commitment tohelping resolve environmental and social issues.
MUFG Group’s four main strategies in meeting these commitments and achieving carbon neutrality are:
(1)
(2)
(3)
(4)

Reducing emissions from own operations
Engagement with and support of clients in transitioning to net zero
Reducing emissions from our finance portfolio
Risk management and governance5) tcfd2023_en (mufg.jp)
MUFG New Zealand Climate Report FY2023 | 10

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action PlanEngagement and support
Client Engagement
In line with MUFG Group’s overall strategy to promote engagement and support decarbonisation, the Group willcontinue to identify new needs and issues faced by MUFG Group clients and provide solutions to meet theseneeds, while offering suggestions to policymakers in collaboration with industries and government agencies.
As the Group deepens its relationships with clients, local governments, and various industries throughmanagement-level executive forums and through efforts of a newly established specialised engagement team,
MUFG Group provides valuable insights to clients, industries and government agencies on emerging needs andissues related to decarbonisation.
Engagement approach Policy suggestions in collaboration with industries and government agencies

Specific engagement activities

Contribute to GX policy formulation by collaborating with government agencies andindustries through policy engagement
Building frameworks fortransition financeTransition Whitepaper

Asia Transition White Paper

Promoting blended financing

Participating in initiatives inJapan and overseas

Activities for COP28

Phase 1

Confirm our position

Explore how MUFG can supportclients’ current activities toachieve net zero

Phase 2Analyse client strategies
Organise client strategies andoperational issues, along withfinancing opportunities

 Enhancing our capability to provide solutions that support clients’decarbonisation in line with government policies and strategies

Phase 3

Support in developing
financing plans

Strengthen our capability to provide solutions tailored to each market stage by leveraging thecollective strengths of the MUFG Group and collaborating with external partners
Sustainable financepromotion

GX value chain support

Identify financing requirements
in line with clients’decarbonisation plans

Investment andInnovation projects

Phase 4

Provide financing

Agree pricing and solution
designs with clients andexecute financing contracts

Leveraging relationships with clients, local governments, andindustry associations to identify new needs and issues

Phase 5

Provide feedback to industries and government agencies on new needs and issues
identified through decarbonisation support, and link to policy suggestions
Executive Forum for
dialogue with clients froma management standpoint

Measure effectivenessand check progress

Measure effectiveness throughprogress checks. Support thetransition to a decarbonisedbusiness modelSpecialised engagement teamFinancing Support
MUFG Group has raised its sustainable finance target
from 35 trillion yen (circa NZ$ 387 billion6) to 100 trillion yen(circa NZ$ 1.1 trillion6) by 2030, given strong progress that
MUFG Group has made to date along with the growing demand
for funds. Through the expansion of sustainable financing(e.g., renewable energy project financing), the Group will not only
generate positive environmental impacts, such as CO2 reduction,
but also create broader environmental and social impacts.

76) Exchange rate applied is JPY90.5/NZD 7) Estimated required capital investment of 150 trillion yen over the 10 years starting in 2023 in Japan (per the
Basic Policy for Realization of GX by the Japanese government), and 5 trillion U.S. dollars per year globally (per net zero scenarios by the Network forGreening the Financial System (NGFS))
MUFG New Zealand Climate Report FY2023 | 11

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

3.2 MUFG New Zealand’s Climate Strategy
MUFG New Zealand’s core business is the provision of wholesale banking services to Corporate and Institutional
clients in New Zealand focused on core industry sectors including utilities, infrastructure, diversified industrials,
financial institutions, and support of MUFG Group’s Japanese Corporate and Global Subsidiary Banking businesses.
MUFG New Zealand’s strategy is to be a leading global bank in the New Zealand market providing banking solutions
to its client base. MUFG New Zealand is committed to promoting real economy decarbonisation and a sustainable
environment.
This Strategy section outlines the process MUFG New Zealand has undertaken to identify and understand ourcurrent and anticipated climate-related risks and opportunities, how we will adapt our strategy based on these risks
and opportunities using scenario analysis.
The Group will facilitate its clients' transition to net zero emissions and implement environmental measures globallyin line with its Carbon Neutrality Declaration, announced in May 2021.
Aligning with the Group climate strategy and announced sectoral targets (detailed in Section 5.2), MUFG New
Zealand is working with clients to deliver a smooth and orderly transition and a decarbonisation of our financed
portfolio by 2050. MUFG New Zealand’s roadmap to achieving carbon neutrality for the New Zealand branch will
follow the four main MUFG Group level strategies (detailed in Section 3.1).
Growth targets have been established for MUFG New Zealand’s sustainable financing portfolio in support of the
MUFG Group publicly stated targets (detailed in Section 5.2).

3.3 Climate-related Opportunities
MUFG New Zealand has reviewed key climate-related opportunities in the following sectors – Energy, Transport andShipping, and Agriculture, which comprise 47% of our total exposure in the New Zealand business. We haveidentified the driver of these opportunities and are actively looking towards investments, partnerships and projects tocontribute towards the decarbonisation of our portfolio.

EnergyTransport
andShipping

Agriculture

Climate Opportunity Driver

Description and Potential Impact•

Increase in New Zealand’s renewable andlow-carbon energy sources
Resilience & reliability of energy
distribution

Banking and financing related opportunities• expanding renewable and low-carbon energy• transmission and distribution networks•

Decarbonation of New Zealand’s transport
fleet

Banking and financing related opportunities• low / zero emission fuels and associatedinfrastructure (such as hydrogen, ammonia,
methanol and biofuels)• EV Infrastructure•

Reduction in biogenic methane

Banking and financing related opportunities• Agriculture and clean technology to drive
biogenic methane reduction• Investments into decarbonising the farming
ecosystem•

In light of the increase in the Group’s sustainable finance target, from 35 trillion yen (circa NZ$ 387 billion) to 100
trillion yen (circa NZ$ 1.1 trillion) by 2030 to support the decarbonisation of its financed portfolio, we note specificfunding decisions and capital deployment will be undertaken in conjunction with the MUFG Group policies andprocedures including climate-related targets (refer section 5.2).

MUFG New Zealand Climate Report FY2023 | 12

4. Risk Management
As noted in section 2.1 above, climate-related risk has been identified as one of the Top Risks facing MUFG Groupand is managed at Executive level via various delegated Group Risk Committees. MUFG New Zealand, a branch of
MUFG Bank, Ltd. under MUFG Group, is subject to Group Risk Policies and Procedures, including those on climaterelated risk. These Policies and Procedures are implemented and overseen locally via OEXCO through local
governance structures.
Additionally, MUFG New Zealand has undertaken a qualitative assessment of physical (acute and chronic) andtransition impacts from climate change across our New Zealand investment portfolio in compliance with therequirements of the NZ CS. This assessment was based on a scenario analysis, with scenarios developed incompliance with NZ CS1 (see section 4.1 below).
Under this assessment, the impact of climate change on two key business risks has been considered as outlined
below:
ClimateImpactCreditimpacts

Operational
impacts

Description

Current Impacts

Physical and transition impacts from climatechange that affect our customers’ businesses
and impact on MUFG New Zealand.

We have not currently observed any significant shortterm impacts from climate change on the credit risk
profile of our clients.

Physical and transition impacts from climatechange directly affect MUFG New Zealand’s
capital and operational costs (e.g., increased
operational costs to meet climate policies,
ensure operational resilience to the impact ofclimate events, or insure buildings fromextreme weather events) and therefore also
impact our financial returns.

We have assessed the operational impacts on ourbusiness and have concluded that these do not
impact our ability to operate in the short-term.

4.1 Scenario analysis undertaken
We engaged with a third-party service provider to assist in developing relevant scenarios covering both physical andtransition risks impacting MUFG New Zealand’s business, in compliance with NZ CS1. Against those scenarios, acomprehensive qualitative review of our business was conducted to identify and understand the climate-related risks
that affect our New Zealand investment portfolio. This process was conducted by the working group and the external
service provider and overseen by OEXCO. Refer to the appendix for the scenario analysis process.
We have identified the potentially significant climate-related risks from our scenario analysis. These risks have beenassessed using an impact assessment that takes into consideration the likelihood of the risk occurring, and theconsequences for MUFG New Zealand’s business.
Based on these Scenarios, climate-related risks were assessed against the three-time horizons8. For the short-term
assessment, both inherent and residual risks were assessed. For the medium- and long-term horizons, risks wereassessed using a “low”, “moderate” and “high” risk matrix approach (see Credit Risk Heatmap).
The risks and opportunities arising from climate change, based on these scenarios, will be re-assessed on an annual
basis.
MUFG New Zealand does not intend to exclude any parts of its value chain when conducting risk assessment.
However, climate change risk assessment is in the process of development, therefore, risk assessment andmanagement of climate-related risk will also evolve.
8) The time horizons MUFG New Zealand considered in the scenario development and climate-related risks and opportunity identification are
short-term (~3 years), medium-term (~10 years), and long-term (~30 years)
MUFG New Zealand Climate Report FY2023 | 13

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

4.2 Credit Risk - Sector level climate scenario narrative
Physical and transition impacts from climate change can affect our customers’ businesses and their ability to meettheir obligations, and increase the likelihood of default.

Approach
To assess climate-related risks and opportunities against MUFG New Zealand’s lending portfolio, we analysed ourlending book to understand the sectors most susceptible to climate risk. MUFG New Zealand considered the size oflending to the sectors (materiality from a lending perspective) and the level of sectoral exposure to either physical ortransition risks. The sectors MUFG New Zealand analysed for sector level risks included the following:

Sector Exposure of MUFG New Zealand Lending Portfolio (%)9
Agriculture, Horticulture and Aquaculture

22.5

Energy18

6Transport and Shipping

4.1

Construction

5.4

Manufacturing

3
33.5

7.5

Real Estate
Telecommunications
Other

A qualitative Risk Assessment was then conducted on four key sectors in MUFG New Zealand’s portfolio, based on
exposure and potential impact of climate-related physical and transition risks on the portfolio. These sectors are
Agriculture, Horticulture and Aquaculture, Energy, Transport and Shipping, and Telecommunications. These risks
were assessed against short-, medium- and long-term time horizons against the 3 selected scenarios based on the
Heatmap below.
In the short-term, climate-related risks on the identified sectors were assessed as low on a residual basis, based on
the business models of MUFG New Zealand’s customers and existing customer driven climate risk mitigations. In themedium- to long-term, climate-related risks (both physical and transition) were assessed to increase for the identified
sectors, particularly under the “Too Little too Late” and “Hot House” scenarios as per the Heatmap below.
Based on our scenario based qualitative risk assessment, physical and transition risk in our identified higher risk
sectors is considered low in the short-term. In the medium- to long-term, 54% of our total portfolio is consideredvulnerable to physical risk and 47% to transition risk, with these risks increasing over time. This assessment will be
refined as data availability and quality improves.
This qualitative assessment process will be conducted annually and identified customers in these sectors will be
subject to heightened monitoring by the Branch and Credit Risk Management for changes in short- to medium-termclimate-related risks.
In line with MUFG Group’s climate change / sustainability strategies (see 3.1 above), including sustainability lending
targets, MUFG New Zealand will, along with heightened monitoring for exposures in the identified sectors, increaseclient engagement to support their transition requirements and physical risk mitigation strategies.
As MUFG Group develops quantitative capabilities and modelling to assess climate-related risk, these will be
adopted by MUFG New Zealand as part of our overall climate risk management process.
9) As of end of March 2024
MUFG New Zealand Climate Report FY2023 | 14

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

Credit Risk Heatmap
Key:

High
Moderate
Low

SectorAgriculture,
Horticulture andAquaculture

Orderly
1.5°C
SubCategory

Climate Risk
DriverPhysicalAcute andchronic

Drought,
flooding,
extreme weather,
extreme heat, fireTransition

MarketCustomer
behaviourchangeRisk

ShortTerm(Inherent)

ShortTerm(Residual)

MediumTerm

LongTerm

Too Little Too Late
>2°C
MediumTerm

LongTerm

Hot House>3°C
MediumTerm

LongTerm

Drought

Acute

Heatwaves

Flood

PhysicalTemperature
increase

EnergyChronic

Sea level riseTechnology

Unsuccessful
Investment

Policy &Legal

Litigation risk

Acute

Extreme Weather

Chronic

Precipitation
changeMarketCustomer
behaviourchangeAcute

Extreme weather

Transition

PhysicalTransport andShipping

Transition

Telecommunications

Increased
temperatures

Physical
Chronic

Sea level rise

MUFG New Zealand Climate Report FY2023 | 15

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

4.3 Operational Risk – Climate-related scenario narrative
ApproachBeyond the credit implications of climate change to our customers, MUFG New Zealand is also directly exposed tooperational impacts from climate change due to our physical footprint and the increased expectations of society andGovernment to manage our climate-related impacts. Similar to Credit Risk, a qualitative Risk Assessment was
conducted for all the potential transition and physical risks. These risks were assessed against short-, medium- andlong-term time horizons against the 3 selected scenarios. We have concluded that in the short-term the risks
identified via the scenario analysis do not impede our ability to operate.
This qualitative assessment process will be conducted annually for movements in short- to medium-term climaterelated risks.
Mitigating actions include but are not limited to ensuring that we have targets in place for addressing emissions,maintaining adequate business continuity arrangements in place, including staff having the ability to operate fromhome or at alternative dedicated recovery premises, and ensuring that our New Zealand corporate premises are
sufficiently structurally sound.

4.4 Other Risks
Climate change impacts other risks facing MUFG New Zealand. These include reputational risk, legal andcompliance risk and liquidity/funding risk. The potential impacts of climate change on these risks are recognised andassessed and managed through the existing Risk Management Committee and processes.

MUFG New Zealand Climate Report FY2023 | 16

5. Metrics and Targets
5.1 Reducing emissions from own operations
MUFG Group
Based on the MUFG Group Carbon Neutral Declaration released in May 2021, the Group has a target to reduce
GHG emissions from our own operations to net zero by 2030, including through emissions reduction activities suchas energy efficiency & conservation and adoption of renewable energy sources wherever possible (see Roadmap
below).

10

11

MUFG New ZealandIn support of the MUFG Group target, MUFG New Zealand is also aiming to achieve net zero emissions from ourown operations by 2030.
Current progress towards our 2030 Target is detailed below.
Base year of
reduction target
MetricTargetFY2020(tCO2)FY202112(tCO2)FY2022(tCO2)FY2023(tCO2)

Scope 1emissions

Net zero by 2030

0.276

0.041

0.208

0.253

Scope 2emissions

Net zero by203013

3.410

0.918

0.439

0.452

Total

3.686

0.959

0.646

0.705

GHG emission intensity
GHG tonnes CO2e per FTE

0.205

0.056

0.040

0.039

See Appendix for CO2 Emissions Calculation Method and definitions.

10) Additionality refers to the effect of encouraging an increase in new renewable energy facilities
11) Asian partner banks Krungsri (Bank of Ayudhya) and Bank Danamon are MUFG consolidated subsidiaries in Thailand and Indonesia, respectively
12) Potential impact from external factors such as COVID 13) 100% switch to renewable energy
MUFG New Zealand Climate Report FY2023 | 17

About MUFG

Governance

Strategy

Risk Management

Metrics andTargets

Future Action Plan

5.2 Reducing emissions from our financed portfolio
MUFG GroupTo achieve carbon neutrality by 2050, it is essential to reduce emissions from the financed portfolio (Scope 3
Emissions), which is the main overall source of emissions for MUFG Group. In an effort to reduce such emissions,
MUFG Group is setting:(1) interim targets by sector (see Table below), (2) controls to achieve interim targets, and (3) sector-specificapproaches to achieve interim targets.
MUFG Group has set interim targets in the below sectors in accordance with NZBA guidelines where detailed
approach in setting the targets can be found in MUFG Group’s Climate Report14.
More broadly, to support our Net Zero 2050 Target, MUFG Group is also working on, a wide range of initiatives
contributing to resource conservation and recycling through partnerships with MUFG Group clients, including
sustainable investment strategies (recently increased target of 100 trillion yen in sustainable finance – see 3.1) andinvesting in start-up companies in the sustainable sector.

MUFG New Zealand
A decarbonisation target has been set at the Group level for all sites including MUFG New Zealand, and we aim toachieve our Net Zero 2050 Target collectively as illustrated in the Table below.

MUFG Interim targets by sector
MUFG has set interim targets in the following sectors in accordance with NZBA guidelines.
FY2022 results

Baseline
SectorTargets

Emissions
Scope

Targetfinancing

Indicators

Power

Power generationcompanies

Scope 1

Corporate loans18 andProject financeOil & gas

Upstream
producers

Scope 1, 2 and 3

Commercial Developers/REITs/SPVs19real estate
Residential
Mortgage debtors
real estate

Baselineemissions

Emissions

Coverage ofemissions in
scope15

PCAF
score16

Emission
intensity

2019

328g
CO2e/kWh313g
CO2e/kWh87%

1.8

156g-192g
CO2e/kWhCorporate loans andProject finance

Absolute
emission

2019

84MtCO2e81MtCO2e
(-5%)

86%

1.7

-15% -28%

Scope 1, 2 and 3(Category 13)

Corporate loans andnon-recourse loans

Emission
intensity

2020

65kg
CO2e/m2

56kg
CO2e/m2

2.3

44kg – 47kg
CO2e/m2

Scope 1 and 2

Mortgages

Emission
intensity

2020

27kg
CO2e/m2

25kg
CO2e/m2

5.0

23kg
CO2e/m2

Scope 1 and 2

Corporate loans

Absolute
emission

2019

22MtCO2e

16MtCO2e(-25%)

86%

1.3

-22%

2021

Formerstandard:
PCA 0.6%

New standard:
PCA 26.2%(Minimum)New standard:
PCA 30.9%(Striving)

85%

-

-

-

73%

Steel

Steel
manufacturers

Shipping

Maritime
operators

Scope 1

Ship finance

Portfolio
climatealignment(PCA)
score20

Automotive
manufactures

Scope 3 (Category 11)

Corporate loans

Emission
intensity

2021

169g
CO2/vkm

Airline companies

Scope 1

Corporate loans
and aviation
finance

Emission
intensity

2021

130g
CO2/RPK---

Corporate loans

Creditbalance2022

Approx.
3 billion yen(Approx. 12 billion
yen for nonOECD countries)

-

-

-

New
Automotive

New
Aviation

Aircraft lessors Scope 3 (Category 13)

New
Coal

Miningoperators21

Targets17(FY2030)

Baselineyear

Scope 1, 2 and 3

-

PCA≤0

-23% -46%71g
CO2/RPK

Zero(2040 for
non-OECD
countries)14) Climate Report 2024 15) Ratio of financing amounts for which actual results are measured to total financing amounts subject to measurement 16) PCAF’s own five-point scale scoring
system that indicates the quality of the disclosed data. Scores are determined according to the degree of estimation, with Score 1 as the highest rank 17) Referenced scenarios: eachsector’s respective page of Climate Report 2024 18) Including undrawn-committed amounts 19) Special purpose vehicles for real estate securitization 20) PCA score based on the emissions
intensity of vessels in scope of ship finance 21) Business operators primarily engaged in mining thermal coal for power generation
MUFG New Zealand Climate Report FY2023 | 18

6. Future Action Plan
In line with its publicly disclosed climate targets and policies, MUFG Group will continue its efforts to achieve net zero
GHG emissions from its investment and financing portfolio by 2050, as committed in the MUFG Carbon Neutrality
Declaration.
Furthermore, based on the TCFD recommendations, MUFG Group will continue to address risks and opportunities
related to climate change under the supervision of the Board of Directors and disclose the status of such efforts in atimely, appropriate, and proactive manner.

Action plan for initiatives to address climate change
Item

MUFG Group Action PlanMUFG New Zealand Action Plan

Governance• The climate change working group willcontinue to identify and assess climaterelated risks and opportunities,• The Sustainability Committee will
governance, strategies and metrics,
continue to discuss policies and initiatives
including ensuring MUFG New Zealandto address opportunities and risks related
complies with regulatory and legal
to environmental and social issues
requirements (e.g., NZ CS requirements)• Strengthen training for front office• Oceania senior management will receive
representatives
regular training on NZ climate standards
and climate-related risk assessments andopportunities

Strategy• Implement energy efficiency andconservation initiatives and convert• MUFG New Zealand will explore
electricity contracted by other companies
opportunities for decarbonisation in our
to renewable energy to achieve theown operations in line with overarching
Group FY2026 interim targets
MUFG Group initiatives• Implement findings of Asia Transition• Incorporate research and strategies found
White Paper
in Transition White Paper 2.0 and look to• Implement integrated initiatives for natural
implement these strategies where
capital, circular economy, and humanrelevantrightsRisk Management• Promote various measures in line with the
Carbon Neutrality Declaration.
• Study quantification of climate changerisks through enhancing scenario
analysis.

Metrics andTargets• Promote sustainable finance as set forthin the new medium-term business plan as • Reduction of our Scope 1, 2 and 3
MUFG progress towards the Groupemissions in line with overall MUFG Groupsustainable financing target of 100 trillion
targetsyen• Continue to identify and assess climatechange-related risks and information
disclosure in line with MUFG Groupstrategy

MUFG New Zealand Climate Report FY2023 | 19

IndexDisclosure

Governance

Strategy

RiskManagement

Metrics andTargets

Disclosure objectives

Disclosure location

To enable primary users tounderstand both the role an entity’s
governance body plays in overseeing
climate-related risks and climaterelated opportunities, and the role
management plays in assessing andmanaging those climate-related risks
and opportunities.

Page 8Page 8Page 92. Governance
2.1 MUFG Group Governance2.2. MUFG Oceania Governance Structure
for Countering Climate Change

To enable primary users tounderstand how climate change iscurrently impacting an entity and how
it may do so in the future. This
includes the scenario analysis anentity has undertaken, the climaterelated risks and opportunities anentity has identified, the anticipatedimpacts and financial impacts ofthese, and how an entity will position
itself as the global and domestic
economy transitions towards a lowemissions, climate-resilient future.
To enable primary users tounderstand how an entity’s climaterelated risks are identified, assessed,
and managed and how those
processes are integrated into existingrisk management processes.

Page 10
Page 12Page 12Page 13
Page 15
Page 16

3.1 MUFG Group Climate Strategy
3.2 MUFG NZ Climate Strategy
3.3 Climate-related Opportunities
4.1 Scenario analysis undertaken
Credit heatmap
4.3 Operational Risk – Climate-related
scenario narrative
Appendix

To enable primary users tounderstand how an entity measuresand manages its climate-related risks
and opportunities. Metrics and targets
also provide a basis upon whichprimary users can compare entities
within a sector or industry.

Page 9Page 21

Page 13
Page 13
Page 14
Page 16
Page 21

Page 10
Page 12Page 14
Page 17
Page 18
Page 22

4. Risk Management
4.1 Scenario analysis undertaken
4.2 Credit Risk - Sector level climate
scenario narrative
4.3 Operational Risk – Climate-related
scenario narrative
Appendix

2.2 MUFG Oceania Governance forCountering Climate Change
3.1 MUFG Group Climate Strategy
3.3 Climate-related Opportunities
4.2 Credit Risk - Sector level climate
scenario narrative
5. Metrics and Targets
Appendix

The Group, including MUFG New Zealand, does not currently fully disclose the proportion of assets, capital deployment or other businessactivities aligned with climate-related opportunities. MUFG New Zealand is disclosing certain elements in relation to sustainable finance.

MUFG New Zealand Climate Report FY2023 | 20

Appendix
Scenario Analysis
MUFG New Zealand identified its climate-related risks and opportunities and evaluated its business model andlending strategy with a climate focus, utilising qualitative analysis. No quantitative climate modelling or analysis has
been undertaken by MUFG New Zealand, however this work has been done at the Group level.
Our scenario analysis was conducted as a standalone process this reporting year, but MUFG New Zealand will look
to integrate this into our core strategy function and processes in future years, as we progress our understanding of
our climate-related risks and opportunities.

Scenario parameters
Scenario

Orderly
Collective action against
climate change will see a
steady and transformative
response to limit averagetemperature to 1.5 degrees
Celsius and achieving netzero.

Overarching narrative

Global average temperatureby 2100
Physical climate risk
Transition risk
Technology change response
Domestic policy response

Too Little, Too Late

Hot House

Limited progress in policies
and technologies, will lead toDomestic efforts to achieve
high physical risks fromemissions reductions efforts
extreme weather and sea
will be swift, but a delayed
level rise as global warming
global response will lead toexceeds 2.5 degrees Celsius
New Zealand sufferingby 2050, which will disrupt
widespread physical impacts.
social, political, and economic
systems.

1.5 degrees Celsius

2.7 degrees Celsius

4.4 degrees Celsius

Low

Moderate

High

Moderate

High

Low

Immediate and advanced
Fast and coordinated

Delayed and costly
DelayedLimited and insignificant
None

Climate scenarios and data sources used to underpin each scenario
Intergovernmental Panel on
Climate Change Shared
Socioeconomic Pathways
NIWA Representative
Concentration Pathways
Climate Change
Commissions’ Transition
Pathway Parameters
Network for Greening the
Financial System (NGFS)IEA Global Energy Pathways

Time horizons

SSP1-1.9

SSP2-4.5

SSP5-8.5

RCP2.6

RCP4.5

RCP8.5

Tailwinds

Headwinds

Current Policy Reference

Net Zero 2050
IEA Net Zero Emissions by
2050 (NZE)

Nationally Determined
Contributions (NDC’s)
IEA Announced Pledges
Scenario (APS)

Current Policies
IEA Stated Policies Scenario(STEPS)

The time horizons MUFG New Zealand considered in the scenario development and climate-related risks andopportunity identification are:Time horizon

Year end point
Period (relative to 2024)

Reasoning

Short-term

Medium-termLong-term

2026

2030

2050

~3 years~10 years~30 years

MUFG New Zealand defines its
immediate term for its
Aligned with MUFG Group’s
investment portfolio as 3 years,
interim GHG emissions
Aligned with MUFG Group’s
this time horizon allows MUFG reductions targets. Broadly
long-term GHG emissions
New Zealand to stress testaligned with average maturity
reduction targets.
profile of business loans.
active investments and provide
a current state assessment.
MUFG New Zealand Climate Report FY2023 | 21

Appendix
CO2 emissions calculation method
Promoting Carbon neutrality and setting target based on SBTi Corporate Net Zero Standard
Calculation Method:••••

Scope 1: GHG emissions have been calculated in accordance with the Greenhouse Gas Protocol.
Scope 2: Electricity is calculated according to emissions factors based on the Act on the Promotion of Global
Warming Countermeasures and laws and regulations of each country.
Market-based: Adjusted emission factor of emission factors by electric power utility.
Location-based: Alternative value of emission factors by electric power utility. (Emission factors by country
specified by the International Energy Agency)

Emission factor:••

Scope 1 : EPA, "Emission Factors for Greenhouse Gas Inventories," Table 1 Stationary Combustion Emission
Factors, March 9, 2018
Scope 2 : Emission factors by country specified by the International Energy Agency factors

Global warming Potential (GWP) is applied to HFCs to calculate CO2 equivalent emission quantities, using GWP
from the 4th Assessment of the Intergovernmental Panel on Climate Change (‘IPCC’)22.
The operational control approach was used to account for GHG emissions.
FY2021/FY2022 : MUFG Group and MUFG Bank have obtained third-party assurance for Scope1, 2 and Scope3(partial) greenhouse gas emissions23
MUFG New Zealand adopts hybrid workplace model, mixes in-office and working-from-home to offer flexibility andremote work to employees. This disclosure does not include GHG emissions resulting from employee home working
due to data limitations.
Methane (CH4) and Nitrous Oxide (N2O) are excluded in this disclosure as there are no activities that emit therelevant gas and have a material impact due to the nature of MUFG New Zealand business operations.
In line with the Group target to achieve carbon neutrality by 2050, MUFG Group is pursuing various initiatives (refer
to 3.1 MUFG Group Climate Strategy). The Group aims to be net zero from our own operations by FY2030.
Offsetting the residual emissions that cannot be reduced after maximum reduction efforts may be considered once
international discussions on carbon credits have been progressed and credible standards have been established,however, this has yet been decided at this stage.

Internal Emission Price
Under MUFG Group’s Sustainable Business Investment Strategy, MUFG Group invests in funds that contribute tosolving environmental and social issues. Through the Investment Strategy, the Group seeks to acquire knowledge
and explore new business opportunities. In addition, MUFG Group aims to solve issues through our fund investment
activities by creating positive impacts and innovation, and nurturing of new industries.
The internal carbon pricing24 used in MUFG Group investment decisions was US$40/tCO2 (as of FY2022). Goingforward, the Group will assess investment opportunities based on the international impact measurement methods
while considering their updates in a timely manner.

22) GHG emissions that the Group reports are CO2 and HFCs. HFCs is not reportable in MUFG New Zealand. 23) Please see the Group site for details MUFG;
Third Party Assurance/Third Party Verification | Mitsubishi UFJ Financial Group. 24) This concept is used by organisations to independently price their own CO2emissions and to reduce the carbon footprint of their corporate activities. It is used mainly by business corporations for investment decisions.

MUFG New Zealand Climate Report FY2023 | 22

Glossary, Abbreviations, Links
Glossary

APAC
Baseline

MUFG Bank Asia-Pacific region, Asia-Pacific branches (excluding Japan)
Clear definition of baseline time period against which progress will be tracked, with a consistent base year
across GHG emissions targets
BranchMUFG Oceania branches (Auckland, Sydney, Melbourne, and Perth Branch)
Carbon Neutrality Declaration MUFG Carbon Neutrality Declaration
Executive
Mitsubishi UFJ Financial Group, Inc. Board of Directors
FY2023Financial year ended 31 March 2024
GHG emission intensity
The amount of CO2 emitted per unit of economic output or activity
Interim Target
Refers to a short-term milestone between the organisation’s medium- or long-term target and current period
Internal Carbon Price
Refers to a monetary value on GHG emissions an organisation uses internally to guide its decision-making
process in relation to climate change impacts, risks, and opportunities
MUFG BankMUFG Bank, Ltd
MUFG Bank New Zealand
MUFB Bank, Ltd. (Auckland Branch)
MUFG Group
Mitsubishi UFJ Financial Group, Inc.
MUFG Oceania
MUFG Bank, Ltd. Oceania Region(Consist of Sydney Branch, Auckland Branch, Melbourne Branch, Perth Branch)
Net ZeroA state in which GHG emissions are reduced to a net value of zero when combining captured and removed
emissions
NZ CS requirements / NZ CS Aotearoa New Zealand Climate Standards
OEXCO
Oceania Executive Committee, overarching governance committee in MUFG Oceania
RegionRegional Offices in Singapore
Scope 1GHG Emissions (direct GHG emissions by business operators)
Scope 2
GHG emissions (indirect emissions associated with the use of electricity, heat, and steam supplied by othercompanies) in the GHG protocol
Scope 3
Indirect GHG emissions other than Scope 1 and Scope 2 (emissions by other companies related to the own
business activities)
Working group
Climate change working group

Abbreviations

CO2e
COP
EMEA
ESG
FTE
FSB
GHG
GWP
GX
IEA
IPCC

JGAAP
KPI
NDC
NGFS

CO2 equivalent
Conference of the Parties
Europe Middle East & Africa
Environmental, Social, and GovernanceFull Time EquivalentFinancial Stability Board
Greenhouse Gas
Global Warming Potential
Green Transformation
International Energy Agency
Intergovernmental Panel on Climate Change
Generally accepted accounting principles as used inJapan
Key Performance Indicator
Nationally Determined Contribution
Network for Greening the Financial System

NIWA
National Institute of Water and Atmospheric Research
NZAM
Net Zero Asset Managers initiative
NZBA
Net-Zero Banking Alliance
PCA
Portfolio Climate Alignment
PCAF
Partnership for Carbon Accounting Financials
PCAF score PCAF Data Quality Score
RCP
Representative Concentration Pathway
SBTi
Science Based Targets initiative

Abbreviations for MUFG Title
CEO
CSO
CFO
CSuO
CRO

Chief Executive Officer
Chief Strategy Officer
Chief Financial Officer
Chief Sustainability Officer
Chief Risk Officer

Link to MUFG Sustainability Initiatives / Report

Carbon Neutrality Declaration
MUFG Sustainability
TCFD Report
MUFG Climate Report / MUFG Progress Report
MUFG Transition White Paper 2023 (Whitepaper 2.0)
MUFG Annual Report
MUFG Group Risk Management
MUFG Various Reports/Data/Index

MUFG Group site

MUFG Financial GroupMUFG BankMUFG Bank, Ltd. (Auckland Branch) Disclosure Statement

MUFG; MUFG Carbon Neutrality Declaration | Mitsubishi UFJ Financial GroupMUFG; Sustainability | Mitsubishi UFJ Financial Grouphttps://www.mufg.jp/english/csr/report/tcfd/index.html
https://www.mufg.jp/english/csr/report/progress/index.html
MUFG; Transition Whitepaper | Mitsubishi UFJ Financial GroupMUFG; Annual Reports | Mitsubishi UFJ Financial GroupMUFG; Risk Management | Mitsubishi UFJ Financial GroupMUFG;Various Reports/Data/Index | Mitsubishi UFJ Financial Group
Mitsubishi UFJ Financial Group (mufg.jp)
MUFG; MUFG Bank; Japan's largest bank.
MUFG; MUFG Bank, Ltd.
MUFG New Zealand Climate Report FY2023 | 23

MUFG New Zealand Climate Report FY2023