E nvironmental Conservation and Climate Change Actions

Scenario analysis
The Juroku Financial Group conducts scenario analysis on physical risks and transitional risks in order to identify how climate-related risks
would affect the Group.

Information Disclosure Based on TCFD Recommendations
The Group recognizes initiatives for climate change as an important management issue, and strives to grasp the opportunities andrisks brought by climate change.
We have also expressed our endorsement for TCFD (Task Force on Climate-related Financial Disclosures) recommendations,and are proceeding with appropriate information disclosure based on the disclosure framework advocated for by TCFD.

Governance
Sustainability Management Structure
As stated in the Sustainability Policy, the Juroku Financial Group recognizes sustainability initiatives such as climate change as animportant management issue. “The Juroku Financial Group SDGs Declaration” lists “environmental conservation and climatechange actions” as one of the key challenges.
In order to address this challenge appropriately, the Group has set up the Sustainability Meeting, which is chaired by thePresident and consists of Group Management Meeting members, Division General Managers and the head of the Sustainability
Management Office.
The Meeting meets at least once every 3 months in principle to deliberate on important matters such as drawing up a policy
for implementing initiatives for climate change and other sustainability issues, setting targets and checking progress, andreflecting results to management strategies and risk management. Items deliberated on at this Meeting are reported periodicallyto the Board of Directors at least once a year for appropriate supervision.

Strategy
Opportunities and risks brought by climate change
The Juroku Financial Group analyses risks and opportunities associated with climate change in the timeframes of “short term,”“mid term” and “long term.” The results of analyzing scenarios are used to organize active dialogue (Engagement) for supporting
customers who are working toward a decarbonized society, and reinforce financial support in the forms of sustainable financing
and transition financing to create business opportunities and reduce risks.

Opportunities

Assessment item
Resource efficiency
Energy sources
Products and services
Robustness
Acute risks
Physical risks

Risk

Chronic risks
Policies / laws
Transitionalrisks

Technologies
MarketReputation

Main opportunities and risks

Timeframe

Increasing business opportunities such as offering investments, loans and consultation
services to help customers’ transition to a decarbonized society
Reducing business costs through resource saving and energy saving
Boosting corporate value by implementing appropriate initiatives on climate change anddisclosing information about them
Increasing public works projects for disaster management and demand for customers’ capital
investment fund
Deterioration in customers’ business performance and damage to collateral value due to theincrease in frequency and severity of abnormal climate patterns, causing a decline in loan
asset value
Business disruption at Group sites affected by a disaster

Short- to long-term

Deterioration in customers’ business performance and damage to collateral value due tohigher average temperature and higher sea level, causing a decline in loan asset value
Deterioration in customers’ business performance due to climate-related regulationtightening, failed investment in low-carbon technology and changes in consumer behaviors,
causing a decline in loan asset value
Slower implementation of appropriate climate-related initiatives and disclosure of information
about them than competitors, lowering corporate value

Short- to long-term
Short- to long-termMid- to long-term

Physical risks

Transitional risksRain-prone Japan experiences heavy precipitations eachyear, causing rivers to swell and triggering flooding. In
recent years, the number of heavy localized rainstorms has
become more common, causing significant damage tomany areas including our sales territories.
In terms of physical risks, we have anticipated anincrease in the frequency of large-scale flooding due toclimate change, and calculated the impact of climateattributable large flooding in Gifu Prefecture on theGroup’s credit-related costs on the premise of the RCP8.5scenario (4 °C scenario). The result points to a cost increaseof approx. 3.1 billion yen.

Following a qualitative analysis of sectors with large credit
exposure and sectors referred to in TCFD
recommendations, we have identified the “electric powersector” and “automotive sector” as sectors of significant
transitional risks for the Group.
In terms of transitional risks, on the premise of theRCP2.6 scenario (2 °C scenario) and NZE scenario (1.5 °Cscenario), we calculated the impact on the Group’s creditrelated costs in view of the increased cost of transition into a
decarbonized society such as the introduction of the carbon
tax, a decline of net sales and future market trends. The
result points to a cost increase of approx. 2.2 billion yen.

Physical risks

Transitional risks

Scenario

IPCC / RCP8.5 scenario (4 °C scenario)

IPCC / RCP2.6 scenario (2 °C scenario)
IEA / NZE scenario (1.5 °C scenario)

Risk event

Large-scale flooding

Transition to a decarbonized society

Analysis target

Borrowers in Gifu Prefecture
Collateral of real estate (buildings) in Gifu Prefecture(excluding secured home loans)

Electric power sector
Automotive sector

Analysis content

Deterioration of business performance due to customers’
business suspension / stagnation
Damage to the Group’s real estate (buildings) collateral

Deterioration of customers’ business performance due to cost
increase and sales decline

Analysis period

Up to 2050

Up to 2050

Analysis results

Increase of credit-related costs: Up to 3.1 billion yen

Increase of credit-related costs: Cumulative total of approx.
2.2 billion yen*IPCC (Intergovernmental Panel on Climate Change)*IEA (International Energy Agency)

Short- to long-term

Analysis results are calculated under specific preconditions.
Short- to long-termMid- to long-term

The impact on the Group’s finances has been found to be limited within the scope of this analysis, but we will continue to enhance thescenario analysis.

Mid- to long-term
Short- to long-term*Short term = Around 5 years; Mid term = Around 10 years; Long term = Around 30 years

2223

Carbon-related assets

Indicators and targets

Of carbon-related assets defined in the TCFD recommendations,loan balance to the energy and utilities sectors accounts for 1.4%

 atio of carbon-related assets against Juroku
R
Bank’s loan balance (as of the end of March 2022)(Millions of Yen)of the total loan balance. We will examine target sectors for othercarbon-related assets for future information disclosure.

CO2 emissions reduction targets
The following reduction targets are set on CO2 emissions generated by the Group’s energy use in our efforts to establish a decarbonized

Loan balance

Ratio

Utilities

45,936

1.0%

Energy19,1100.4%

TargetTotal

65,047

1.4%

Halve CO2 emissions by FY2030 (SCOPE 1, 2) from the FY2013 level and achieve carbon neutrality by FY2050*Loan balance = Total of loans, foreign exchange, acceptance and guarantee, etc.
*Utilities include electric power and gas supply sectors and exclude water andrenewable energy power sectors

society.

CO2 emissions (SCOPE1, 2)(t-CO2)

Risk management

13,11012,892

12,218

11,873

11,733

10,8099,836(34.4)%

9,452

8,600

Approach to risk management(50.0)%

6,555

The Group has an integrated risk management framework in place, managing its overall financial risks in the categories of “credit risk,”

Carbonneutrality“market risk,” “liquidity risk” and “operational risk.”
Climate change risk is recognized as one of the top risks and a driver of financial risk, and is controlled with the risk management
framework for credit risk and operational risk.

FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2030FY2050Target

TargetFormulating an investment and lending policy

In FY2021, the Group reduced CO2 emissions by 852 tons from the previous year, due partly to the introduction of CO2-free electricity

The Group has the Investment and Lending Policy for Creation of a Sustainable Society.

generated in Gifu Prefecture for use at Juroku Bank’s head office building, which began in November. This has reduced our CO2 emissions
by 34.4% in FY2021 compared to the FY2013 level.

Basic policy
The Juroku Bank Group strives to contribute to medium- to long-term enhancement of corporate value and sustainablegrowth of customers by vigorously supporting initiatives to resolve environmental and social issues through investment andlending. Moreover, the Group strives to mitigate or avert the impact of investment and lending that may pose a significant
risk or have a negative impact on the environment and society by subjecting any such investment and lending to
meticulous consideration.

Sector-specific policies
Coal-fired
thermal power
generation

The Group will not invest in or extend loans to projects that involve building new coal-fired thermal power
stations or expanding existing power generation facilities, while taking a prudent approach in considering
exceptional cases in response to emergencies or in projects in line with the Japanese government’s energy policy.

Weapons

The Group will not invest in or extend loans to companies that manufacture weapons, regardless of fund usage, in viewof the inhumane nature of cluster bombs, anti-personnel landmines and biological / chemical weapons.

CO2 emissions (SCOPE 3)
FY2021[Category 6] Business trips

49[Category 7] Employee commuting3,135

Deforestation24

Calculation methods for other categories will be explored for
future information disclosures.

Sustainable finance targets
The following targets are set on sustainable finances in order to support, through our core business, customers’ initiatives for solving
environmental issues and to contribute to establishing a decarbonized society.

Targets
Target amount
PeriodThe Group will not invest in or extend loans to projects that involve illegal logging or forest incineration.
Investment in / loan to projects whereby the fund is used for operations that involve deforestation will beconsidered carefully in view of their impact on the local economy and the environment.

(t-CO2)

Target investment
and lending, etc.

¥2 trillion (including ¥800 billion yen in the environmental field)
9 years (FY2022 – FY2030)
Sustainable finances
Investment and lending for SDGs / ESG initiatives that contribute to building a sustainable society
Environmental field
Investment and lending for initiatives to reduce environmental impact

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