Carbon Neutrality
Initiative 2024 (Overview)- Provisional English version -March 15, 2024

JAPANESE BANKERS ASSOCIATION

Overview of the Carbon Neutrality InitiativeAchieving carbon neutrality by 2050 is a global commitment by more than 150 countries including Japan, which may bring about aglobal transformation to the industrial structure and the entire economy as a whole. While such a transformation may provide
significant growth opportunities, a disorderly transition to carbon neutrality could also bring about financial risks for banks.
Against this backdrop, the Carbon Neutrality Initiative provides a foundation for the JBA’s policies and actions for asociety/economy-wide “Just Transition”5 to carbon neutrality. The JBA will continue to review its focus, as necessary.
Objective
Support and achieve a “Just Transition” to carbon neutrality by 2050
Key Policies
Key policies to support and accelerate JBA member banks’ efforts for their clients’ orderly transition to carbon neutrality
1

Financialintermediation

2 Cooperation withindustrial sectors

3

Publicadvocacy

4International
discussions

Key Priorities
Key priorities to achieve the 2030 interim GHG reduction targets
1Engagement2© 2024 JAPANESE BANKERS ASSOCIATION

Assessment

3

Sustainablefinance

4 Climate-related

disclosure

5 Climate-related

financial risks

1Key Policies
Achieving carbon neutrality requires significant efforts by both the public and private sectors globally and nationally. It is therefore essential towork collaboratively, not just within the banking industry alone, but also with industrial sectors, the government and the international community.
The JBA, as the premier Japanese banking association, is committed to playing a leading role in such cooperation with key stakeholders,
working collaboratively to achieve carbon neutrality by 2050.

Key Policies

1

Financialintermediation

2Cooperation
with industrial
sectors

3

4

Publicadvocacy

International
discussions

Our Approach

Initiatives

 The banking industry, as the key financial intermediary in Japan,
has a social responsibility to provide financial support to theeconomy to achieve a Just Transition.
 At the same time, banks are expected to effectively manage
climate-related financial risks for their financial soundness and tomeet the stakeholders’ expectations.

 Host seminars inviting relevant ministries, agencies and experts.
 Run an information platform where JBA member banks can refer tokey policies and documents by theme.
 Continue to respond to JBA member banks’ needs and challenges.
Develop the JBA’s capabilities and expertise.

 The JBA will carry out sector-to-sector engagement with relevant
industrial organisations to collaboratively achieve carbon
neutrality.
 The JBA will act as a hub for sharing issues between the banking
industry and industrial sectors.
 The JBA will actively engage in public advocacy, sharing financial
issues and challenges for carbon neutrality and a Just Transition.
 In areas where concerted efforts are required for Japan’sinternational competitiveness, the JBA will work with relevant
industrial organisations as necessary.
 The JBA will actively participate in and contribute to international
policy/rule-making.
 It also promotes close cooperation with the International Banking
Federation (IBFed) and other bankers associations to addresscommon challenges and share good practices.

© 2024 JAPANESE BANKERS ASSOCIATION Deepen collaboration and cooperation with relevant industrialorganisations, and consider cross-industrial measures and initiatives.
 Host seminars inviting speakers from industries to foster mutual
understanding with those industrial sectors / Explain the banking
industry's initiatives at seminars hosted by relevant industrialorganisations.
 Participate in relevant government councils and share the banking
industry’s views.
 Advocate policy recommendations in relation to climate policy/rulemaking.
 Share the banking industry’s initiatives and challenges withrelevant ministries and agencies.
 Enhance the international presence of Japanese banks in thesustainable finance area.
 Actively participate in international discussions on
policy/rulemaking in cooperation with Japanese authorities.
 Continuously collaborate and cooperate with the IBFed and foreignbankers associations in other jurisdictions.

2Major Progress in Key Priorities (January 2023 to February 2024)

Particularly from the perspective of engagement, the JBA provided information through climate change dedicated website and other sources, andreleased materials to support interactions between banks and their customers. In addition, the JBA hosted the JBA CNI Compass Program 13times, inviting speakers from relevant ministries and agencies, and submitted comments on 21 domestic and international public consultations.

Action PlanKey Priorities
1.

1

Engagement

2.

3.

2

3

Assessment

Sustainablefinance

4.
5.
6.
7.

Support member banks' initiatives, including the use of engagement
support tools, such as “First Steps Toward Decarbonisation” [New]
Host seminars/study sessions inviting stakeholders, such as relevant
industrial organisations and ministries, to better understand sectorspecific action plans and economic/technological challenges [On-going]

Follow the trends in global, regional and domestic assessment
guidance/criteria [On-going]
Share examples of leading cases/examples. [On-going]
Participate and advocate in relevant government councils. [On-going]
Participate in discussions to promote sustainable finance, including
discussions to ensure the eligibility and credibility of transition finance[On-going]
Cooperate with SME-related organisations to advocate for support
programs to complement the private sector’s efforts. [On-going]

8.

45

Climate-related
disclosure

Advocate through relevant government councils and the TCFD
Consortium. [On-going]
9. Monitor the progress of TCFD disclosure by our member banks. [Ongoing]
10. Cooperate with international fora such as PCAF on Scope 3 emissions
calculations. [On-going]

Climate-related
financial risks

11. Participate in international discussions on climate-related financial risks.
[On-going] (e.g., share views at international conferences, provide
comments to public consultations)12. Participate in discussions to develop data and methodologies forscenario analysis [New]© 2024 JAPANESE BANKERS ASSOCIATION

Major Progress (Corresponding Action Plan Number) February: Explained the banking industry's efforts at a seminar hosted by theTokyo Chamber of Commerce and Industry. (7) April: Explained the progress of efforts by the JBA at the Net-Zero Banking
Alliance (NZBA) (1), (7), (11) February 2024: Released CO2 Visualisation and Beyond, a document that helps
small and medium-sized businesses promote decarbonisation management (1),(7), (9) Year round: Hosted the JBA CNI Compass Program 13 times, inviting speakers
from relevant ministries and agencies (1), (2), (3), (4), (6), (7), (9), (10), (11), (12)January 2023: Climate change and biodiversity (11)February: Utilization of “First Steps Toward Decarbonisation” (1), (7)March: Pro-Growth Carbon Pricing Concept and GX League (2)April: Long-term CCS roadmap (2)May: Automobile sector roadmap (2)June: Guidelines Concerning the Activities of Enterprises, etc. Toward theRealization of a Green Society Under the Antimonopoly Act (2)July: Progress and challenges of sustainable finance/Transition Finance Followup Guidance (2), (6)September: The status of development of sustainability disclosure standards(IFRS S1, S2 standards, etc.) (3), (9), (10)October: TNFD v1.0, SMBC Group TNFD Report 2023 (3), (4), (10), (11)November: MUFG Transition White Paper 2023, Decokatsu (4)December: BCBS public consultation document “Disclosure of climate-related
financial risks” (11), (12)January 2024: COP28, Asia Zero Emission Community (11)February: NFGS Scenarios (11), (12)
 Year round: Submitted comments on 21 domestic and international publicconsultations (5), (6), (11)Submitted comments regarding the JFSA's "Supervisory Guidance on Climaterelated Risk Management and Client Engagement (Draft)" (May). (12)
 Year round: Participated in discussions at the Expert Panel on Sustainable
Finance hosted by JFSA, other government councils, and at the TCFD
Consortium. (5), (6), (8), (11), (12)3Key Priorities by 2030
The first step for clients to respond to climate change is to identify potential climate-related risks and opportunities and, based on their materiality,
develop a credible transition plan for decarbonisation, including specific actions during the “critical decade” up to 2030.
The starting point for banks to support such a transition is to engage with clients to build a common understanding on their challenges andissues. The JBA will actively play a key role to facilitate such engagement by its member banks and address industry-wide challenges.

Key Priorities
123

Engagement

Assessment

Sustainablefinance

Challenges

Action Plan Currently, the advancement of client self-assessment on climate-relatedrisks and opportunities varies by sector and company.

 Support member banks' initiatives, including the use of engagement-related
support materials, such as “CO2 Visualisation and Beyond”. [On-going] Host seminars/study sessions inviting stakeholders such as relevant industrialorganisations and ministries to better-understand sector-specific action plans
and economic/technological challenges. [On-going] The banking industry needs to build expertise on climate-related policies
and sector-specific challenges for engagement with clients and effective
management of climate-related risks.
 A globally consistent assessment framework/criteria on whether a client’s
activities and transition plan are credibly aligned with the Paris Agreement
and/or NDCs does not necessarily exist.
 There, however, is internationally growing pressure on banks to demonstrate tostakeholders how banks reduce their financed emissions.
 Further promotion of sustainable finance, including transition finance, isneeded to realise GX.
 For SMEs, transforming their business entails numerous challenges.

4

Climate-relateddisclosure Progress is being made in the development of a framework for climaterelated disclosures. Continuous engagement with clients is indispensable toenhance banks’ disclosure.
 For banks' climate-related disclosures, industry-wide discussions onactions and measures are required to meet the challenge of Scope 3
emissions calculations.

5

Climate-related
financial risks

 Discussions are carried out for the management of climate-change risks forbanks, including the Basel framework. The JBA needs to actively
participate in international discussions.
 It is necessary to address issues, such as a lack of data and methodologies for
scenario analysis, to identify and manage climate-change risks.

© 2024 JAPANESE BANKERS ASSOCIATION

 Monitor the trends of available assessment guidance/criteria. (global, regionaland domestic) [On-going] Share examples of leading cases/examples. [On-going] Participate and advocate in relevant government councils [On-going] Participate in discussions to promote sustainable finance, including discussions
to secure the eligibility and effectiveness of transition finance [On-going] Cooperate with SME-related organisations to advocate for support programs tocomplement the private sector’s efforts. [On-going] Support initiatives to achieve environmental and social effects (impacts) [New] Advocate through relevant government councils and the TCFD Consortium.
[On-going] Monitor the progress of sustainability disclosures by our member banks, andsupport initiatives using “CO2 Visualisation and Beyond” [New] Cooperate with international fora such as PCAF on Scope 3 emissionscalculations. [On-going] Participate in domestic and international discussions on climate-related
financial risks. (e.g., presentation at international conferences, provide
comments during public consultations) [On-going] Participate in discussions to organise available data and methods for scenario
analysis. [On-going]

4