Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

Sustainability Promotion
Initiatives for promoting sustainability

In October 2021, the Bank formulated the “SDGs Action Plan” from the perspective of the proper and sufficient promotion ofsustainability.
We are strengthening the promotion of sustainability by recognizing the four items of the “77 Bank Group SDG
Declaration” as key topics and working toward the realization of the SDGs.

The Bank has formulated the “77 Bank Group SDG Declaration,”
which parallels the philosophy of the Bank Creed, and from theperspective of further strengthening sustainability initiatives, in
FY2022, we formulated the “SDGs Action Plan” and established

77 Bank Group SDG Declaration (formulated in July 2020)

the “Sustainability Promotion Office.” Since our response to~More than ever, and forever, with our region.~sustainability is long-term and wide-ranging, we will continue to

The 77 Bank Group, in keeping with the philosophy of the Bank Creed of “desiring communal prosperity and serving local
communities,” which has been in our DNA since our founding, aims to contribute to the future of the region and the realization of asustainable society by working toward the achievement of the Sustainable Development Goals (SDGs) on a Group-wide basis.

implement the PDCA cycle for our “SDGs Action Plan” and work
to enhance the social value of local communities and thecorporate value of the Bank.

2. Responding to Global Warming

1. Revitalization of the Regional

Economy3. Encouraging and Supporting the
Activities of Our Employees

and Climate Change
4. Advancing Corporate GovernanceConnections with local communities
In order to expand sustainability as a regional financial
institution, I believe we need to support financing initiatives
and conduct other activities to raise awareness among

Realization of initiatives

customers in local communities. In addition, taking advantage

FY2023 “SDGs Action Plan” (the content of the SDGs Action Plan is discussed each fiscal year)of the comprehensive partnership agreements we have signed

1 Revitalization of the Regional Economy

with all regional public bodies in Miyagi Prefecture for regional(1) Support implementation of SDGs for clients(2) Support new companies and growth of startup companies(3) Build regional economic ecosystems(4) Develop new businesses and sectors(5) Contribute to society through interaction with the local community(6) Make financial services more convenient through non-face-to-face channels, etc.
(7) Expand opportunities to access financial services

2 Responding to Global

Warming and Climate Change(1) Initiatives for environmental protection and climate change(2) Respond to business operators that require environmental
and social considerations(3) Support clients’ disaster countermeasures(4) Expand investment and lending to environmental andsocial sectors

3 Encouraging and Supporting

4 Advancing Corporate Governance(1) Revise personnel systems with the aim of establishing
an ambitious corporate culture(2) Revitalize the organization and enhance productivity
through effective utilization of personnel(3) Introduce flexible work styles tailored to increasingly diverse values(4) Educate and spread awareness of diversity and inclusion(5) Invest in human capital and intellectual property(1) Build internal systems that comply with the TCFD recommendations(2) Enhance awareness of initiatives targeting the SDGs
within the Bank
(3) Active participation of the Board of Directors in the
response to issues surrounding sustainability(4) Strengthen systems for complying with laws and regulations, etc.
(5) Strengthen our stance to respond to antisocial forces(6) Strengthen our stance to prevent money laundering, etc.
(7) Strengthen our stance to manage cyber risks

Status of achievement of KPIs

Target (FY2031)

the Activities of Our Employees

Cases of growth support for founders
Projects launched for new businesses or sectors
Support for increasing the economic growth rate of Miyagi Prefecture
People receiving financial education
Seminars held in related to SDGs/participants
Total cumulative sustainable finance executed (*)
CO2 emissions (vs. FY2014)
Proportion of female managers

Result (FY2022)

Promotingsustainability
Deputy General Manager, General Planning & Coordination
Division and Manager, Sustainability Promotion Office

Takuro Suzuki

revitalization, the Bank would like to provide opportunities forcustomers who do not yet bank with us to learn about oursustainability initiatives by holding various seminars incooperation with regional public bodies and other entities. We
hope to further strengthen our connections with local
communities through various sustainability-related measuresand other efforts.

The Bank’s target form
As stated in the “77 Bank Group SDG Declaration,” we believethat the philosophy of the Bank Creed of “desiring communal
prosperity and serving local communities,” which has been in our
DNA since our founding, is the form of sustainability that the Bankis striving for. The Bank aims to create the future and realize asustainable society, not by ourselves, but together with local
communities.

Major sustainability-related initiatives

3,000 cases

1,490 cases

10 cases (cumulative total until FY2024)

1 case2012

Established the “Environmental Policy”

Japan growth rate +0.1 pt―

70,000 people (cumulative total)

8,364 people

2016

Newly established the “Diversity Promotion Office” and implemented the “IkuBoss Declaration”

100 seminars / 5,000 people (cumulative total)

5 seminars / 484 people

2018

Established the “Diversity Promotion Policy” and formulated the “77 Bank Health Management Declaration”¥1.2 trillion¥274.0 billion

2020

Formulated the “77 Bank Group SDG Declaration” and established “Lending Policies for Specific Businesses”

46.0% reduction

38.5% reduction

30.0%

14.2%

2021

Formulated “Vision 2030” and agreement with “TCFD Recommendations”* Total cumulative investment and lending executed which contributes to the stimulation of local communities and the realization of a sustainable society(investment and lending that supports and promotes SDGs initiatives in the fields of the environment, medicine, new companies, business succession, etc.)

Formulated the “SDGs Action Plan” and newly established the “Sustainability Promotion Office”
2022 Established the “Sustainability Promotion and Management Policy” and formulated the “Dementia Barrier-Free Declaration”
Established the “Sustainability Committee”

26

THE 77 BANK INTEGRATED REPORT

27

Value Creation Story

1 Revitalization of the Regional Economy

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

2 Responding to Global Warming and Climate Change

The Bank aims to contribute to the realization of a sustainable society through consulting with, and building

Through our responses to climate change, we will contribute to the protection of Earth from destruction andpartnerships with, regional public bodies and corporate and individual customers.

contribute to urban development that is more in harmony with nature.

■ Promotion of partnerships for regional revitalization<Cooperation agreement with Nippon Telegraph andTelephone East Corporation> (June 2021)<Cooperation agreement with Meiji Yasuda Life
Insurance Company> (March 2022)

Specific cooperation ideas

Specific cooperation ideas

Ideas related to enhancement and co-creation of regional
value with the use of regional resources and assets
・Asset sharing■J ointly promote various community support
activities by utilizing various assets such as realestate, technology, and human resources

・Support for tourism promotion■M ake joint proposals for workation and regional
brand creation, such as support for commercializationand development of the tourism industry

Ideas related to addressing of regional challenges andvitalization of regions in cooperation with regional public bodies
・Smart cities■Promote innovation in areas such as regional safetyand disaster prevention, administrative services,and transportation utilizing cutting-edge ICT・DX support for local industries■Enhance the productivity of local industries andpromote an increase in resident population throughDX such as next-generation agriculture utilizing ICT

Ideas related to sustainable urban development in regions
・Support for urban development■Promote urban development that integrates ICT
to create local brands and facilitate the passing
down of culture and skills, etc.

・Regional development projects■Jointly promote regional development projects andsupport the creation of local brands and businesses

Ideas related to promotion of industry and tourism
・Support the creation of business opportunities for the Bank’s clients throughexchanges between different industries hosted by Meiji Yasuda Life
Insurance Company
・Promote the products and services of the Bank’s clients utilizing the internal
intranet of Meiji Yasuda Life Insurance Company■ Forest conservation activities
To restore the coastal disaster prevention forest that was lost in the Great East Japan Earthquake, based on the“Citizens’ Reforestation Activities to Restore the Miyagi Coastal Forests” agreement concluded with Miyagi
Prefecture and Sendai City, we carry out forest conservation activities in the “77 Forest for the Future” where weplanted black pine trees in the Arahama District of Sendai City.
We will continue to care the black pine trees so that they will grow big and become a disaster prevention forestthat protects the region from disasters.

・Promote local products by offering Miyagi’s local cuisine and menus using
ingredients from Miyagi Prefecture at employee cafeterias of Meiji Yasuda
Life Insurance Company’s main locations

Ideas related to promotion of total health and support for the elderly・Jointly hold seminars and other events on health management, etc.
・Make joint proposals to the Bank’s clients on support services for healthmaintenance such as “health analysis reports”
・J ointly hold seminars for the elderly (nursing care/dementia, healthmaintenance, end-of-life planning, life planning, etc.)

Ideas related to the promotion of regional revitalization
・S ponsor and participate in activities aimed at contributing to regional
revitalization undertaken by the Bank and Meiji Yasuda Life Insurance
Company

Ideas related to support for the growth of local companies and industries
・Starting new companies or businesses ■P rovide corporate support and incubation
services for ventures and start-ups as well as thecreation of new businesses
・Support for regional core companies■Jointly support the growth of local companies andindustries by taking advantage of the businessmatching agreement between the two companies

・Development of local talents■Jointly develop talents who will lead the region for regional
revitalization and the stimulation of local communities■ Promotion of initiatives to reduce environmental impact
We switched the lighting of business rooms, lobbies, etc. to LED at all branches and cash service corners inprinciple and installed solar power generation systems at new branches.

■ Various seminars and initiatives for financial education

CO2 emissions（t-CO₂）

As a regional financial institution, we hold various seminars and other events related to the SDGs in order tospread awareness of the SDGs among local residents. We are also stepping up our efforts in financial education toenhance financial literacy.

16,00016,79546% reduction

14,00012,00010,331

10,000

Image of a branch with a solar power generation systeminstalled

compared with
FY2014

12,197
10,20010,000

9,069

8,000
FY2014FY2021

FY2022

FY2023(Target)FY2026
FY2031(Interim target) (Our target form)■ Promotion of ESG investment in management of securities
Held <77> SDGs seminars for promoting carbon neutrality

Visited a local junior high school to give lectures on thethemes of “money for working adults” and “work at banks”
after receiving an inquiry from the school at the planning stage■ Initiatives to support clients’ efforts for the SDGs
・Launch of 77 SDGs-related services

In October 2021, we launched “77 SDGs Support Services” and“77 SDGs Support Loans” aimed at spreading the SDGs to andsupporting efforts of SMEs, etc.

28

・Launch of “77 SDGs Privately Placed Corporate Bonds”

In December 2021, we renewed the existing “77 ESG Privately
Placed Corporate Bonds,” etc. and launched “77 SDGs
Privately Placed Corporate Bonds” from the perspective of
accelerating support for companies’ initiatives for the SDGs.

The Bank actively invests in ESG-related areas, including the environment sector, not only in lending to customers
but also in management of securities.

54 cases / ¥42.5 billion ■Sustainability bonds  23 cases / ¥12.3 billion■Social bonds  34 cases / ¥23.8 billion ■Sustainability-linked bonds  7 cases / ¥5.4 billion■Green bonds * Total from April 2018 to March 2022

THE 77 BANK INTEGRATED REPORT

29

Value Creation Story■ Response to TCFD recommendations
Taking into consideration the fact that climate change has become an issue shared by the whole global
community, including unusual global weather phenomena and increasing damage from natural disasters, the Bank
announced its support for the recommendations of the TCFD* in July 2021. In order to contribute to the protectionof Earth from destruction and contribute to urban development that is more in harmony with nature, the Bank will
actively implement initiatives that target issues such as climate change.
Our responses to four items proposed in the TCFD recommendations are described below.
*TCFD (Task Force on Climate-related Financial Disclosures)
A taskforce established in December 2015 by the Financial Stability Board (FSB) and led by private-sector companies with the aim of promoting thedisclosure of climate-related financial information by companies

Governance
The Bank has established a basic policy for sustainability promotion management, and in addition toformulating the “Sustainability Promotion and Management Policy” in January 2022 to ensure this is managed
properly and sufficiently, we set up the “Sustainability Committee,” chaired by the President, in July 2022.
Through regularly discussing and reporting the relevant important matters, including climate change, we ensure
the results of these efforts are reflected in management strategies and risk management.
Since October 2021, in line with the “SDGs Action Plan,” which is formulated each fiscal year, we have been
regularly reporting the status of initiatives for the SDGs such as climate change to the Board of Directors andhave constructed a system where the Board of Directors supervises the status thereof.
Moreover, for the purpose of promoting initiatives for solving environmental and social problems such as
climate change on a Group-wide basis, we have set up the “Sustainability Promotion Office” inside the General
Planning & Coordination Division and while putting in place a system for appropriate management, we are
ensuring that measures are promoted effectively.

Strategy
Based on the understanding that responding to sustainability issues, including climate change, is a key
management issue, we have positioned the “77 Bank Group SDG Declaration” as values shared across theGroup within our new management plan “Vision 2030.”
In addition to the “77 Bank Group SDG Declaration,” which focuses on “responding to global warming andclimate change” as a priority issue, we will also actively support businesses, etc. that contribute to solving
environmental and social issues, determine “Lending Policies for Specific Businesses” based around notfinancing businesses that pose a risk of negative impact to the environment and society, and actively engage ininitiatives related to financing for renewable energy, etc.
■ Opportunities
Treating responses to climate change as a business opportunity, we actively provide various related services
and products and develop products to support our clients’ transition to decarbonization and initiatives for the
SDGs. By understanding the issues and needs of our clients from a medium- to long-term perspective andsupporting them in responding to climate change and transitioning to a decarbonized society, we are trying tocreate and expand business opportunities such as the provision of investment and lending and other solutions.
(As of March 31, 2022)

79 cases●Renewable energy-related funding  406 cases / ¥194.4 billion●Number of applications for “77 SDGs Support Services” Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section■ Risks and scenario analyses
In terms of climate change risks, we are aware of both physical and transitional risks.
●In terms of physical risks, we estimate credit risk caused by climate change affecting the business activities
and changing the businesses circumstances of the Bank’s clients, etc., as well as operational risks
associated with the exacerbation of earthquake and tsunami damage, etc. and damage, etc. to bankbranches due to natural disasters.
●In terms of transitional risks, we estimate risks such as increased credit risk related to borrowers that are
affected by the transition to a low-carbon society, such as those that must respond to stronger climaterelated regulation, etc.
<Scenario analyses>
The results of scenario analyses on physical and transitional risks based on the TCFD recommendations are
as follows.
Physicalrisks・Based on the 4°C scenario presented by the Intergovernmental Panel on Climate Change (IPCC), we
analyzed the impact on the collateral value, targeting real estate collateral in the Abukuma Riverbasin, in the event of storm and flood damage equivalent to that of Typhoon No. 19 in 2019.
・As a result of the analysis that takes into account the temperature rise up to 2050, the collateral value
is expected to decrease by about ¥7.0 billion.

Transitional
risks

・Based on the below 2°C scenario presented by the Network for Greening the Financial System(NGFS), we analyzed the impact on credit expenses for borrowers in the power and utilities sector asa result of deterioration of financial conditions due to tax burden caused by the introduction of carbon
taxes and existing facilities turning into stranded assets.
・As a result of the analysis covering the period up to 2050, credit expenses are expected to increaseby a maximum of about ¥8.2 billion.

<Carbon-related assets>
The Bank’s exposure to the energy and utilities sector accounts for 3.8% of its loans and bills discounted(however, water utilities, independent electric power, and renewable power businesses are excluded).

Risk management●We recognize that physical and transitional risks caused by climate change may have a significant financial
impact in the future.
●To conduct regular analysis and verification of the impact of climate change on capital health and financials
through implementation of regular scenario analyses and stress tests, we have arranged a system byrevising the regulations related to risk management and carrying out other measures.

Indicators and targets●Based on the “Environmental Policy” that we established in 2012, we are promoting activities aimed atconserving the environment, and we have set a target in our new management plant, “Vision 2030,” ofreducing CO2 emissions across the 77 Bank Group by 46% by FY2031 compared with FY2014. Furthermore,
in FY2022, we succeeded in reducing CO2 emissions by 38.5% compared with FY2014.
（t-CO₂）Items measured

FY2014FY2020

FY2021

FY2022

Scope 1 (kerosene, heavy oil
A, etc.; however, gasoline is
excluded)

1,894

1,638

1,600

1,483

Scope 2 (electricity, local hot
water)

14,901

10,68910,5978,848

The Bank’s total (Scope 1 + 2)

16,795

12,327

12,197

10,331*F or Scope 3 (indirect emissions
other than Scope 1 and 2), we will
evaluate calculation methods, etc.

●Furthermore, in the “SDGs Action Plan” formulated in October 2021, we set a ¥1.2 trillion cumulative target
by 2030 for sustainable finance, which is investment and lending contributing to the stimulation of local
communities and the realization of a sustainable society. The result for FY2022 was ¥274.0 billion.

30

THE 77 BANK INTEGRATED REPORT

31

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

3 Encouraging and Supporting the Activities of Our Employees
We are creating an organization where each and every employee and officer can engage in a diverse range of activities.

Through the following four initiatives, our Bank is striving to improve employee productivity as well as the services we provide to customers in local communities, with the aim of becoming the “bank chosen by customers.”

1. Realizing work-life balance

2. E‌ stablishing an environment where diverse humanresources can demonstrate their full potential

From “work-work” to “work-life”~Rewarding working environments~(1) Strengthen efforts aimed at reducing total working hours

3. Developing promising human capital

4. Promoting health and productivity management(1) Fostering an organizational culture of self-education(1) ‌Formulation of the “Health and Productivity Management
Declaration”~People make companies~~A healthy body is capital~(2) ‌Supporting employees to balance work and childcare/nursing, etc.

(1) ‌Strengthening initiatives to promote the active
participation of women(2) ‌Enhancement of consulting capabilities through humanresources development programs, etc.

(2) Strengthening health management measures(3) Utilization of the Select Staggered Shift System(2) Utilizing seniors, part-timers, etc.

(3) Initiatives aimed at career development support(3) Improving the work environment(3) Revision of personnel evaluation systems(4) ‌Initiatives aimed at improving abundant personalcapabilities(4) Raising employee awareness of health management

Rate of taking paternity leave(people)
100
80

100
72

No. of people

100

100

81

79

Rate

(%)
100

60
50
40
20
0

0
2019

2020

2021

♦Implementation of “Bank-wide Refresh Day” (started in FY2019)
The second Wednesday of each month has been designatedas “Bank-wide Refresh Day” to encourage employees to leave
work on time.
♦Recommended interval between work shifts (started in FY2020)
From the perspective of health management, as a general rule,
employees should have at least 11 hours from the end of theprevious day’s work until the start of their next shift.
♦‌Newly established the Select Staggered Shift System (started
in FY2022)
In addition to the normal work schedule, employees can choose
from six staggered work patterns.

♦Formulation of the Action Plan for General Businesses (Third)
From the perspective of creating a working environment thatenables women to heighten their awareness of advancing intheir career and tackle their work with a positive attitude,
while also maximizing the abilities of each individual andenabling them to play an active role at work, the Bank
formulated the “Action Plan for General Businesses (Third),”based on the “Act on Promotion of Women’s Participation
and Advancement in the Workplace.”[Evaluation period]
April 1, 2021 - March 31, 2026 (five years)[Objectives](1) ‌Increase the proportion of women in management
positions to 18% or more (FY2022: 14.2%)♦Training-related investment for human resource development

FY2022
Invested amountJPY 304 mn♦‌Appointment of in-house career advisors (started in
FY2019)Consultations with career advisors (Personnel Division
staff) are held with employees at headquarters andbranches to support the career design of each bank
employee and foster an environment in which diverse
human resources can play an active role.
♦Holding same-industry networking sessions‌Formulation of the “Health and Productivity Management♦
Declaration” (December 2018)
We clearly stated our policy as a company on conserving
and promoting the health of employees.
‌Certified as a “Health and Productivity Management♦
Organization 2022”(March 2022)
The Bank is implementing initiatives aimed at conserving andpromoting the health of employees. On March 9, 2022, the Bank
was certified as a “Health and Productivity Management
Organization 2022” under the “Health and Productivity Management
Organization Certification System” implemented by the Ministry of
Economy, Trade and Industry and the Nippon Kenko Kaigi.

(2) ‌Reduce the average number of hours worked on days
off to less than 10 hours per person per month (FY2022:
12 hours 18 min)(3) ‌Maintain an annual rate of taking paid time off of 70%(FY2022: 73.4%)♦‌Introduced the 77 Career Bridge System (started in
FY2021)
From the perspective of promoting diverse work styles
for retirees, we introduced a system to support theirreemployment.

Toward the increased value of human capital32

THE 77 BANK INTEGRATED REPORT

33

Value Creation Story

Top Message

Sustainability Promotion

Business Strategy

Corporate GovernanceBank Data

Financial Section

4 Advancing Corporate Governance
We will collaborate appropriately with our stakeholders to strengthen and enhance corporate governance.

■ Basic approach●In accordance with the “Bank Creed,” which is our basic principle of management, we will operate businesses that give constant consideration to the public mission of a regional bank — “contributing to the development of the regional economy and society” — through banking operations.
●We will improve the transparency of management and the appropriateness of processes and work together appropriately with stakeholders including the regional society, clients, and shareholders for the Bank’s sustained growth and enhancement in corporate value over the medium- to long-term.

■ Steps to enhance and strengthen governance2014
Introduced
Executive Officer
system2015●Established “Corporate Governance Policy”●Established “Corporate Governance Committee”

2017●Transitioned to a company with an audit & supervisory committee●‌Revised officer compensation plan (introduced performancelinked compensation plan)■ Establishing a highly effective corporate governance structure
The Bank transitioned in June 2017 from a company with the Board of Corporate
Auditors to a “company with an Audit & Supervisory Committee” to improve
corporate value through further enhancement of corporate governance, which
was followed by initiatives for developing further effective corporate governancestructure through appointing Outside Directors and female Directors.
Director…Jun-17

Audit &
Supervisory
Committee
Member…
Jun-18

Audit &
Supervisory
Committee
Member…
Jun-19Audit &
Supervisory
Committee
Member…
Jun-20

Audit &
Supervisory
Committee
Member…
FromJun-22

Audit &
Supervisory
Committee
MemberOutside Director
12
persons2
persons2
persons3
persons8
persons3
persons2
persons3
persons8
persons3
persons2
persons4
persons7
persons4
persons2
persons4
persons6
persons4
persons2
persons4
persons

Total number
of Directors

Director

2019
Increased numberof Outside Directors(female)2020
Increased number of
Outside Directors

2021
Creation of “Operating
Officers Committee”■ Established the Sustainability Promotion and Management Policy

OutsideDirectorFemaleDirector

Ratio of Outside Directors Ratio of female Directors

19
persons

2018●‌Revised Executive Officer
system●Elected female officer

In January 2022, we established the “Sustainability Promotion and Management Policy” with the objective ofconducting proper and sufficient management of sustainability promotion.
(Basic Policy on Promotion and Management of Sustainability)(1) Formulation of action plan pertaining to sustainability(2) Declaration of engagement posture pertaining to sustainability(3) Creation of supervisory division for promotion and management of sustainability■ Established the Sustainability Committee

26.3%
5/19
persons16
persons37.5%
6/16
persons

6.2%
1/16
persons17
persons41.1%
7/17
persons

11.7%
2/17
persons

In July 2022, from the perspective of creating and strengthening a management system on sustainability
promotion, we established the “Sustainability Committee” with the President as chairperson.

Constituent members
Chairperson : President
Vice chairman : Senior Managing Director
Members : ‌Managing Director, General Manager (GM) of General Planning & Coordination Division,
17
persons

47.0%
8/17
persons

11.7%
2/17
persons

GM of Risk Management Division, GM of Business Promotion Division,
GM of Regional Development Promotion Division, GM of Personnel Division,
GM of General Affairs Division16
persons

50.0%
8/16
persons

12.5%
2/16
persons

Major discussion items(1) Matters pertaining to the planning of sustainability-related policy(2) Matters pertaining to the planning of sustainability-related implementation plans■ Strengthening actions pertaining to sustainability(3) Important matters among initiatives that contribute to the management of sustainability promotion

In December 2021, from the perspective of strengthening our sustainability-related planning and planningsystems, etc., we newly established the “Sustainability Promotion Office” within the General Planning &Coordination Division with the aim of realizing sustainable growth for the region and the 77 Bank Group.

34

THE 77 BANK INTEGRATED REPORT35