Carbon Neutrality
Initiative 2023 (Overview)- Provisional English version 16 February 2023

JAPANESE BANKERS ASSOCIATION

Overview of the Carbon Neutrality Initiative
Achieving 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 in the next three years to achieve the 2030 interim GHG reduction targets
1Engagement2© 2023 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

2

Cooperation
with industrial
sectors

3

4

PublicadvocacyInternational
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.

© 2023 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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
1Engagement

2Assessment

3

Sustainablefinance4

Climate-related
disclosure

5

Climate-related
financial risks

Challenges

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

 Support our member banks’ efforts, including the use of engagement-related
support tools such as "First Steps Toward Decarbonisation". [New] 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’sactivities 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.
 Progress is being made in the development of a framework for climaterelated disclosures. Continuous engagement with clients is indispensable toenhance banks’ disclosure.
 Banking-industry-wide discussion is required to approach the challenge ofScope 3 emissions calculation method/disclosure.
 In some jurisdictions, there are increasing signs of trying to incorporate
climate-related financial risks into stress testing and/or capital requirements.
The JBA needs to actively participate in international discussions.
 There are issues to be addressed, such as lack of available data andanalytical methods for scenario analysis to identify and manage climaterelated financial risks for banks.

© 2023 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 ensure the eligibility and reliability of transition finance. [On-going] Cooperate with SME-related organisations to advocate for support programs tocomplement the private sector’s efforts. [On-going] Advocate through relevant government councils and the TCFD Consortium.
[On-going] Monitor the progress of TCFD disclosure by our member banks. [On-going] Cooperate with international fora such as PCAF on Scope 3 emissions
calculations. [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. [New]3