Operating Principles for
Impact Management
Disclosure Statement
27th March, 2024

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

MUFG Bank, a consolidated subsidiary of Mitsubishi UFJ Financial Group (“MUFG”), became the firstJapanese private financial institution signatory to the Operating Principles for Impact Management(“the Impact Principles”) which was developed by the International Finance Corporation (“IFC”) and otherleading impact investors.
The Disclosure Statement affirms that MUFG Bank’s policies and practices are aligned with the Impact
Principles.
MUFG has issued Green Bonds and the net proceeds from the Green Bonds are onlent to MUFG Bank.
MUFG Bank allocates amounts equivalent to the net proceeds of the Green Bonds to MUFG Bank’s eligible
renewable project finance transactions (“Eligible Projects”).Total of the Green Bond assets undermanagement in alignment with the Impact Principles (“Covered Assets”) is US$ 1,500 million1 as of March
31st, 20232.

(Note) 1. 1EUR = 1.0982 USD, 1 AUD = 0.6626 USD
2. https://www.mufg.jp/english/ir/fixed_income/greenbond/index.html

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Principle 1
Define strategic impact objective(s), consistent with the investment strategy:
The Manager shall define strategic impact objectives for the portfolio or fund to achieve positive andmeasurable social or environmental effects, which are aligned with the Sustainable Development Goals(SDGs), or other widely accepted goals. The impact intent does not need to be shared by the investee.
The Manager shall seek to ensure that the impact objectives and investment strategy are consistent; that
there is a credible basis for achieving the impact objectives through the investment strategy; and that thescale and/or intensity of the intended portfolio impact is proportionate to the size of the investment portfolio.
◼ MUFG identified 218 issues by assessing environmental and social issues with reference to the United
Nations Sustainable Development Goals (“SDGs”) and has defined 10 priority issues that must be
addressed to help achieve environmental and social sustainability1.
Climate Change Measures & Environmental
Protection⚫

Response to Poverty⚫

Reduction of Educational Disparities⚫

Response to Aging Population & Low Birthrate⚫

Ensuring Equal Access to Financial Services⚫

Inclusion & Diversity⚫

Promoting Workstyle Reforms⚫

Developing Social Infrastructure⚫

Overcoming Threats to Health⚫

Supporting Industrial Development & Innovation⚫

◼ As part of Climate Change Measures & Environmental Protection initiative, two key impact metrics:
annual energy generation and CO2 emission reductions2 are calculated and disclosed. According to the
Sustainability Report 2023 (P.137)3, MUFG discloses target amount of CO2 emission reductions; 70
million tons to be achieved from FY2019 to FY2030.4
Metric

The amount of CO2 to be reduced through renewable energy project financeTargetReduction of CO2 emissions by 70 million tons (cumulative total from FY2019 to FY2030)

Results

Reduction of CO2 emissions by 36.63 million tons (cumulative total from FY2019 toFY2022, approximately 52% of the Target)◼ In May 2021, MUFG also announced its “MUFG Carbon Neutrality Declaration”, a commitment to achieve
net zero emissions in our finance portfolio by 2050 and in our own operations by 20305. And the following
month MUFG became the first Japanese financial institution to join the Net Zero Banking Alliance(“NZBA”). In November 2021, MUFG was selected to lead the Financing & Engagement Work Track(“Work Track”) of NZBA, which is tasked to create a robust framework for transition finance 6.
◼ MUFG will support a transition to a decarbonized society through the underwriting of MUFG Green Bonds
for which proceeds from issuance are allocated to finance qualified Green Projects, provision of products
and services aimed at reducing environmental impacts, and the promotion of renewable energy throughproject finance.
(Note) 1.https://www.mufg.jp/english/csr/groupcsr/materiality/index.html
2. https://www.mufg.jp/english/ir/fixed_income/greenbond/index.html
3. https://www.mufg.jp/english/csr/report/sustainability/index.html
4. MUFG Sustainability Report 2023 Page 137.
(https://www.mufg.jp/english/csr/report/sustainability/index.html)
5. https://www.mufg.jp/english/csr/environment/cnd/index.html
6.https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20211122-001_en.pdf

3Principle 2Manage strategic impact on a portfolio basis:
The Manager shall have a process to manage impact achievement on a portfolio basis. The objective of theprocess is to establish and monitor impact performance for the whole portfolio, while recognizing that impact
may vary across individual investments in the portfolio. As part of the process, the Manager shall consider
aligning staff incentive systems with the achievement of impact, as well as with financial performance.
◼ MUFG has two key portfolio-level and investment-level impact metrics (annual energy generation andCO2 emission reductions) and annually discloses the two portfolio-level performance metrics.
◼ As of March 2023, the outstanding amount of MUFG Green Bonds stood at USD 1,500 million. Undercertain assumptions, during the year from April 2022 to March 2023, MUFG Bank’s Eligible Projects are
estimated to have contributed to generating 35,811,873,384 kWh energy, which led to avoided CO2
emission of 18,049,185 tons.

◼ MUFG has revised its executive compensation system to achieve the medium-term business plan and to
implement sustainability management and has installed a heightened metric for ESG-related externalratings as a medium- to long-term performance-linked indicator for stock-based compensation. The
system is designed to reflect the degree of improvement found through in the external ratings granted by
five major ESG rating agencies (MSCI, FTSE Russel, Sustainalytics, S&P Dow Jones, and CDP) in
determining executive compensation. The intention is to align MUFG's corporate activities with theinterests of its diverse stakeholders.

4Principle 3
Establish the Manager’s contribution to the achievement of impact:
The Manager shall seek to establish and document a credible narrative on its contribution to theachievement of impact for each investment. Contributions can be made through one or more financial and/or
non-financial channels1. The narrative should be stated in clear terms and supported, as much as possible,
by evidence.
◼ MUFG Bank is a signatory to the Equator Principles since 2005. When financing large infrastructure andindustrial projects, MUFG Bank conducts environmental and social impacts review in accordance with the
Equator Principles. All the Eligible Projects are subject to this Equator Principles review prior to executionof the financing agreements. This is an illustration of MUFG Bank’s contribution to the achievement of
impact for its lending.

(Note) 1. For example, this may include improving the cost of capital, active shareholder engagement,
specific financial structuring, assisting with further resource mobilization, providing
technical/market advice or capacity building to the investee, and/or helping the investee tomeet higher operational standards.

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Principle 4
Assess the expected impact of each investment, based on a systematic approach:For each investment the Manager shall assess, in advance and, where possible, quantify the concrete,
positive impact1 potential deriving from the investment. The assessment should use a suitable results
measurement framework that aims to answer these fundamental questions:(1) What is the intended impact?
(2) Who experiences the intended impact?
(3) How significant is the intended impact?2
The Manager shall also seek to assess the likelihood of achieving the investment’s expected impact.
In assessing the likelihood, the Manager shall identify the significant risk factors that could result in theimpact varying from ex-ante expectations.
In assessing the impact potential, the Manager shall seek evidence to assess the relative size of thechallenge addressed within the targeted geographical context. The Manager shall also consider opportunities
to increase the impact of the investment. Where possible and relevant for the Manager’s strategic intent,
the Manager may also consider indirect and systemic impacts.
Indicators shall, to the extent possible, be aligned with industry standards3 and follow best practice4.
◼ MUFG Bank conducts environmental and social risk assessments based on the Equator Principles prior
to loan decisions. The Equator Principles is an international framework developed to identify, assess, andmanage the potential environmental and social risks and impacts of large-scale projects. Regarding
climate change risks, in addition to examining technically and economically feasible options that
contribute to reducing GHG emissions, the Bank evaluates the status of project developers' measures to
identify and manage physical and transition risks in line with the TCFD recommendations.
◼ To align with the Impact Principles, MUFG Bank confirms the positive impacts of some of the Eligible
Projects among the Covered Assets by sending a questionnaire to the clients. The indicators for the
positive impacts are selected from the Joint Impact Indicators.
⚫

The number of direct jobs supported locally (operations and maintenance)⚫

The number of construction jobs (temporary construction) locally hired by the project⚫

The number of full-time equivalent female employees in senior management roles working for the
borrower.

(Note) 1.Impact is considered the material effects on people and the environment resulting from theinvestment, as outlined in Principle 1. Impacts assessed under Principle 4 may also include
positive ESG effects derived from the investment.
2.Adapted from the Impact Management Project (www.impactmanagementproject.com).
3.Industry indicator standards include HIPSO (https://indicators.ifipartnership.org/about/); IRIS
(https://iris.thegiin.org/); GIIRS (https://giirs.org/about-giirs/about); GRI(www.globalreporting.org/Pages/default.aspx); and SASB (www.sasb.org), among others.
4. International best practice indicators include SMART (Specific, Measurable, Attainable,
Relevant, and Timely), and SPICED (Subjective, Participatory, Interpreted & communicable,
Cross-checked, Empowering, and Diverse & disaggregated), among others.

6Principle 5
Assess, address, monitor, and manage potential negative impacts of each investment:
For each investment the Manager shall seek, as part of a systematic and documented process, to identify
and avoid, and if avoidance is not possible, mitigate and manage Environmental, Social and Governance(ESG)1 risks. Where appropriate, the Manager shall engage with the investee to seek its commitment to takeaction to address potential gaps in current investee systems, processes, and standards, using an approachaligned with good international industry practice2. As part of portfolio management, the Manager shallmonitor investees’ ESG risk and performance, and where appropriate, engage with the investee to address
gaps and unexpected events.
◼ MUFG Bank assesses Environmental and Social risks using a standardized assessment templateanchored in the Equator Principles, which incorporates assessment in line with the IFC PerformanceStandards and is employed to screen out prospective investments with potentially significant negative
impacts (i.e., Category A defined under the Equator Principles) from the Covered Asset, as the Eligible
Projects should consist only of Category B and C projects, and to ensure that projects put appropriate
mitigation measures in place for the potential limited or minimal negative impacts identified under theEquator Principles review.
◼ The project finance deal team is responsible for monitoring and ensuring borrower compliance withcovenants, which often include ESG-related covenants.
◼ MUFG Bank receives an assurance from an independent auditor annually to ensure that we conduct theEquator Principles review in accordance with MUFG Bank’s Implementation Guidelines. The assurance
report is disclosed on MUFG’s webpage3.
◼ In 2018, MUFG established MUFG Environmental and Social Policy Framework to manage
environmental and social risks associated with our financing4. To implement the Environmental andSocial Policy Framework, MUFG developed the due diligence process to identify and assess theenvironmental and social risks and/or impacts associated with transaction.

(Note) 1.The application of good ESG management will potentially have positive impacts that may or
may not be the principal targeted impacts of the Manager. Positive impacts resulting from ESG
matters shall be measured and managed alongside with, or directly embedded in, the impact
management system referenced in The Impact Principles 4 and 6.
2.Examples of good international industry practice include: IFC’s Performance Standards(https://www.ifc.org/en/insights-reports/2012/ifc-performance-standards); IFC’s Corporate
Governance Methodology (http://www.ifc.org/cgmethodology), the United Nations Guiding
Principles for Business and Human Rights (https://www.unglobalcompact.org/library/2); andthe OECD Guidelines for Multinational Enterprises(http://mneguidelines.oecd.org/themes/human-rights.htm).
3.https://www.mufg.jp/english/csr/environment/equator/index.html
4.Credit, bond, and equity underwriting for corporate clients of MUFG’s main subsidiaries, MUFG
Bank, Mitsubishi UFJ Trust and Banking and Mitsubishi UFJ Morgan Stanley Securities.
https://www.mufg.jp/english/csr/policy/index.html

7◼ Under MUFG Environmental and Social Policy Framework, transactions in the list below are designatedas Prohibited Transaction:
Prohibited Transactions
The transactions listed below are considered as having significant environmental and social risks or
impacts. In cases where each Core Subsidiary is aware of the environmental and social risks or impacts,financing is not provided.
A) Illegal transactions and transactions for illegal purposesB) Transactions which violate public order and good morals
C) Transactions that negatively impact wetlands designated under the Ramsar ConventionD) Transactions that negatively impact UNESCO designated World Heritage Sites
E) Transactions violating the Convention on International Trade in Endangered Species of Wild Fauna
and Flora (Washington Convention)(note1)[note1 Taking into consideration country specific considerations]F) Transactions involving the use of child labor, forced labor or human traffickingG) Cluster Munitions and Inhumane Weapons Manufacturing
Civilian populations have been greatly affected by cluster munitions as they release many bomblets
over a wide area and because of their indiscriminate effect. As a result, their use has generated
significant humanitarian concerns internationally. In light of the inhumane nature of cluster munitions,Core Subsidiaries prohibit the provision of financing to any company that manufactures cluster
munitions.
Nuclear weapons, biological and chemical weapons, and anti-personnel mines, which are produced foruse in wars and conflicts and have indiscriminate and serious effects on people, including civilians, are,along with cluster munitions, internationally recognized as being of great humanitarian concern. In lightof the inhumane nature of nuclear weapons, biological and chemical weapons, and anti-personnel
mines, Core Subsidiaries prohibit the provision of financing for the production of these weapons.

(Note) 1.This may include debt, equity, or bond sales, and excludes self-liquidating or maturing
instruments.

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Principle 6
Monitor the progress of each investment in achieving impact against expectations and respond appropriately:
The Manager shall use the results framework (referenced in Principle 4) to monitor progress toward theachievement of positive impacts in comparison to the expected impact for each investment. Progress shallbe monitored using a predefined process for sharing performance data with the investee. To the best extent
possible, this shall outline how often data will be collected; the method for data collection; data sources;
responsibilities for data collection; and how, and to whom, data will be reported. When monitoring indicatesthat the investment is no longer expected to achieve its intended impacts, the Manager shall seek to pursue
appropriate action.1 The Manager shall also seek to use the results framework to capture investment
outcomes.2◼ For Eligible Projects, MUFG Bank estimates and reports annually on energy generation and avoided CO 2
emission volume, based on the asset’s power generation capacity as well as relevant coefficientspublished by third-parties (e.g., IRENA, IFC).
◼ MUFG updates MUFG Green Bonds Reporting annually and discloses the results of energy generation
and avoided CO2 emission volume in the reports.
◼ In annual Sustainability Report3, the cumulative total results of yearly CO2 emissions avoided throughrenewable energy project financings4 from FY2019 to the relevant year is disclosed.

(Note) 1.Actions could include active engagement with the investee; early divestment; adjusting
indicators/expectations due to significant, unforeseen, and changing circumstances; or otherappropriate measures to improve the portfolio’s expected impact performance.
2.Outcomes are the short-term and medium-term effects of an investment’s outputs, while theoutputs are the products, capital goods, and services resulting from the investment. Adopted
from OECD-DAC (www.oecd.org/dac/).
3.https://www.mufg.jp/english/csr/report/sustainability/index.html
4.Cumulative total of CO2 reduction effect for one year, calculated from the amount of electricity
generated by renewable energy projects underwritten in each fiscal year, facility utilization
rates, and emission factors. The values take into account MUFG's contribution in theunderwriting phase.

9Principle 7
Conduct exits considering the effect on sustained impact:
When conducting an exit, the Manager shall, in good faith and consistent with its fiduciary concerns, consider
the effect which the timing, structure, and process of its exit1 will have on the sustainability of the impact.
◼ The Equator Principles is applied to all Eligible Projects. Under Principle 8 of the Equator Principles, theclients are required to comply with the relevant projects’ host countries environmental and social laws,
regulations, and permits. This requirement should be incorporated as a covenant in loan agreements.
Therefore, if a client breaches any of those relevant host country environmental laws, regulations, or
permits, and such breach is not cured within an agreed grace period, the lenders are entitled to exercise
remedies, including calling an event of default, as considered appropriate. This mechanism works as anexit system in commercial lending.

10Principle 8
Review, document, and improve decisions and processes based on the achievement of impact and lessons
learned:The Manager shall review and document the impact performance of each investment, compare the expected
and actual impact, and other positive and negative impacts, and use these findings to improve operationaland strategic investment decisions, as well as management processes.
◼ MUFG Bank is in the process of investigating to establish a means to review the actual impacts of thefinancing or analyze correlation between positive and negative impacts.
◼ Sustainable Business Division shares the lessons learned from the verification process or signatories’
workshops with other members who would like to apply the Impact Principles to other assets. Therefore
the Impact Principles could be applied to other assets and implemented more properly in the future.
◼ As part of implementing the Equator Principles, MUFG Bank has an internal process to review quarterly
the due diligence process and memos by conducting peer-review to assess the quality.

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Principle 9
Publicly disclose alignment with the Principles and provide regular independent verification1 of the alignment:
The Manager shall publicly disclose, on an annual basis, the alignment of its impact management systems
with the Principles and, at regular intervals, arrange for independent verification of this alignment.
The conclusions of this verification report shall also be publicly disclosed. These disclosures are subject tofiduciary and regulatory concerns.
◼ This Disclosure Statement re-affirms the alignment of MUFG Bank’s procedures with the Impact
Principles will be updated annually.
◼ The independent verification is provided by an external auditor.
◼ Information on the current independent verifier is as follows:
Name and Address:

Tideline Verification Services, Inc. (BlueMark) 915-2
Battery St., San Francisco, CA 94111, USA

Most Recent Review:

January 21st, 2022

◼ MUFG Bank intends to update the verification every three years.

(Note) 1. The independent verification may be conducted in different ways, i.e., as part of a financial
audit, by an independent internal impact assessment committee, or through a portfolio/fund
performance evaluation. The frequency and complexity of the verification process should
consider its cost, relative to the size of the fund or institution concerned, and appropriate
confidentiality.

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MUFG Bank, Ltd.
2-7-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
https://www.bk.mufg.jp/global/

Disclaimer: The information contained in this Disclosure Statement has not been verified or endorsedby the Global Impact Investing Network (“the GIIN”) or the Secretariat or Advisory Board. All
statements and/or opinions expressed in these materials are solely the responsibility of the person orentity providing such materials and do not reflect the opinion of the GIIN. The GIIN shall not be
responsible for any loss, claim or liability that the person or entity publishing this DisclosureStatement or its investors, Affiliates (as defined below), advisers, employees or agents, or any otherthird party, may suffer or incur in relation to this Disclosure Statement or the impact investing
principles to which it relates. For purposes hereof, “Affiliate” shall mean any individual, entity orother enterprise or organization controlling, controlled by, or under common control with the
Signatory.