Annual Report 2023
Addendum
Climate-related Financial Disclosures
based on TCFD recommendations

Recognizing the importance of the climate-related financial disclosures in its ESG
policy, the Japan Bank for International Cooperation (JBIC) has promoted and willcontinue to make appropriate information disclosures based on the recommendations
by Task Force on Climate-related Financial Disclosures (TCFD).

＜Contents＞
P. 3

Governance
Sustainability governance and management systems
1. Role of Board of Directors
2. Role of Executive Committee

P. 5

Strategy
Approach to transitioning toward the realization ofcarbon neutrality
Initiatives related to climate change-related finance◆ Initiatives related to green finance◆ Initiatives related to transition finance◆ Initiatives related to innovative energy

Engagement◆ Engagement with host countries’ governments etc.
◆ Cooperation with government and international agencies◆ Support for energy transitions in Asia

P.10

Risk management
Risk management frameworks
Scenario analysis◆ Approach to scenario analysis and preconditions for analysis◆ Notes on scenarios applied by JBIC and its analysis◆ Transition risks◆ Physical risks

Outstanding credit for High-priority Sectors◆ Initiatives related to thermal coal power generation projects

Metrics and targets

P. 17

Climate change-related finance
GHG emissions◆ Initiatives toward reduction of GHG emissions fromour operations◆ GHG emissions from our portfolio

JBIC / Annual Report 2023 Addendum2

Governance

Governance
Sustainability governance andmanagement systems
At JBIC, important matters related tosustainability, including items concerning
climate change, are discussed at the
Executive Committee, the Sustainability
Committee, and the Corporate Risk
Management Committee under the supervisionof the Board of Directors.
In June 2022, JBIC established theSustainability Advisory Committee,
Sustainability Committee, and Sustainability
Management Department as a part of its
efforts toward “strengthening its
sustainability governance and management
systems,” as set out in the ESG Policy and has
implemented initiatives to promotesustainability including efforts for climatechange (“sustainability promotion”). JBIC’s
governance system concerning sustainability
promotion including initiatives for climatechange are shown as below.
Under such sustainability governance andmanagement systems, JBIC will contributeactively to the realization of global
sustainability, including sustainable
development of the global economy andsociety and resolution of global issues. To that
end, JBIC will provide proactive support for
initiatives by Japanese corporations topromote the SDGs and realize thedecarbonization of global economy andsociety, and ensure the appropriate disclosureand announcement of the outcomes of suchinitiatives to stakeholders.

1. Role of Board of Directors
The Board of Directors supervises the basic
policies on sustainability promotion and its
progress in JBIC. Matters concerning
sustainability promotion, including climatechange, are addressed as importantmanagerial matters and are discussed by the
Board of Directors. The outcomes arereflected in the management strategies andrisk management policies.
In addition, the status of climate finance isregularly reported to and properly supervisedby the Board of Directors.
The Sustainability Advisory Committee,
comprising external experts, was founded inJune 2022 as an advisory body of the Boardof Directors. It provides advice on matterssuch as JBIC’s policies for advancing
sustainability promotion including initiatives
for climate change.

2. Role of Executive Committee
The Executive Committee is responsible forthe implementation of climate change-related
operations, based on the mandate of theBoard of Directors.
The Sustainability Committee, based on the
mandate of the Executive Committee,
deliberates on policies for advancing
initiatives toward the realization ofsustainability and other important issues, andit reports the progress of sustainability
promotions by JBIC and related general
updates in Japan and abroad. Mattersdeliberated on are reported to the Executive
Committee and are taken to the Board of
Directors if necessary, following thediscussions and decisions by the Committee.
The Corporate Risk Management Committee
deliberates and decides on the importantmatters related to the management ofcorporate and credit risks (including climate
risks), based on the basic policies determinedby the Board of Directors, the Executive
Committee, and others. When necessary, theCommittee reports and takes matters to theBoard of Directors and the Executive
Committee.

JBIC / Annual Report 2023 Addendum3

GovernanceSupervisory and evaluation function

Board ofDirectors

Passes resolutions on basic matters and changes thereof related topolicies for advancing initiatives toward the realization of sustainability,
including ESG policy[Members] All directors

Inquiry and Advice

Provides advice on the matters inquired by the Board of Directors
related to policies for advancing initiatives toward the realizationof sustainability

Sustainability
Advisory
Committee[Members]
Prof. TAKAMURA Yukari (Professor, Institution for Future
Initiatives, University of Tokyo)
Prof. Rachel Kyte (Dean Emerita, the Fletcher School, Tufts
University)
Prof. Tim Benton (Director, Environment and Society Programme,
Chatham House)[Advice made in FY2022]
Just Transition in response to climate change based on economic
growth and regional factors

Deliberation
or reporting

Execution function

Makes decisions and deliberations on matters of managerial importantthat relate to policies for advancing initiatives toward the realization ofsustainability, based on the mandate of the Board of Directors

Executive
Committee[Members] Governor, deputy governor, and directors (except for chairman
and outside directors) as well as all the managing executive officers[Major matters deliberated and decided]
Decision on policies to address TCFD disclosures and reporting of theresult of climate change scenario analysis

Makes deliberation on policies to promote initiatives forrealizing sustainability and other important matters, based on
the mandate of the Executive Committee

Deliberation or reporting

Sustainability
Committee[Chairperson] Managing Executive Officer, Global Head ofCorporate Planning Group(Deliberation body)[Major matters deliberated and reported]
Deliberation on policies to address TCFD disclosures,deliberation on policies to calculate GHG emissions, andreporting of the climate change-related updates

Corporate
Risk
Management
Committee(Decision-making
body)

Makes decisions and deliberations on important matterspertaining corporate risks (including climate risks) based on the
mandate of the Board of Directors[Chairperson] Managing Executive Officer, Global Head of
Credit, Assessment and Risk Management Group[Major deliberations, decisions, and reports]
Decision on policies for climate scenario analysis, deliberationand decision of climate risk management, and reporting on
monitoring of Top Risks related to climate change

JBIC / Annual Report 2023 Addendum

4Strategy

Strategy
In its Fourth Medium-term Business Plan announced in June 2021, JBIC identified the addressingof “global issues toward realizing sustainable development for the global economy and society”
as its first key focus area. As climate change has become a particularly urgent global issue inrecent years, we recognize climate change as an opportunity to accelerate energy transitions
toward a decarbonized society, and we actively work to support this global agenda through theproactive provision of green finance, transition finance, and social impact finance and thereinforcement of the organizational structure.
In addition, as one important role of JBIC as Japan’s policy-based financial institution, we arepromoting engagement with the host countries’ governments and authorities and collaboration
with overseas governmental organizations and international organizations for achieving global
carbon neutrality.

Approach to transitioning toward therealization of carbon neutrality
Climate change is one of the most urgent
challenges facing the world’s economies.
Following the adoption of the Paris Agreementin December 2015, the global concrete effort
to address climate change has accelerated. As
achieving the objectives of the Paris
Agreement requires substantial investment,
the flow of funds, including through themobilization of private finance, needs to be
redirected and applied to pathways towards
decarbonization.
Under the ESG policy announced in October
2021 and in line with the policy of Japanese
government, JBIC, as a policy-based financial
institution that contributes to the sounddevelopment of Japan and global economy, hasproactively supported global climate change
initiatives, through green finance, transition
finance, engagements with stakeholders, andothers.
JBIC regards the growing need for financing
green energy projects to realize carbon
neutrality, the business and technologicaltransformation required for the transition to a
decarbonized society, and innovation toestablish new technologies as opportunities
that are related to climate change, and it
intends to support such initiatives toward therealization of a decarbonized society. Based on
this understanding, we believes it is crucial for
us to promote initiatives toward
decarbonization by borrowers and hostcountries’ governments through financing andalso engaging with stakeholders.
Achieving carbon neutrality at the global scale
is an issue to be tackled in tandem with the
pursuit of sustainable economic growth.
Moreover, amid the growing uncertainties ofrecent events internationally, it is also
necessary to take into account regional andindustrial characteristics as well as energy
security and geopolitical risks in order topromote steady decarbonization across various
areas and sectors around the world.

JBIC has been pursuing net zero GHG
emissions of its finance portfolio by the year
2050 to align with the objectives of the Paris
Agreement. In order to ensure that thisinitiative contributes to the steadydecarbonization of the real economy, it is
crucial for JBIC to support various paths to asustainable decarbonized society whileconsidering the above-mentioned viewpoints
and the Japanese government’s policies, asJapan’s policy-based financial institution. It isvital for JBIC to provide proactive support toprojects that contribute to the decarbonizationof the real economy in the course of achieving
net zero emissions in the medium and longterm.
In particular, to achieve the energy transition
for decarbonization, it is important to identify
projects that provide sustainabledecarbonization and to give themcomprehensive support, such as green financeand transition finance, which use various
energy sources and innovations related tonext-generation technologies and energies.
With such recognition, JBIC is committed tosupporting energy transition-related projects
from their initial phases and boosting
decarbonization initiatives through various
types of financial support while considering
the Japanese government’s policies. For thispurpose, we will utilize our long-term strategicrisk-taking function as a policy-based financial
institution as well as our continuous
engagement with host countries’ governments
and authorities and collaborations withoverseas governmental organizations andinternational organizations.
We will accelerate the energy transition,
particularly in emerging and developing
countries, and will contribute to global carbon
neutrality through the following initiatives
while pursuing to achieve net zero GHG
emissions for our finance portfolio by 2050.

JBIC / Annual Report 2023 Addendum

5Strategy

Initiatives related to climate change-related financeIn its Fourth Medium-term Business Plan announced in June 2021, JBIC has been actively
working to solve global agenda through financial supports such as green finance and transition
finance.

◆ Initiatives related to green financeTo contribute toward the creation of a new ecosystem, and with a view to reducing GHG
emissions worldwide and realizing decarbonization in Japan, we support efforts to reduce GHG
emissions and popularize green innovation by financing projects in fields such as renewableenergy and energy savings, smart energy (power storage technology, etc.), green mobility, smart
cities, and promotion of the production, transportation, and utilization of hydrogen.

Project financing for onshore wind farm project in Egypt
JBIC concluded in November 2022 a loan agreement in project financing amounting to up to
approximately USD281 million with AMUNET WIND POWER COMPANY S.A.E. (AMUNET) of
Egypt, invested in by Sumitomo Corporation and others for an onshore wind farm project. The
loan is co-financed with International Finance Corporation (IFC), Sumitomo Mitsui Banking
Corporation, and Sumitomo Mitsui Trust Bank, Limited, bringing the total co-financing amount
to approximately USD518 million.
In this project, AMUNET will build, own, and operate an approximately 500 MW onshore windfarm within the Red Sea Governorate along the shore of the Gulf of Suez. AMUNET will also
sell the electricity generated by the wind farm to Egyptian Electricity Transmission Company
for a duration of 25 years. The Government of Egypt aims for a 30% reduction in GHG
emissions by 2030 by increasing renewable energy in its energy mix. The project is expected
to contribute toward the energy transition of the Government of Egypt.

Supporting renewable energy project by Indonesian National Oil Company
JBIC concluded in December 2022 a loan
agreement amounting to up to USD30 million
with PT Pertamina (Persero) (Pertamina),
Indonesia’s state-owned oil company, forrenewable energy projects. The loan is cofinanced with MUFG Bank, Ltd. and the Chiba
Bank, Ltd., bringing the total amount of cofinancing to USD50 million. JBIC will also
provide a guarantee for the portion cofinanced by the private financial institutions.
The Government of Indonesia has expressed
its national goal of reducing GHGs by at least
Signing ceremony of the GREEN to Pertamina
around 32% by 2030 and achieving net-zeroemissions by 2060. Pertamina is responding by focusing on new businesses in cleaner
energy fields in conjunction with decarbonization of existing business. Also, the loan
contributes to the Just Energy Transition Partnership (JETP), which was agreed on by theGovernment of Indonesia and its partner countries, including Japan and the US., in
November 2022. In addition, the loan is in line with the concept of the Asia Zero Emission
Community (AZEC) released by the Governments of Japan and Indonesia in November 2022.

JBIC / Annual Report 2023 Addendum

6Strategy◆ Initiatives related to transition finance
While working to engage host countries to make the shift toward sustainable energy, we provide
support for initiatives toward global energy transitions by financing projects in areas such asenergy conversion, CCUS/ carbon recycling, and ammonia and hydrogen co-combustion, in order
to contribute toward expanding businesses that help to achieve a decarbonized society.

Loan for building pellet feed plant in Brazil
JBIC signed in March 2023 a loan agreement amounting to up to USD980 million (JBIC
portion) with CSN Mineração S.A. (CM) of Brazil. The loan is co-financed with BNP PARIBAS,Tokyo Branch, Citibank, N.A., Tokyo Branch, JP Morgan Chase Bank, N.A., Tokyo Branch, Crédit
Agricole Corporate and Investment Bank, Tokyo Branch, Sumitomo Mitsui Trust Bank, Limited,
and Sumitomo Mitsui Banking Corporation, bringing the total co-financing amount to
USD1,400 million.
The loan is intended to finance the funds necessary for CM, of which Itochu Corporation(Itochu), JFE Steel Corporation, and Kobe Steel, Ltd. are shareholders among others, to build
a new pellet feed production plant. Pellet feed is processed iron ore crushed into particles,
which is a raw material for low-carbon
steelmaking. It plays an important role in
reducing CO2 in iron-manufacturing process.
The factory will enable Itochu to secure pellet
feed for a long term.
The loan will financially support Itochu's longterm securing of pellet feed, thereby
contributing toward a stable supply of thecritical mineral resource for the Japanese steel
industry and toward supply chain resilienceand the realization of a sustainable society.
Construction site for a Pellet Feed Plant in Brazil◆ Initiatives related to innovative energy
In addition to providing financial supports, JBIC has strengthened its abilities to collect anddisseminate information and conduct studies for structuring projects related to hydrogen,ammonia, and other forms of innovative energy as well as associated loan, guarantee, andresearch operations, by establishing the Energy Transformation Strategy Office within the
Energy and Natural Resources Finance Group on July 1, 2022.

Signing MOU with State of Western Australia
JBIC signed in January 2023 a Memorandum ofUnderstanding (MOU) with the State of Western
Australia to build a comprehensive strategic
partnership with the aim of encouraging Japanesecompanies to invest in and structure projects in
Western Australia. Against the backdrop ofcommon issues shared by Japan and Australia,
such as growing geopolitical risks and climatechange, we revised the MOU of 2011 to expand
the area of cooperation to include hydrogen,ammonia, and critical minerals.

Signing Ceremony of the MOU

JBIC / Annual Report 2023 Addendum

7

Strategy

Engagement
We believe that engagement with stakeholders, including host countries’ governments andauthorities represents our important responsibility as a policy-based financial institution for
accelerating energy transition in emerging and developing countries toward the realization of adecarbonized society and for ultimately achieving global carbon neutrality. As Japan’s policybased financial institution, JBIC continues to be proactive in providing financial support for
efforts to tackle climate change through the reinforcement of collaboration with overseas
governmental organizations and international organizations.

◆ Engagement with host countries’ governments etc.
Vietnam
Dialogue between JBIC’s
Governor and Prime Ministerof Vietnam, H.E. Pham Minh
Chinh

⁃

Exchanged views with the Government of Vietnam and Communist Party, whichannounced at COP26 its target of achieving carbon neutrality by 2050, on
financial cooperation towards promoting projects of energy transition anddecarbonization⁃

Dispatched a joint mission to Vietnam with the U.S. DFC
and Australia's DFAT/EFA and announced to theGovernment of Vietnam and the Communist Party its
intention to accelerate support for the energy
transition in Vietnam⁃

Launched the Vietnam Climate Finance Framework(VCFF)
under the Australia-Japan-United States
partnershipto promote projects contributing toVietnam’s goal of achieving net zero greenhouse gas(GHG) emissions by 2050⁃

Conducted Fifth Annual Dialogue with PLN, which is taking
on a leading role in Indonesia's energy transition based on
the Electricity Supply Business Plan (RUPTL 2021 - 2030)⁃

Exchanged views on the potential for collaboration between
JBIC and PLN for a smooth energy transition in Indonesia⁃

Conducted 10th Policy Dialogue among JBIC, the Ministry of
Finance of Indonesia, the Ministry of Energy and Mineral
Resources (MEMR) and the Indonesia Investment Authority (INA)⁃

Exchanged views on investment trends of Japanese companies
and JBIC's potential plan to support decarbonization inIndonesia(September 2022)

Vietnam
Australia-Japan-United States
dialogues with Communist
Party of Vietnam Central
Economic Commission(October 2022)

Vietnam
Launch of Vietnam
Climate Finance
Framework (VCFF)(January 2023)

Indonesia
Annual dialogue with PT
PLN (Persero), the stateowned electricity utility
company(December 2022)

Indonesia
Annual policy dialogue
with the Government ofIndonesia(March 2022)◆ Cooperation with government and international agencies
Eｇｙｐｔ
MOU with Ministry ofInternational Cooperation⁃

Support the business development of Japanesecompanies inavarietyofsectors,
includingdecarbonization, such as renewable energy, hydrogen,and ammonia, by strengthen the cooperation between
the Government of Egypt and JBIC⁃

Promote cooperation between ADNOC and Japanese
corporations, with a focus on areas such as
decarbonization, energy transition, and energy
efficiency⁃

Further promote cooperation between JBIC and EBRD
in financing operations in areas such as Central andEastern Europe, Central Asia, and the Southern andEastern Mediterranean, as well as in energy
transformation, digital transformation, and solutions
to social issues, by developing the MOU signed in 2019
for global environmental protection, and innovation
promotion, etc.

⁃

Further strengthen the existing cooperative relationship between the twoorganizations by expanding the areas of cooperation to sustainability (includinghydrogen and ammonia), social infrastructure, and supply chain resiliency, in
addition to the existing areas of cooperation, such as energy conservation andrenewable energy⁃

Promote structuring projects with the involvement of Japanese companies in Africa
by strengthening relations through the exchange of information on the political andeconomic situation and the environmental conservation sector, including
greenhouse gas emission reductions of AFC member countries all over Africa(April 2023)

UAE
MOU with Abu Dhabi
National Oil Company(ADNOC)(July 2023)

MOU with European Bankfor Reconstruction andDevelopment (EBRD)(October 2022)

MOU with Inter-American
Development Bank andInter-American
Investment Corporation(April 2023)

MOU with Africa FinanceCorporation (AFC)(May 2023)

JBIC / Annual Report 2023 Addendum

8Strategy◆ Support for energy transitions in Asia
The Japanese government promotes decarbonization through the Just Energy Transition
Partnership (JETP) and the Asia Zero Emissions Community (AZEC). JBIC supports energy
transitions by engaging with host countries’ governments and developing projects such as
renewable energy projects.

Just Energy Transition Partnership (JETP)The Just Energy Transition Partnership (JETP), comprising some G7 countries and the EU, isan initiative that supports just energy transitions. Following South Africa, Indonesia andVietnam announced the launch of JETPs in November and December 2022, respectively.
In November 2022, JBIC signed MOUs with Pertamina, PLN, and SMI to strengthen
partnerships with them toward achieving carbon neutrality in Indonesia. Under the MOU, JBIC
provided Pertamina with the funds required for its renewable energy project in December
2022.

Asia Zero Emission Community (AZEC)The Asia Zero Emission Community (AZEC) is a multilateral platform that was put forward by
Prime Minister KISHIDA Fumio in January 2022 and launched under the leadership of theGovernment of Japan in March 2023. Together with other Asian countries that are actively
tackling carbon neutrality, AZEC supports decarbonization while considering the unique
circumstances each country faces to ensure economic growth and energy security.
On the sidelines of the G20 summit in November 2022, Japan and Indonesia jointly
announced an initiative toward realization of the AZEC concept.
In line with the AZEC concept, JBIC strengthens support for decarbonization in Indonesia
and Vietnam not only through promoting engagement with the host countries’ governments
but also by structuring renewable energy projects in those countries.

India

Promoting environmental preservation and growth of the
Indianeconomy,andenhancingthecooperative
relationship between Indian and Japanese companies
across all sectors

MOU with the National
Investment andInfrastructure Fund
Limited (NIIFL) of India（November 20２２）

Supporting projects toward Vietnam’s goal of achieving net
zero GHG emissions, through partnership with the U.S.
International Development Finance Corporation (DFC), theDepartment of Foreign Affairs and Trade (DFAT) of Australia,
and Export Finance Australia (EFA)

Vietnam

Joint statement onAustralia-Japan-UnitedStates partnered VCFF
（January 2023）

ThailandMOU with Export-Import
Bank of Thailand（December 20２２)

Promoting collaboration towards enhancement ofconnectivity and decarbonization in Thailand andthe Mekong region

Malaysia
MOU with Petroliam
Nasional Berhad(PETRONAS)（September 2022)

Strengthening partnership in suchsectors as hydrogen and ammonia
value chain, renewable energy, andCCS

Signing MOUs related to energy transition
on sideline of G20 Summit in November 2022

Joint statement with Asian
EXIM Banks Forum members

Indonesia
National Power Company,
PT PLN (Persero)

Promoting collaboration to realize projects suchasrenewable-energy
powerplantsandtransmission grid projects that contributetoward the energy transition

Indonesia
National Oil Company,
Pertamina

Promoting collaboration in such sectors as
renewable energy, hydrogen and ammonia
value chains, and CCS

Indonesia
Infrastructure Finance
Company PT Sarana Multi
Infrastruktur (Persero)

Strengthening the partnership to realize projects
such as renewable-energy power plants andtransmission grid projects that contributetoward the energy transition（November 20２２）

Promoting cooperation
among the forum
members (Asian export
and import banks) on theefforts to address
climate change,
particularly promotion ofrenewable energy

JBIC / Annual Report 2023 Addendum

9

Risk management

Risk management
JBIC recognizes the importance of managing risks related to climate change (collectively,“climate-related risks”), and it decided on the climate risk management policy in 2023. Based on
this policy, JBIC has prepared a framework to identify, assess, and manage climate-related risks.

Risk management frameworks
JBIC recognizes climate-related risks as
forward-looking risks that may materialize in
different patterns and magnitudes, subject tofuture environmental and social
circumstances, and which therefore need tobe addressed through long-term,
comprehensive perspectives. We also
understand that climate-related risks arecharacterized as risk drivers that areassociated with every risk category, including
credit risk, market risk, liquidity risk, andoperational risk. Thus, they may materialize
over a variety of time horizons, both short andlong term, and through a wide range ofchannels and touchpoints.
Based on this recognition, JBIC has
designated climate-related risks as one of the
Top Risks (risk events that will significantly
impact JBIC when they become apparent andrequire particular attention) in its enterpriserisk management framework, and it
comprehensively manages these risks bymonitoring the social and regulatory trends
related to climate issues and changes insituations regarding fossil fuel projects.
We also conducted a qualitative assessmentof the significance of climate-related risk
events that are anticipated in each risk

category with external experts, taking into
account the characteristics of JBIC’s businessactivities and portfolios. This assessmentshows that JBIC’s credit risks (e.g., increases
in credit-related costs due to a deterioration
in a borrower’s business performance) are ofhigh significance, so JBIC has been prioritizing
the development of climate-related risk
assessments and management frameworks.
One of the climate-related credit-risk
assessment measures that JBIC implements is
scenario analysis regarding the transition andphysical risks of borrowers. As the TCFD’s
supplemental guidance for the financial
sector recommends the disclosure ofsignificant concentrations of credit exposure
to carbon-related assets for certain sectors,
JBIC has designated the four sectors ofelectricity, energy, transportation, and ironand steel as “High-priority Sectors” whereclimate-related risks are captured intensively
in light of the relatively large credit amounts.
Through scenario analysis, JBIC understands
the crucial factors for business
transformations in each sector that enabletransitions to a decarbonized society. We
provide support through individual projectmonitoring and dialogues with clients, and wework to measure and reduce GHG emissions in
our portfolio.

Examples of risk events

Credit risk

Market/liquidity risk

Operationalrisk

Tangible
asset risk
Reputation
risk

Climate risk

Timeframe

Increasing credit costs along with the deterioration of aborrower’s business performance resulting from declining
revenue and increasing carbon-related burdens, mainly incarbon-related industries

Transition
risk

Mediumto longterm risks

Increasing credit costs along with the deterioration of aborrower’s business performance and collateral
impairment due to extreme weather

Physical(acute) risk

Short-term
risks

Increasing credit costs resulting from collateral
impairment and deterioration of a borrower’s businessperformance resulting from long-term climate change

Physical(chronic) risk

Mediumto longterm risks

Disruption to financial and commodity markets andaccompanying price fluctuations of financial products andcommodities due to hasty transitions or natural disasters

Transitionand physical(acute) risk

Short- tolong-termrisks

Increasing funding costs due to a deterioration in
reputation resulting from a delayed response to transition
risks

Transition
risk

Short- tomediumterm risks

Physical(acute) risk

Shortterm risks

Transition
risk

Shortterm risks

Damage to the head office, branch, etc.
Deterioration of reputation resulting from an inadequate
response to climate change issues and delayed responses
to disclosures

JBIC / Annual Report 2023 Addendum10

Risk management

Scenario analysis
In order to evaluate the impacts that climate change will have on our portfolio in the future, we
conduct scenario analysis for transition risk and physical risk. The analysis is based on multiple
scenarios, including the 1.5℃ scenario that aims for net zero emissions by 2050, to enhance theflexibility and resilience of our risk management against various future circumstances that are
related to climate change.

◆ Approach to scenario analysis andpreconditions for analysis
Climate scenarios are generally quantified andmodeled projections of transition processes
to a world that is expected to be realized,
based on various assumptions related toclimate change including environmental
change and social, economic, and policy
issues, as well as markets (supply anddemand), technology, and other factors thatwill lead to decarbonization. Such scenarios
are developed and published by internationalorganizations and initiatives, including the
Network for Greening the Financial System(NGFS), the International Energy Agency (IEA),
and the Intergovernmental Panel on Climate
Change (IPCC).
JBIC considers it important to evaluate theimpact of transition and physical risks due toclimate change on its portfolio and to makecountermeasures as needed, as well as
appropriately comprehend each borrower’s
transition risks and opportunities and consider
having dialogues with stakeholders, such as
borrowers and host countries’ governments,
and provide support for transition. Based on
this understanding, JBIC has been
implementing scenario analysis of transition
risks from FY2021 and of physical risks fromFY2022 using the NGFS’s climate scenarios inaccordance with the TCFD’s recommendations.

In the scenario analysis of transition risks
conducted in FY2022 and FY2021, we applied
as the main scenario the Net Zero 2050
scenario (the below 1.5℃ rise scenario) in
which net zero CO2 emissions (carbon
neutrality) will be achieved by 2050 on a
global level. The scenario analysis of physicalrisks conducted in FY2022 used the Current
Policies scenario (the 3℃ rise scenario), whichassumes the largest temperature rise among
the NGFS’s scenarios.
However, there exist some constraints in
obtaining necessary data from the NGFS’s
scenarios. Data for certain regions and sectors
were not detailed enough to analyze thoseregions and sectors in light of thecharacteristics of JBIC’s credit portfolio, andsome data were not available, such as thecosts of implementation and management or
carbon emission reduction effects ofdecarbonization technologies that are
currently expected to be introduced in eachsector. Therefore, JBIC conducted theanalysis with external experts, andsupplemented the available related data andestimations from climate scenarios issued byinternational organizations, such as the IEA
and the IPCC, industry reports, and theTechnology Roadmap for Transition Financeby the Ministry of Economy, Trade andIndustry (METI), and it aligned the transition
risks scenario with the Net Zero 2050
scenario and the physical risks scenario with
the Current Policies scenario to the maximum
extent possible.

＜Summary of NGFS’s scenarios＞

Major premises

Net Zero 2050

Current Policies

Narrative

Limits global warming to 1.5℃ throughstringent climate policies andinnovation, reaching net zero CO2emission around 2050

Assumes that only currently
implemented policies are preserved,
leading to high physical risks

Rising mean
temperatures

Below 1.5℃ by 2100

3.0℃ by 2100

Net zero by 2050

Net zero goal not met by 2050

Carbon prices

Continued rise from present to 2050

Virtually no rise

Companies’
efforts for
decarbonization

Progress in changing business frompresent

Virtually no progress

Carbon emissions

JBIC / Annual Report 2023 Addendum11

Risk management

The FY2022 scenario analysis of transitionand physical risks simulated the impacts ofeach climate scenario on borrowers’ financial
conditions and credit ratings and on JBIC’s
credit costs on the assumption that JBIC’s
portfolio and risk profile composition willremain unchanged from the end of March2022 until 2050 for transition risks and fromthe end of March 2023 until 2050 for
physical risks. We applied the method toevaluate and capture the impact of possible
climate change by assessing the portfolio
components as of the end of March 2022 andMarch 2023, at future dates defined in the
climate scenario as it is difficult to estimate
the future portfolio and risk profile at thistime.
The actual portfolio composition in the futureis expected to differ from the current one as
JBIC follows its principle of providing loans toprojects that are in line with the businessareas and policy objectives stipulated in the
JBIC Act.
Additionally, the scenario analysis takes aconservative stance from the viewpoint ofrisk management, and it applies theassumption that the exposure and risk profile
will be the same until 2050, except for theloans for coal power generation projects. We
address fossil fuel projects in accordancewith the G7 Leaders’ Communiqué in 2022
and the Japanese government’s policy.
JBIC has discontinued its financing of
unabated international thermal coal power
generation projects in accordance with theG7 Leaders’ Communiqué in 2022 and theJapanese government’s policy. Since it isevident that our exposure to such projects
will be phased down, we conducted theanalysis assuming that the exposure will
decline over time rather than remainunchanged until 2050.

◆ Notes on scenarios applied by JBIC and its
analysis
While it is widely recognized that scenario
analysis is a useful approach, the following
points need to be noted:
 The scenarios JBIC applied are thosedeveloped by the NGFS and otherorganizations, but this does not mean thatthese scenarios are our outlook. Also,
assumptions in the scenarios contain anumber of uncertain factors, including who
will bear the carbon costs. The actual
society in the future or the pathway for
GHG emission reductions may differ fromthe assumptions and scenarios. The
objective of our analysis is to evaluate andcomprehend what and how much theimpact of the assumptions and scenarios
will pose and how it will be channeled.
 The FY2022 scenario analysis of transition
risks estimated the impact on borrowers’
financial conditions by considering thecosts of implementing and managing
decarbonization technologies that are
currently expected to be introduced andtheir emission reduction effects and byreferring to technical reports issued byorganizations, such as the IEA, andreceiving advice from external experts.
With regard to our scenario analysis, thefollowing is to be noted: we have notassessed the feasibility of decarbonization
technologies. The outlook for the futuretechnologies may be relatively less reliable
than the outlook for other parameters, andwe have not considered the possibility that
future policy changes may affect thetiming of the deployment orcompetitiveness of individual technologies.

JBIC acknowledges scenario analysis as atool to assess the future impact that climatechange will have on its portfolio, and it willcontinue to utilize scenario analysis in orderto enhance the flexibility and resilience of its
risk management for various future climaterelated conditions. We will advance ourceaseless efforts to improve the analysis anddata utilization method through dialogue withvarious stakeholders, including hostcountries’ governments and clients so that
we can enable scenario analysis to reflect
decarbonization prospects in each sector andclients’ transition plans.

JBIC / Annual Report 2023 Addendum

12

Risk management◆ Transition risks(1) Analytical approach
JBIC’s portfolio consists mainly of long-termand large-scale loans because it operates inaccordance with the principle ofsupplementing the private financial sector asa policy-based financial institution, so it ischaracterized as vulnerable to the credit
strength of certain regions, sectors, orborrowers. Also, sovereign or country risk
accounts for a large portion of the credit risk
since JBIC frequently provides loans andguarantees to governments, authorities, andcompanies in foreign countries. Based onthese characteristics, we apply the bottom-up
approach, which simulates the financial
conditions of each borrower, rather than the
top-down approach, which assesses themacro-economic impact on the portfolio, when
we estimate the risks and opportunities
related to climate change.
Considering GHG emissions and the credit
exposure of JBIC, the following targets havebeen extracted for analysis:
 Corporate finance: Of the sectors that
constitute carbon-related sectors definedin TCFD recommendations for which thedisclosure of credit concentration isrecommended in the TCFD’s supplemental
guidance for the financial sector, four
sectors (electricity, energy, iron and steel,and air transportation) that account for asignificant part of JBIC’s portfolio were

(2) Results of analysis
According to the results of the scenario
analysis of transition risks, based on the
NGFS’s Net Zero 2050 scenario in FY2022,
the cumulative rise in credit costs up to theyear of 2050 is estimated to be JPY348.2
billion. It is suggested that this may impose areasonable cost burden on JBIC in the medium
to long term, but the short-term impact on
JBIC’s financial soundness is limited. In
addition to the analysis above, we identified
short-term stress events and their features byusing our own developed scenarios to measure
the short-term impacts of rapidly and acutely
accelerating the Net Zero 2050 scenario on a
global scale.
Given the assumptions and other parametersin the NGFS’s scenarios, the results confirmed
the high possibility that borrowers in theanalyzed portfolio are expected to bear acertain amount of the investment burden thatis associated with business transformations

extracted for analysis in FY2021, and theautomobile and general trading company
sectors were added in the FY2022 analysis.
The analysis focused on domestic andforeign clients in the above sectors,
especially those with large credit exposure.
 Project finance (PF): As a policy-based
financial institution, project finance makes
up a relatively large portion of JBIC’s
portfolio compared to other financial
institutions, and each project tends to belong term and large. Therefore, we adopted
our original approach and focused theanalysis on carbon-related project finance,
especially those projects with large credit
exposure.
 Credit for foreign governments: Given thenature of a policy-based financial
institution, credit for foreign governments
accounts for a relatively large part of
JBIC’s portfolio. Therefore, we adopted ouroriginal approach and focused the analysis
on large-lot borrowers, which are more
susceptible to transitioning to a
decarbonized society.

toward a decarbonized society or the carbonrelated burden according to their GHG
emission reduction status in the medium tolong term and which translate into increased
credit costs.
The results also confirmed the importance ofcontinuing dialogues and engagements withhost countries’ governments and borrowers aswell as providing support through green
finance and transition finance to ensure that
initiatives toward decarbonization will be
implemented as planned.
We will continue to support initiatives toachieve carbon neutrality through dialogues
and engagements with stakeholders, includinginternational organizations, governments, andborrowers.

JBIC / Annual Report 2023 Addendum

13

Risk management◆ Physical risks(1) Analytical approach
As in the transition risk analysis, we have adopted a bottom-up approach that simulates thefinancial conditions of each borrower. Details of the process are described below:
i. Evaluation of themagnitude of hazard
impacts on theoverall PF portfolio•

Using hazard maps and information about project sites, we evaluate theimpact of the following acute risks: coastal floods, river floods, storms,
droughts, wildfires, and sea level rises as well as the chronic risks oftemperature and sea level rises.

•

We extract project financing cases that are considered to be ofsignificance and with high physical risk by comprehensively considering
multiple factors, such as our exposure and the qualitative risks of eachsector.

•We translate the hazard impacts of each site into the costs of direct
damage (physical damage) and indirect damage (periods when businessis suspended), and we estimate the credit rating of each project sample
using our PF credit rating model.

•

We take into account the cumulative probability of hazard events, andwe calculate credit costs (on an expected value basis) of each hazard
under the scenarios.

ii. Selection ofproject samples tobe analyzed in detailiii. Estimation of thecredit rating of eachproject sample

iv. Estimation of
credit costs from theestimated ratings① Evaluation of hazard impacts② Evaluation of financial impacts

The evaluation covers all of JBIC’s project
financing. It takes into account thecharacteristics of our credit portfolio, where
project finance accounts for a relatively largepart, and that project finance is more
susceptible to hazards (climate disasters) as
the revenue assets tend to be concentrated in
one location, compared to companies andgovernments, whose vital assets and revenue
sources are diversified and widely distributed.

Based on the results of the hazard impacts
evaluation, we selected the projects that weresignificant in terms of physical risk and credit
exposure, and we assessed the financial
impacts of each project under NGFS’s Current
Policies and other scenarios. Concretely, we
estimated the costs of direct damage andindirect damage, such as losses due tobusiness interruptions caused by acute riskhazards, as well as reduced labor productivity
caused by chronic risk hazards. We thenconsidered financial factors, including
insurance, followed by scenario analysis withexternal experts to estimate the impact oneach project’s credit rating, such as losses
due to business and our cost of credit after
financial compensation, such as insurance tocover damage.

We evaluate from the hazard maps the impactof the following acute risks: coastal floods,
river floods, storms, droughts, wildfires, andsea level rises as well as the chronic risks oftemperature and sea level rises, taking into
account the possible impacts of distinct
hazards by location as our projects areglobally dispersed.

（２）Results of Analysis① Evaluation of hazard impacts
We conducted a hazard impact evaluation byidentifying the location of each project,assessing the hazards of acute risks andchronic risks with hazard maps, andconsidering multiple factors, including our
exposure and the qualitative risks of eachsector.

The evaluation confirmed that JBIC’s project
financing is globally dispersed and could be
impacted by distinct hazards at each location.
By hazard, projects in disaster-prone areas forstorms, river floods, and wildfires could be
relatively more impacted than others. It also
found that of the regions where many JBIC
projects are located, risks are relatively moreconcentrated in North America, South Asia,
Southeast Asia, and Oceania.

JBIC / Annual Report 2023 Addendum

14

Risk management② Evaluation of financial impacts
According to the scenario analysis of physical risks for the selected projects, based on the
NGFS’s Current Policies scenario, the cumulative credit costs up to 2050 are estimated to be a
maximum of JPY13.5 billion for acute risks and JPY13.2 billion for chronic risks1, which means
they have a limited impact on JBIC’s financial soundness.
Given the assumptions and other parameters in the NGFS’s scenarios, the results confirmed thehigh possibility that borrowers in the analyzed portfolio are susceptible to distinct hazards ineach area, especially storms, river floods, and wildfires. On the other hand, the result also
confirmed that each project is likely to be properly insured, so financial losses will becompensated, minimizing the impact on project profitability and credit costs.
Meanwhile, in order to more accurately assess the risks of physical climate hazards for theseprojects, it is necessary to analyze more detailed weather data, each project’s measures for
mitigation and adaptation, and the insurance conditions. It should be noted that trends in natural
disasters related to climate change may affect insurance market trends.
From the scenario analysis, we have confirmed the importance of continued dialogue andengagement with host countries’ governments and borrowers, recognizing natural disaster risks,
and implementing climate mitigation and adaptation measures. We will continue proper credit
management, taking into account the characteristics of each project.
1 These amounts exclude the reversal of credit-related costs resulting from a decline in balances.

Cascade channel of acute and chronic risks

Coastal flood

Drought

Physical damage fromdisasters（direct damage）
Business suspended becauseof disasters （indirect damage）

Extreme heat

Chronic risk

Extreme heat
Wildfire

Decline in utilization
because of water shortages
due to salt damage or
lower productivity from the heat（indirect damage）

Lost revenue

Wildfire

Estimated impact on
ratings and credit costs

Acute risk

Temperature rise

Storm

Reconstruction
costsRiver flood

Consideration of
insurance coverage

JBIC / Annual Report 2023 Addendum15

Risk management

Outstanding credit for High-priority Sectors
In addition to scenario analysis for the four
sectors of electricity, energy, transportation,and iron and steel, which are designated as
High-priority Sectors where climate-relatedrisks are captured intensively, for individual
projects we provide support throughmonitoring and dialogues with clients, and for
portfolios, we give consideration and respondto GHG emission measurements and reduction
measures.
As of the end of March 2023, the outstanding
credit in these sectors amounted to
JPY8,924.3 billion2, which accounts forapproximately 51% of the total outstandingloans, guarantees, and equity participations of
JBIC.
2 The amount includes loans, guarantees, and equity
participations. In the electricity sector, renewable energy
and transmission and distribution projects are included.

◆ Initiatives related to thermal coal
power generation projects
In order to achieve carbon neutrality, it is
crucial to support various transition pathways
while taking into account regional andindustrial characteristics, energy security, andgeopolitics. JBIC addresses fossil fuelprojects appropriately in line with theJapanese government’s policies (e.g.,consistency with the 1.5℃ target and goals of
the Paris Agreement), and we havediscontinued financing for unabatedinternational thermal coal power generation
projects. We also continue to engage withhost countries’ governments and collaborate
with foreign government bodies andinternational organizations.
Outstanding credit of project financing to thethermal coal power generation projects as ofMarch 31, 2023, stood at JPY1,177.6 billion3(which accounts for approximately 7% of thetotal outstanding loans, guarantees, andequity participations of JBIC), and we expect
to reduce it to zero in the early 2040s.
3 The amount includes loans and guarantees.

JBIC / Annual Report 2023 Addendum

16

Metrics and targets

Metrics and targets
Climate change-related financecommitted and structured as our metrics. For
these metrics, we have defined quantitative
targets for each fiscal year and have beenmonitoring the status of achievement at the
Executive Committee. The status of climatechange-related finance projects is regularly
reported to the Board of Directors, and theprogress of strategies, such as the MediumTerm Business Plan, are overseen.

JBIC believes it is essential that the flow offunds, including those through themobilization of private finance, needs to be
redirected to and shore up thedecarbonization pathways to accelerateenergy transitions and realize carbon
neutrality on a global scale.
Accordingly, under one of our action plans,“Respond to energy transformation toward therealization of a decarbonized society” in our
Fourth Medium-Term Business Plan, we have
set the numbers of green finance andtransition finance4 projects that are

The table below shows the targets and results
concerning the numbers of green finance andtransition finance projects committed andstructured in FY2022. The total co-financing
amount for projects committed in FY2022 was
JPY1,623.2 billion5.

＜Green finance and transition finance in FY2022＞
Number of projects
structured (target)

Number of projects
committed (target)

Co-financing amount57 （35）21 （33）

JPY1,623.2 billion

4 The definition of green finance and transition finance is based on JBIC’s Fourth Medium-term Business

Plan. See P.20 “Medium-term Business Plan (FY2021-FY2023) in 2023 Annual Report.
5 The amount includes guarantees.

GHG emissions
JBIC is conducting analysis and examinationon the measurement of its GHG emissions asa metric to evaluate and manage climaterelated risks and opportunities.

◆ Initiatives toward reduction of GHG
emissions from our operations
We are committed to pursuing efforts to
reduce GHG emissions from our operations to
net zero by 2030 under the ESG policy
established in October 2021.
The table below shows the amounts of GHG
emissions from our operations for FY2022.
We will continuously consider and execute
emission reduction measures in Scope 1

Items
measured6

FY2022(t-CO2)9GHG emissions

1,042.9

Scope 1 7

181.5

Scope 2 8861.4

TargetNet zeroby 2030(direct GHG emissions from our own
operations) and Scope 2 (indirect GHG
emissions from purchased electricity, heat, or
steam consumed by JBIC).
In FY2022, JBIC’s major emission source in
Scope 1 and 2 was power consumed by
offices. So far, we have taken emission
reduction measures, such as turning off
unused lights and implementing a casual
dress code during summer. In addition, in
2022 we signed a contract with an electricity
provider that generates renewable energy to
be the main power source for the Head Office.
Going forward, we will work to procure power
derived from renewable energy.
In FY2022, we also started calculations forthe categories in Scope 3 (including businesstrips).
6 The scope of data collection includes the Head Office, the Osaka
Branch, the Keidanren Kaikan office, a training center, and a systemback-up center.
7 Scope 1 includes gasoline and city gas.
8 Scope 2 includes electricity (market based).
9 GHG emissions in Scope 1 are calculated according to emissions
factors based on the Act on the Promotion of Global WarmingCountermeasures. The calculation for Scope 2 applies the emission
factors of electric power utilities, as listed by the Ministry of theEnvironment and the METI.

JBIC / Annual Report 2023 Addendum

17Metrics and targets◆ GHG emissions from our financeportfolio
JBIC recognizes the substantial role that
financial institutions can play in climatechange initiatives, and under its ESG policy,
we are committed to pursuing to achieve net
zero GHG emissions in our finance portfolio by2050, toward the global implementation of
the Paris Agreement.
Energy transitions toward a decarbonizedsociety are especially important in emerging
and developing countries, as well as indeveloped countries. There is no single
pathway, and it is vital to provide
comprehensive support for transitions withconsideration for regional and industrial
features, energy security, and geopolitics.
While pursuing to achieve net zero GHG
emissions in its finance portfolio, JBIC will
accelerate the energy transition to a
decarbonized society in emerging anddeveloping countries through continued
engagements with host countries’
governments and collaborations withgovernment bodies and overseas andinternational organizations, and we willcontribute toward realizing carbon neutrality
on a global basis.
Currently a trial calculation of GHG emissions
in our finance portfolio, based on ouroperational features, is underway. We willcontinue to analyze and adjust the scope of
calculations and monitoring toward achieving
net zero by 2050.

JBIC / Annual Report 2023 Addendum18