Catalyzing Climate Action: Emergent
Asia-Pacific Case Studies of Financial
Institutions’ Net-zero Transition Plans
Supplementary Report to GFANZ’s
Recommendations and Guidance on
Financial Institution Net-zero
Transition Plans

JULY 2024

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Contents
Contents

2

Important Notice3

Authors and Acknowledgements

4

Introduction and Asia-Pacific’s landscape on net-zero transition planning

5

1.

12

Foundations - Objectives and Priorities: Dai-Ichi Life Group

2. Implementation Strategy - Activities and Decision Making: DBS Group17

3. Implementation Strategy - Policies and Conditions: Mitsubishi UFJ Financial Group (MUFG)

21

4. Engagement Strategy - Clients and Portfolio Companies: HSBC

26

5. Engagement Strategy - Clients and Portfolio Companies: Sumitomo Mitsui Trust AssetManagement (SMTAM)

30

6. Engagement Strategy - Policy Advocacy and Industry: BNP Paribas Asset Management(BNPPAM)

35

7.

40

Metrics and Targets – Mizuho Financial Group

8. Metrics and Targets - UOB Group46

9. Governance: Roles, Responsibilities and Remuneration & Skills and Culture - Prudential plc

522

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Important NoticeThis case study report was produced by the Asia-Pacific (APAC) Network of the Glasgow Financial Alliancefor Net Zero (GFANZ) with contributions from members of the sector-specific alliances comprising GFANZ.
This report aims to provide context for the APAC region on the various themes and components of the netzero transition plan (NZTP) set out in GFANZ’s Recommendations and Guidance on Financial Institution
Net-zero Transition Plans (November 2022). For the avoidance of doubt, nothing expressed or implied in
the report is intended to prescribe a specific course of action. This report does not create legal relations
or legally enforceable obligations of any kind. Each GFANZ sector-specific alliance member unilaterally
determines whether, and the extent to which, it will adopt any of the potential courses of action describedin this report.
The information in this report does not purport to be comprehensive and does not render any form oflegal, tax, investment, accounting, financial, or other advice. The case studies in this report are madeavailable by individual members and have not been independently verified by any person. Nothing in thisreport constitutes an offer or a solicitation of an offer to buy or sell any securities or financial instruments
and does not constitute investment advice or a recommendation by any person of an investment ordivestment strategy or whether or not to “buy,” “sell,” or “hold” any security or other financial instrument.
The report is for informational purposes only and the information contained herein was prepared as of thedate of publication.
No representation, warranty, assurance, or undertaking (express or implied) is or will be made, and no
responsibility or liability is or will be accepted by GFANZ, its secretariat, sector-specific alliance members,
or by any of their respective affiliates or any of their respective officers, employees, agents, or advisors
including without limitation in relation to the adequacy, accuracy, completeness, or reasonableness of thisreport, or of any other information (whether written or oral), notice, or document supplied or otherwise
made available to any interested party or its advisors in connection with this report.
Members of the eight financial sector-specific net-zero alliances comprising GFANZ have signed up to
the ambitious commitments of their respective alliances and are not automatically expected to adopt the
principles and frameworks communicated within this report, although we expect all members to increase
their ambition over time, so long as it is consistent with members’ fiduciary and contractual duties andapplicable laws and regulations, including securities, banking, and antitrust laws.

3

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Authors and Acknowledgements
GFANZ would like to acknowledge and express our gratitude to the numerous GFANZ sector-specificalliance members which submitted the case studies in this report. This does not imply that the casestudies included herein are endorsed by every GFANZ sector-specific alliance member firm, including
the firms represented on the Principals Group [and the APAC Network / Advisory Board]. The report
was developed and edited by Joyce Khoh from the GFANZ APAC Network Secretariat with support
from the GFANZ Central Secretariat.

4

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Introduction and Asia-Pacific’s landscapeon net-zero transition planningThis GFANZ Asia-Pacific Network case-study
report builds on the inaugural June 2023 reportthat reviewed how financial institutions in theregion were developing the components of
their net-zero transition plans. The case studies
featured in this report showcase practicalexamples of transition planning advancing netzero commitments and the evolution of practices
across the region.
The case studies reference the November
2022 published report and framework on
Recommendations and Guidance on Financial
Institution Net-zero Transition Plans (“GFANZ
FI NZTP Framework”) which sets out ten
components across five themes. Specificrecommendations and guidance are provided foreach component.1 The supplementary technicalreview note on Scaling Transition Finance and Real
Economy Decarbonization which was launched in
December 2023 at COP 28 is also referenced.
The case studies aim to contextualize the themes,components and recommendations inin the GFANZ FI NZTP Framework (Figure 1).
Each case study provides a deep dive into how
a financial institution is approaching one of thefive themes, and together they demonstrate
how leading financial institutions are utilizing
their transition plans to accelerate financingof the net-zero transition in Asia and globally.
Examples of the four key net-zero financing
strategies identified in the November 2022 report— financing climate solutions, ‘aligned’ entities,‘aligning’ entities and managed phaseout of highemitting assets2 are also included.

Figure 1: GFANZ financial institution net-zero transition plan framework: themes and components
Foundations• Objectives and priorities

GOVERNANCE

A set of structures' tooversee, incentivize, andsupport the implementationof the plan.

IMPLEMENTATIONSTRATEGY
A strategy to alignbusiness activities,
products, services,and policies with the
net-zero objectives.

FOUNDATIONS

An articulation of theorganization’s overall
approach to net zeroacross the four key
financing strategies.

Implementation Strategy• Products and services• Activities anddecision-making• Policies and conditions
ENGAGEMENTSTRATEGY
A strategy to engage
with external
stakeholders insupport of the
net-zero objectives.

Engagement Strategy• Clients and portfolio
companies• Industry• Government and public
sector
Metrics and Targets• Metrics and targets

METRICS
AND TARGETS

A suite of metrics and targets toassess and monitor progress
towards the net-zero objectives.

1
2

Governance• Roles, responsibilities,
and remuneration• Skills and culture

Figure 3 on p.10.
Figure 4 on p.11.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

INCREASING REGULATORY FOCUS ONDISCLOSURE, TRANSITION PLANS AND
TRANSITION FINANCE
Globally and in Asia, the last few years have seen
increasingly strong regulatory support for thedevelopment and disclosure of transition plans inalignment with globally recognized frameworks,
alongside greater engagement surroundingtransition finance. As work on regulatory andsupervisory approaches to climate-related risks
evolves, the role of transition plans for bothfinancial institutions and real-economy corporates
is not only viewed as a practical tool to enable anorderly transition3, but also a potentially usefulsource of information for financial authorities toassess micro and macroprudential risks.
In 2022, the G20 Sustainable Finance Working
Group published a Transition Finance framework4
that provides five categories of high-level
principles to guide transitional activities andinvestments, of which a number encouragetransition planning. At the 2023 G7 Summit inHiroshima, leaders also called on the private sector
to set and implement credible transition plans inline with the Paris Agreement and emphasized
the significant role of transition finance inadvancing a whole-of-economy decarbonization— avoiding locking in carbon and being basedon effective emission reductions.5 International

3

4
5
6
7
8

bodies such as the Financial Stability Board (FSB),
the Network on Greening the Financial System(NGFS) and the Basel Committee on Banking
Supervision (BCBS) are undertaking their own
efforts to consider the role transition plans playin micro and macroprudential risk assessment.
The International Sustainability Standards Board(ISSB)’s climate disclosure standard6 requires firms
to disclose a transition plan if they have one. ISSB
have announced they will consider developing
globally applicable guidance for transition plan
disclosures.7
Across the Asia-Pacific, governments have also
been publishing taxonomies, mandatory climatereporting disclosure requirements, guidance ontransition planning and related policy documents.
A number of these, including the Hong Kong
Monetary Authority (HKMA)’s published circularon transition planning8, reference the GFANZ
voluntary FI NZTP Framework. Sustainability
disclosure guidance that includes or referencestransition planning is also being consulted on by
governments / regulators in major economies
such as China and India. Figure 2 provides a nonexhaustive summary of markets across the AsiaPacific that have introduced, or are consulting on,
policy, guidance and / or regulation on reporting
frameworks, disclosure, transition finance andtransition planning.

GFANZ uses the term “orderly transition” to refer to a net-zero transition in which both private sector action and public policychanges are early and ambitious, thereby limiting economic disruption related to the transition (e.g., mismatch between renewableenergy supply and energy demand). For reference, the Network for Greening the Financial System (NGFS), which develops climate
scenarios used by regulators and others, defines “orderly scenarios” as those with “early, ambitious action to a net-zero GHG
emissions economy,” as opposed to disorderly scenarios (with “action that is late, disruptive, sudden and / or unanticipated”). In an
orderly transition, both physical climate risks and transition risks are minimized relative to disorderly transitions or scenarios whereplanned emissions reductions are not achieved. This explanation applies to all mentions of the term “orderly transition” in thisdocument.
G20 Transition Finance Framework (2022).
G7 Hiroshima Leaders’ Communique, May 2023.
IFRS S2 Climate-related Disclosures, June 2023.
ISSB, ISSB delivers further harmonisation of the sustainability disclosure landscape as it embarks on new work plan, June 2024.
HKMA Planning For a Net Zero Transition circular (2023).

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 2: Regulatory support for transition finance and transition planning across Asia
Region /Market

Key Regulatory Developments

Status of Issuance

ASEAN• ASEAN Taxonomy Board: ASEAN Taxonomy for Sustainable
Finance (v3) — Apr 2024

Voluntary

Australia• Australian Treasury: Climate-related financial disclosure
consultation paper (Jun 2023), Sustainable Finance Strategy
Consultation Paper —Nov 2023
• Net Zero Economy Authority Bill (NZEA) 2024: New independent
statutory authority (Net Zero Authority) established to promoteorderly and positive economic transformation

To be announced

China• EU-China Common Ground Taxonomy – Nov 2021
• National Development and Reform Commission (NDRC): Guidance
Catalogue (Taxonomy) for Green and Low-Carbon Transition
Industry (2024 edition) – Feb 2024
• People’s Bank of China (PBOC): Transition Taxonomy that will alignwith G20 Transition Finance Framework - upcoming, announced in
2022• Beijing Stock Exchange (BSE), Shanghai Stock Exchange (SSE),
Shenzhen Stock Exchange (SZSE) publish draft guidelines onsustainability reporting — Feb 2024

Sustainability
reporting guidelines
mandatory for listedcompanies.

Hong Kong• Hong Kong Monetary Authority (HKMA): Circular on Planning for a
Net Zero Transition — Aug 2023
• Hong Kong Exchange (HKEX): ISSB disclosures from 2025 – Apr
2024

Climate disclosures– mandatory.

India• Reserve Bank of India (RBI): Draft Disclosure Framework on
Climate-related Financial Risks — Feb 2024

Mandatory for‘Regulated Entities’.

Indonesia• Financial Services Authority (OJK): Taxonomy for Indonesian
Sustainable Finance (TKBI) — updated Feb 2024

VoluntaryJapan• Ministry of Economy, Trade and Industry (METI): Basic Guidelines
on Climate Transition Finance — May 2021
• Sustainability Standards Board of Japan (led by Financial Services
Agency): three Exposure Drafts of Sustainability DisclosureStandards (ISSB-aligned) - Mar 2024

Climate disclosures- mandatory forlarge entities from2027.

Malaysia• Bank Negara Malaysia (BNM): Guidance on Transition Planning —under development, announced Oct 2023
• Securities Commission (SC): Consultation on mandatory adoptionof ISSB standards – Feb 2024

To be announced

New Zealand• Reserve Bank of New Zealand: Guidance on managing climaterelated risks — Mar 2024

Voluntary

Singapore• Monetary Authority of Singapore (MAS): Guidelines for Financial
Climate disclosures
Institutions on Transition Planning (Consultation) — Oct 2023
– mandatory.
• Accounting and Corporate Regulatory Authority (ACRA) andSingapore Exchange Regulation (SGX RegCo) introduce mandatory
climate-related disclosures in a phased approach — Feb 2024

South Korea• Ministry of Environment: Korean Green Taxonomy – Dec 2021
Climate disclosures• Financial Services Commission (FSC): ISSB-aligned ESG disclosures – mandatory forfor listed entities from 2026 – Feb 2024
large entities from2026.

Thailand• Bank of Thailand (BOT): Thailand Taxonomy — Jun 2023

Voluntary

Source: Various policy documents

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

CATALYZING CLIMATE AMBITION INTO
STRATEGIC ACTION
The direction of travel on policy is clear, andfinancial institutions have been responding
to the changing regulatory landscape. Asianfinancial institutions are making progress in their
Climate Mitigation Journey9 across reportingand disclosure efforts as well as moving on totransition planning — typically starting with a
specific theme (e.g. Metrics and Targets) andadvancing toward publishing comprehensive
end-to-end transition plans that set out how afinancial institution intends to achieve its net-zerocommitments. GFANZ’s pan-sector voluntary
FI NZTP Framework, alongside other tools andguidance have been used by financial institutions
to help structure and implement their individualtransition plans. Hundreds of financial institutions
are expected to have developed transition plans,or components of transition plans, by the endof 2024. Referring to practitioner-led common
frameworks can support the development ofcomparable and comprehensive transition plans,
enabling key stakeholders, such as investors, tomake use of this consistency in approach to aid
their evaluation of a firm’s net-zero efforts; while
encouraging policymakers to support a globallyconsistent approach to considering policy aroundnet-zero transition planning and disclosures.

9

Beyond viewing the net-zero transition planning
process as a strategic organization-wide
transformation and risk management tool,
financial institutions have begun reaping broader
benefits from the process, including: utilizing
their transition plan as a key communication toolwith internal and external stakeholders; achieving
internal alignment and consensus on net-zero
topics; bolstering investor and market confidence
in the firm’s commitment; and thus improving
access to capital, and more. These and otherbenefits are detailed in the report.
The case studies also consider the broad andcomplex challenges that remain, including data
availability, lack of region-and sector-specificpathways, nascent technologies and a continued
need for increased regulatory clarity. Whilethese issues continue to be addressed at global
and regional levels, the snapshots provided by
Asia-Pacific financial institutions in these casestudies demonstrate their efforts and progressin developing net-zero strategies to ultimately
support real economy decarbonization.

A UNEP FI-created framework that constitutes an end-to-end view of the capabilities financial institutions need to develop to alignthemselves with a 1.5 degree C trajectory.

8Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

institutions as helpful in understanding how
other participants in the financial and real
economy sectors are implementing their own
net-zero commitments and building internal
understanding and capacity.

HOW TO READ AND UTILIZE THIS REPORT
It is useful to note that the financial institutions
providing case studies in this report are at different
stages of their net-zero transition planningjourney, and that transition plans will need to beconsistently updated over time. Although eachcase study primarily focuses on one component
within a theme as set out in the GFANZ
framework, they touch on other components
across the remaining themes. Tags have beenused to demonstrate the interlinkages andinterplay between different parts of each financial
institution’s individual net-zero transition plan.
Through the contributions of financial institutions
to this report, practical lessons learned include:• Starting early is key to building up capacity
to adapt to regulatory changes. Transition
planning is an iterative and organization-wide
process that takes time. Financial institutions
can start with and build on existing work andcapabilities, with the vision to attain the fullsuite of capabilities needed to stay ahead of thecurve.
•

Learning through knowledge sharing and peerto-peer exchanges (e.g. voluntary participationin GFANZ organized roundtables or external
events) has been frequently cited by financial•

Reviewing the transition plan regularly, inline with evolving global developments andthe business landscape, to ensure continued
relevance given the changing policy landscapeat global and regional levels.

•

Taking a localized approach to global plans.
Transition plans for global financial institutions
will require implementation strategies which
retain clear ambition while considering
the unique circumstances of the financial
institution’s local and regional markets ofoperation.

References:
Figure 3 presents an overview of the NZTP
framework and recommendations that financial
institutions could implement as they develop their
net-zero transition plans.
Figure 4 illustrates the four key financing
strategies included in the GFANZ FI NZTP
Framework.

9Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 3: Summary of recommendations from the GFANZ FI NZTP Framework

Foundations

Implementation
Strategy

1. Objectives and priorities
Deﬁne the organization’s objectives to reach net zero by 2050 or sooner, in line with sciencebased pathways to limit warming to 1.5 degrees C, stating clearly deﬁned and measurable
interim and long-term targets and strategic timelines, and identify the priority ﬁnancing
strategies of net-zero transition action to enable real-economy emissions reduction.

1. Products and services
Use existing and new products and services to support and increase clients’ and portfolio
companies’ efforts to transition in line with 1.5 degrees C net-zero pathways. Include
accelerating and scaling the net-zero transition in the real economy, providing transitionrelated education and advice, and supporting portfolio decarbonization in accordance with theinstitution’s net-zero transition strategy.
2. Activities and decision-making
Embed the ﬁnancial institution’s net-zero objectives and priorities in its core evaluation anddecision-making tools and processes to support its net-zero commitment. This applies to both
top-down/oversight structures and bottom-up tools and actions.
3. Policies and conditions
Establish and apply policies and conditions on priority sectors and activities, such as thermalcoal, oil and gas, and deforestation. Include other sectors and activities that are high-emitting,or otherwise harmful to the climate, to deﬁne business boundaries in line with the institution’s
net-zero objectives and priorities.

Engagement
Strategy

1. Engagement with clients and portfolio companies
Proactively and constructively provide feedback and support to clients and portfolio companies
to encourage net zero-aligned transition strategies, plans, and progress with an escalation
framework with consequences when engagement is ineffective.
2. Engagement with industry
Proactively engage with peers in the industry to 1) as appropriate, exchange transition expertiseand collectively work on common challenges and 2) represent the ﬁnancial sector’s views
cohesively to external stakeholders, such as clients and governments.
3. Engagement with government and public sector
Direct and indirect lobbying and public-sector engagement should, in a consistent manner,
support an orderly transition to net zero, and as appropriate, encourage consistency of clients’and portfolio companies’ lobbying and advocacy efforts with the institution’s own net-zero
objectives.

Metrics andTargets

Governance

1. Metrics and targets
Establish a suite of metrics and targets to drive execution of the net-zero transition plan andmonitor progress of results in the near, medium, and long term. Include metrics and targets
focused on aligning ﬁnancial activity in support of the real-economy net-zero transition; on
executing the transition plan; and on measuring changes in client and portfolio GHG emissions.

1. Roles, responsibilities, and remuneration
Deﬁne roles for the Board or strategy oversight body and senior management ensuring they
have ownership, oversight, and responsibility for the net-zero targets. Assign appropriate
individuals and teams to all aspects of both design and delivery of the transition plan. Use
remuneration incentives for all roles, where possible. Review the transition plan regularly
to ensure material updates/developments are incorporated; challenges are reviewed as anopportunity to correct course; and implementation risks are properly managed.
2. Skills and culture
Provide training and development support to the teams and individuals designing,
implementing, and overseeing the plan so that they have sufficient skills and knowledge toperform their roles (including at the Board and senior management level). Implement a change
management program and foster open communications to embed the net-zero transition plan
into the organization’s culture and practices.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 4: Four key financing strategies

11Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Foundations
Component: Objectives and Priorities — Dai-Ichi Life Group
Example 1: Dai-ichi Life Group – Clear and measurable objectives and priorities advance transition
implementation
Sub-sector: Asset Owner
Objectives and priorities
Recommendation: Define the organization’s
objectives to reach net zero by 2050 or sooner,in line with science-based pathways to limit
warming to 1.5 degrees C, stating clearly definedand measurable interim and long-term targets
and strategic timelines, and identify the priority
financing strategies of net-zero transition action
to enable real economy emissions reduction.
The Dai-ichi Life Group (Dai-ichi Life) wasestablished in 1902 as Japan’s first mutual life
insurance company and currently operates as a
global network across 10 countries in Asia-Pacificand North America. In March 2021, Dai-ichi Life
became the first Japanese asset owner to join
the Net Zero Asset Owner Alliance (NZAOA)
where it announced its commitment to net-zerogreenhouse gas (GHG) emissions by 2050, which
it had been working on since 2018.

The commitment to apply best practices on
climate change as a member of the global financial
sector was further reinforced by its participationin the GFANZ Principals Group in 2021. Following
publication of the GFANZ FI NZTP framework,
Dai-ichi Life advanced its efforts with its inauguralnet-zero transition plan (NZTP) published in
September 2023 (Figure 5). As recommended
in the GFANZ FI NZTP voluntary framework,
Dai-ichi Life’s NZTP comprises foundations,
implementation and engagement strategies,
metrics and targets, and governance. The planis the result of collaboration between various
teams within the organization, including the
Sustainability Unit (acting as central coordinator),
Investment Department, Corporate Services Unit,
and Research team.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 5: Dai-Ichi Life’s inaugural Net Zero Transition Plan

Source: Dai-Ichi Life Net Zero Transition Plan (2023)

The clear objectives and emission reduction
targets included in its NZTP has enabled Daiichi Life to effectively communicate its transition
approach with internal and external stakeholders,
as well as engage more productively withportfolio companies. Beyond utilizing the plan tostrengthen engagement and raise expectations
with the top 50 emitters in its investment portfolio,in the process of developing its plan, Dai-ichi
Life also decided to expand the asset classes
covered by its emission reduction targets toinclude enterprise loans. The Group’s annual
review of its NZTP will help maintain stakeholder
accountability by assessing its progress inpriority areas, and advancing its net-zero efforts
accordingly.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

CORPORATE ROLES GUIDE OBJECTIVES AND PRIORITIESTo effectively set and scope key objectives andpriorities, Dai-ichi Life took the approach of first
identifying and defining its three roles: operatingcompany (insurance company), institutional
investor, and NZAOA member. Specific objectives
and priorities, and corresponding targets•••

As a global operating company, Dai-ichi Life Holdings views the reduction of GHG emissions fromits operations as essential, with its transition plan providing a roadmap to achieve net-zero.
As an institutional investor managing diversified asset classes, Dai-ichi Life recognizes the crucialrole of its investments in achieving a sustainable society. To achieve net-zero targets, transition
planning provides disclosure of key strategies and activities, and encourages GHG emission
reductions with investees. The following interim metrics and targets have been set (with progressmeasured):° Scope 3 Category 15: 25% and 50% GHG emissions reduction by FY 2025 and FY 2030
respectively (from 2020 baseline), in alignment with NZAOA guidelines (16% reduction achievedin 202211)° JPY 2.5 trillion of environment / climate solution investments and loans (cumulative)12 by
FY2030 (approximately JPY 1.2 trillion achieved in FY2023)° 2.4 million tons (CO2e) of avoided emissions by FY2026 (recorded 1.83 million tons CO2e in
FY202313)° Engagement with investment portfolio’s top 50 high emitters (exceeded target by engaging
with top 55 emitters in 2022 (estimated portfolio coverage of 72%)), in alignment with 2030
sectoral targets that reference the IEA NZE / APS scenario.14
As a member of the NZAOA, Dai-ichi Life recognizes its mission to take a leadership role andcontribute to the financial sector addressing climate change issues. Developing its NZTP in line with
GFANZ voluntary guidance promotes global consistency and action across the financial sector.

Balancing feasibility and ambition
Dai-ichi Life’s core transition objectives andpriorities are the result of extensive internal
discussion between management and working
teams about balancing feasibility and ambition.
To best harness its NZTP as a meaningful
tool for engaging external stakeholders andcommunicating the company’s ambitions andstrategy, the decision made was to present goals
that are more ambitious than conservative, in Daiichi Life’s estimation.

10
11
12
13
14

and strategies were then identified for eachrole. Progress toward Dai-ichi Life’s 2050 netzero target is guided by interim targets for its
investment portfolio (Scope 3 Category 1510
emissions) and for its own business (Scope 1 and 2
emissions).

This development process created value by
strengthening internal alignment and coordination
around net-zero objectives. At the same time,
the company endorses a flexible approach toits plan, recognizing the benefit of realignmentand refinement based on consultation with key
stakeholders. The annual review process has been
structured to allow Dai-ichi Life to react swiftly,
and course correct as necessary.

Based on PCAF standards.
Actual results on an absolute volume basis in FY2022.
Defined on p.16.
Avoided emissions per the PCAF’s methodology, covering Dai-Ichi’s environment/climate solution investment and loans.
185 ~ 255 g/kWh for the electricity sector, 16% emission reduction from 2020 baseline for the steel sector.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Metrics
And
Targets

Governance

Roles,
Responsibilities
andImplementation
Remuneration,
Strategy
Skills andCultureEngagement
Strategy

Clients andPortfolio
Foundations
Companies

Investing in internal and external stakeholders
Recognizing climate governance to be critical toachieving its net-zero objectives and priorities,
Dai-ichi Life has also prioritized a strong
governance structure to address climate change
and has invested in building awareness among
Group executives and employees.
In 2021, Dai-Ichi Life established its Group
Sustainability Committee to formulate policies
and actions in response to climate change,
including transition planning and monitoringof progress against the plan. The committee
reports directly to the Board of Directors andis chaired by the Chief Sustainability Officer (aposition established in 2023), and managed by the
Sustainability Unit which is tasked with policy andstrategy formulation. To incentivize management,sustainability-related indicators, including theGroup’s progress on emission reduction, havebeen included in executive compensation.

Dai-ichi Life is also building awareness
Metrics
andcapacity across its global network ofAnd
Governanceapproximately
60,000 employees to ensure
Targetssustainability is embedded in every role. Rolespecific environmental-related training and sharingof sustainability initiatives at annual town hallmeetings enhance employees’ climate awarenessand commitment across the Group. Further efforts
have been set to bring together leaders fromforeign offices and the central Sustainability Unit
to share knowledge and collaboratively address
global developments.
Dai-ichi Life has also identified priority areas todedicate resources to in relation to its institutional
investor role. These include: requiring disclosureof supporting data on avoided emissions frominvestee companies; enhancing the effectivenessof investee engagement by considering the natureand characteristics of the companies; assessing
the relative merits of direct or collaborative
engagement15; and sustained engagement toensure progress in decarbonization. Examples ofthe engagement process are detailed in Figure 6.
A collaborative approach is taken with industry
and investees, as well as GFANZ and other external
initiatives, to promote the disclosure of transition
plans and increased transparency in corporate
reporting.

Figure 6: Dai-Ichi Life’s engagement process with investee companies

Source: Dai-Ichi Life Net Zero Transition Plan (2023)

15

Refers to group-based investor engagement initiatives that are targeted at advocating for specific outcomes with real-economy
companies.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

FOUNDATIONS DRIVE TRANSITION AND CLIMATE SOLUTIONS FINANCING

Implementation
Strategy

Products
and Services,
PoliciesandEngagement
Conditions,
Strategy
Activities andDecision Making

other factors in Japan and internationally.
Foundations

Metrics
And
Targets

Dai-ichi Life’s motto of “pursuing the wellbeing of current & future generations, realizing
a sustainable society, and achieving sustainablebusiness growth” is directly connected to its
transition plan implementation. Its implementation
strategy prioritizes: 1) expanding the scope of
assets covered by its emission reduction targets
and analysis, and 2) supporting the transition
to a decarbonized society and the creation ofenvironmental innovation through its investments.
In September 2022, the Dai-ichi Life Policy on
Transition Finance was developed from its Basic
Policy on Responsible Investment. Key principles
include:(1) Choosing to take investment actions thatprioritize the realization of long-term carbon
neutrality16 for society as a whole;(2) Independently examining the validity andfeasibility of companies’ transition strategies
when making investment decisions to ensure
investment returns while aligning with key
transition finance guidelines;(3) Continuously reviewing the criteria used in
examining companies’ transition strategies,
including taking into account external
developments such as technologicalinnovation; and(4) Facilitating improvements in companies’
transition strategies and initiatives throughengagement, following thorough analysis of
their performance.
Dai-ichi Life’s transition finance is targeted at
high-emitting industries and the policy identifies
specific considerations to be included in theinvestment decision process. Negative screening is
also conducted as part of the process, to exclude
prohibited sectors or projects from Dai-ichi Life’s
financing. In particular, new thermal power plant
projects that use fossil fuels and coal mining
projects are excluded. The policy scope17 will be
reviewed based on evolving social conditions andGovernanceInternal
standards have also been set for labelledtransition finance instruments (e.g. transition
bonds and loans) to further guide Dai-ichi Life in
its investment decisions. These standards requireissuers’ net-zero strategy and use of proceeds toalign with international standards, in addition tothird party verification. Dai-ichi Life’s Sustainable
Finance Frameworks were also launched in
January 2024 covering six corporate loan producttypes (Transition, Green, Social, Sustainability,
Sustainability-Linked and Positive Impact)18. They
detail approaches to determining borrowers’
eligibility for financing, and key standards andguidelines used.

In pursuing environment / climate solution
investments and loans (defined in Figure 7), Daiichi Life is actively exploring new and impactful
opportunities that contribute to resolving climatechange. For example, the company recently
invested JPY 1.5 billion in a Japanese venture
fund focused on startups that have businessmodels or technologies to spur decarbonization.
One of the fund investees, Sharing Energy, sets
up decentralized sources of renewable energy
and provides third-party ownership services
for residential power solar systems – enabling
residents to tap on their solar power system
without paying initial costs and maintenanceexpenses.
Figure 7: How Dai-Ichi Life defines climate
solution investments and loans
Investments andloans in alignment
with international
standards•••

Green bond and/or loan
Transition bond and/or loan
Transition-linked bond and/or loan

Projects•

Investments and loans forrenewable energy related
infrastructure (e.g. renewableenergy power plant projects)

Real estate•

Investments and loans forgreen buildings

Funds

•

Funds to be invested inrenewable energy related
infrastructure

16 “Carbon Neutrality” is used interchangeably with “Net Zero” in Japan. Japan’s Ministry of Economy, Trade and Industry (METI) has
publicly confirmed this.
17 Excludes transportation and storage of fossil fuels. Investments in LNG and new technologies such as CCS and CCUS are reviewed
on a case-by-case basis, in line with internationally recognized scenarios.
18 News release on Dai-Ichi Life’s Sustainable Finance Frameworks, January 2024.

16

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Implementation Strategy
Component: Activities and Decision Making — DBS
Example 2: DBS - Use of Artificial Intelligence (AI) to enhance the climate and ESG risk assessment
process
Sub-sector: Banking
Activities and Decision Making
Recommendation: Embed the financial
institution’s net-zero objectives and priorities
in its core evaluation and decision-making
tools and processes to support its net-zerocommitment. This applies to both top-down /oversight structures and bottom-up tools andactions.
DBS is a leading financial services group in
Asia, headquartered and listed in Singapore. It
has presence in 19 markets and is active in thethree key Asian axes of growth: Greater China,
Southeast Asia and South Asia. It offers a fullrange of services in consumer banking, wealthmanagement, and institutional banking, creating
differentiated customer solutions by leveraging
digital technology.
As a purpose-driven bank, DBS was the firstSingaporean bank to join the Net Zero Banking
Alliance (NZBA) in 2021. This decision wasmade to demonstrate its commitment to
key stakeholders and to align its lending andinvestment portfolio to net-zero emissions by
2050. Being part of the NZBA community alsooffers the opportunity to shape industry guidelines
and best practices, in collaboration with other net
zero-aligned peers.
DBS supports a fair and just transition acrossits markets. It believes that climate action
presents both risk management and commercial
opportunities, beyond being a societal
responsibility. In 2022, DBS announced its
net-zero commitments and science-informed
decarbonization targets (Scope 3 financed
emissions inclusive) across seven sectors anddata coverage targets for two sectors. These
sectors are significant contributors to global GHG
emissions, and account for a material portion of
the bank’s emissions covering both corporate
financing and capital market activities. Together,the 2030 interim and 2050 net-zero targets guide
its lending and financing efforts for an economywide transformation. DBS Sustainability Reports
and its inaugural Our Path to Net Zero reportencapsulate its net-zero transition plan and cover
governance, strategy, risk management andmetrics and targets, in line with the Task Forceon Climate-Related Financial Disclosures (TCFD)
voluntary recommendations.

17

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

LEVERAGING ARTIFICIAL INTELLIGENCE FOR ENHANCED ESG RISK ASSESSMENTS

Implementation
Strategy

Engagement
Strategy

Clients andPortfolio
Foundations
Companies

Metrics
And
Targets

to identify key patterns, trends and insights
to optimize data-driven decision making, andmanaging broader climate and transition-relatedrisks.

GovernanceIn early experiments with Gen AI, DBS had comeup with over 240 ideas. This led to the scalingof more than 15 meaningful use cases across thebank, since early 2023. One such use case wasits inclusion in the bank’s ESG risk management
approach to generate responses to selected
questions in the bank’s ESG Risk Questionnaires(ERQ). The overall ESG risk assessment process
for all new credit applications, annual credit
reviews and in cases where there are negative
ESG news or reports around specific clients has
also been enhanced (Figure 8).

A key driver of DBS’ climate strategy is its
approach to client engagement, which is
supported by the integration of climate
considerations into its sectoral strategies andprocesses. DBS has accumulated a decade ofexperience leveraging Artificial Intelligence (AI)approaches to enhance customer experiences,improve operational efficiency and drive
innovation. As such, the bank views Generative
AI (Gen AI)19 as a revolutionary tool for efficiently
processing vast amounts of unstructured data

Figure 8: DBS’ enhanced ESG risk assessment process (excluding the credit approval process)
ESG Risk Assessment (NEW)

Relationshipmanager uses
enhanced ESG Risk
Questionnaire(ERQ)

Sector Level
Climate Risks
Borrower Level
Climate Risks
Non-Climate
ESG Risks

ESG Risk
Score
(ERS)
Determines
Escalation

Submission forreview by credit
risk managers

NO

Credit including ESG YES
Risk assessed
as satisfactory

Approved

NO
Escalation
Required
YES
Enhanced due
diligence by:

YES
Suﬃcient ESG Risk
Mitigation?

NO

Declined

Sustainability
Team ( First Line)

Source: DBS

ESG Credit Team( Second Line)The ERQ is a key first step to assess clients on theircommitment and ability to manage ESG issues
and climate-related risks associated with theiroperations, which helps DBS evaluate whethera client’s business activities could trigger credit
or reputational risks. ERQ information provides
critical insights into a client’s alignment with

DBS’ own net-zero commitments. Data collectedfrom the ERQ also enables relationship managers
to better understand client transition planningand sustainability efforts, to develop targeted
engagement strategies, as well as financing andfacilitation opportunities that support clients’transition to a lower-carbon business.

19 A field that focuses on creating new data similar to an inputted dataset and can be used across a variety of domains including text
synthesis, art generation and audio-video creation. Gen AI models, such as the generative pre-trained transformer (GPT), can beleveraged and fine-tuned for generative tasks and has the potential to automate tasks, offer creativity and improve decision-making
processes.

18

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

DBS’ Gen AI pilot focused on generating
responses to selected questions within the ERQ
that cover topics including net-zero alignment,
transition strategy, climate-related physical andtransition risks, governance, and disclosure.
To ensure appropriate source material, theresponses and justifications are derived fromrelevant documents and disclosure uploadedby the relationship managers (Figure 9). Gen
AI’s suggested responses and justifications areembedded within the ERQ tool to provide easy
review by the relationship managers to support thebroader due diligence process. DBS’ institutionalbanking and risk management teams, with the aidof AI-generated inputs, remain responsible for ESG
risk assessments and related decision making.

Figure 9: Integrated Gen AI assists relationship managers in the ESG risk assessment process

Source: DBS

DBS has also embedded a Gen AI chatbot within
the ERQ platform, providing an interactive virtualassistant that facilitates human-like conversations.
This allows relationship managers to clarify
any ambiguity from the generated insights, or
prompt further queries for additional ESG-related
information.
To ensure the reliability of the Gen AI modelfor the enhanced ESG risk assessment process,
DBS sustainability teams made extensive efforts
to validate the generated responses during thepilot phase. Using their deep domain knowledge,
the teams meticulously reviewed the model’sassessments against predefined criteria andbenchmarks, as well as cross checking against
content in the uploaded documents. Ongoing
feedback from relationship managers is also used
to iteratively enhance the pre-defined Gen AI
prompts. DBS found that having a focused set ofquestions to test and optimize the Gen AI model
has been a key success factor for the pilot.

Using the Gen AI pilot to accelerate thecompletion of the enhanced ERQ will allow
DBS to mitigate and manage key ESG risks,
while increasing employee productivity throughreducing time taken for document review. It also
frees up the bandwidth of relationship managers
to focus on engaging and uncovering newopportunities for DBS to provide transition financesupport.
Early positive feedback strongly indicates Gen AI
is meeting intended objectives. DBS concurrently
continues to conduct training and capacity
building sessions on various sustainable financetopics and industry-specific climate-related trends
and issues to ensure relationship managers andcredit risk managers are empowered to effectively
perform their duties. Ongoing development of
in-house data and technology talent is prioritized
to support the development of new analytical
tools and systems to further empower client
engagement. As of December 2023, the bank had
employed over 10,000 software engineers anddata and analytics experts.

19

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Navigating the risks of AI technologies
While Gen AI has tremendous potential tocreate value, DBS is cognizant of the need to
manage both the ethical dimensions of data
use and the risks associated with emergent
technologies, particularly in areas such as data
confidentiality, Gen AI hallucination20, bias, toxicity,and cybersecurity. The existing AI and machinelearning governance framework is being enhanced
to mitigate these risks and DBS has establisheda PURE (Purposeful, Unsurprising, Respectful,
Explainable) framework that provides guardrails
for AI use cases. It has also established a
responsible AI taskforce comprising senior leadersfrom multiple disciplines, to assess AI deployment
and address relevant risks.
While embracing emerging technology, DBS
will continue to rely on human oversight anddecision making that encourages the transfer ofAI knowledge and skillsets across its workforce.
Efforts include in-house training and workshops
to deepen employee understanding of Gen AI
and to develop skills that harness the power ofAI-driven creativity and problem solving. DBS willcontinue to pilot, review, improve, and reiterate AI
applications and explore utilizing it across othercomponents of its transition plan to support netzero efforts.
DBS believes that Gen AI, and AI more broadly,
will significantly reshape the future of workand has strong potential to support the bankin delivering on its net-zero commitments. DBS
is also exploring newer Gen AI applications ina less-controlled environment, such as trackingof legitimate websites to better identify andsummarize relevant ESG information as part of the
ESG risk assessment process.

CLIMATE RISK MANAGEMENT SUPPORTS TRANSITION FINANCING OPPORTUNITIES

Implementation
Strategy

Products
andEngagement
Implementation
services
Strategy
Strategy

Engagement
Foundations
Strategy

Metrics
Policies andAndFoundations
Conditions
Targets

Implementation of DBS’ net-zero transition
plan encompasses core priorities for its lending
and financing businesses, as well as its internal
operations and processes. Strengthening risk
management related to climate change provides
the foundation for these priorities as it increasingly
drives other traditional risk categories. The climate
crisis continues to drive DBS’ development ofproprietary analytical tools and data sources
to better assess, engage and support clientson their decarbonization journeys. Improved
tools and data are further supported by a broad
range of enabling activities, such as improving
internal processes and upskilling its workforce tocollectively steer the bank toward delivering on its
net-zero ambitions.

DBS is maintaining strong growth momentum in
itsMetrics
sustainable financing, where SGD 70 billion in
And and trade
Governance
Governanceloans
financing (net of repayments), had
Targets
been recorded as at the end of December 2023.
This represents a year-on-year growth of 37%.
DBS is also actively pursuing new transition
financing opportunities, such as early retirement
and managed phaseout of coal-fired power
plants in Asia. It acted as the financial advisor
to the Indonesian Investment Authority (INA),
which is exploring such transactions and has
signed a framework agreement (alongside various
partners) to conditionally shorten by seven years
the operating life of Cirebon-1, a 660 MW coalfired power plant located on Java.21 DBS recently
amended its thermal coal policy to enable its
involvement in early and managed coal phase-out
opportunities.22
Disclaimer: This case study was written with the assistance of
the Beta version of “DBS-GPT”, DBS’ employee-facing version of
ChatGPT.

20 Refers to incorrect or misleading results that AI models generate, caused by a variety of factors including insufficient training dataor biases in the data used to train the model.
21 Refer to DBS’ Sustainability Report 2023 p.19 for further details.
22 DBS Coal Policy, updated in March 2024.
20

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Implementation Strategy
Component: Policies and Conditions — MUFG
Example 3: MUFG – Whitepapers and sectoral policies underpin transition financing and implementation
efforts
Sub-sector: Banking
Policies and conditions
Recommendation: Establish and apply
policies and conditions on priority sectors andactivities, such as thermal coal, oil and gas,and deforestation. Include other sectors andactivities that are high-emitting, or otherwise
harmful to the climate, to define businessboundaries in line with the institution’s net-zero
objectives and priorities.
Mitsubishi UFJ Financial Group (MUFG) is Japan’slargest financial institution with a USD 3 trillion
balance sheet and an extensive global footprint,
which includes exposure to carbon-intensive
sectors. It is focused on developing relevantinternal policies and frameworks and actively
engaging external stakeholders to realize a global
net-zero transition.
Through client engagement, MUFG has becomecertain that although banks alone are unable todrive transition, they can play a strong supportingrole by working with clients and financing theirtransition strategies (provided that the transition
strategies are credible), in turn, collaboratively
managing and mitigating transition risks. MUFG
supports a whole-of-economy transition that

does not attempt to pick winners or leave behindcertain regions or sectors. As divestment does notcreate an effective transition solution for the real
economy, MUFG prioritizes active engagement
to support clients in decarbonizing, which in turnadvances its own net-zero ambitions.
MUFG joined the Net Zero Banking Alliance(NZBA) in June 2021, one month after becoming
one of the first Japanese banks to make a net-zerocommitment. It is active in chairing discussions
in NZBA’s Transition Finance Working Group
while also actively participating in all GFANZ
workstreams, including the 2024 Transition
Finance and Real Economy Decarbonization
Workstream and co-chairing the Public Policy
Workstream.
MUFG published its inaugural Climate Report in
April 2024. The report includes its transition planand strategies, along with updates previously
shared in its Progress Report 2023. Key pillarsof the Climate Report include: 1) reducing
emissions from own operations; 2) engagement
and supporting the transition; 3) reducing
emissions from its financing portfolio; and, 4)risk management and governance. Its transition
strategy and actions are in line with GFANZ’s FI
NZTP voluntary Framework (Figure 10).

21

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 10: MUFG’s transition plan is in line with GFANZ’s voluntary framework

Source: MUFG Climate Report 2024

BUILDING MARKET-SPECIFIC KNOWLEDGE AND SECTOR GUARDRAILS TO STEER
TRANSITION IMPLEMENTATIONIn supporting real economy decarbonization,
MUFG recognizes the need for a deep
understanding of specific industry nuances andthe challenges of pathways to net zero in Japanand other key markets. In 2022, MUFG engaged
with policymakers in Europe and the US to
discuss transition strategies for Japan and Asia.
The meetings resulted in consensus around theimportance of understanding each country’s
pathway toward net zero and recognizing key
levers that consider the full supply chain, including
linkages and dependencies across industries.
MUFG published transition whitepapers in 2022
and 2023 as part of its efforts to build internaltransition expertise. Beyond that, these were also
used to educate various stakeholders. The 2022
report provides the bank’s perspective on how

Japanese companies are moving toward net zeroand identifies new technologies in the electricity,heat and basic-material industries (together
accounting for 70% of national CO2 emissions)as key levers for achieving net zero. The 2023
report examines the current state and direction ofenergy transition in Japan, focusing on net zeroin electricity and heat in light of the government’s
Green Transformation (GX) Policy23, while also
reviewing the role and feasibility of various
technologies.
The whitepapers enhanced MUFG’s understandingof the complexities surrounding sector-specificenergy and resource interdependencies to achieve
a whole-of-economy just transition. The reports
have been shared with policymakers in Japan andabroad, and also support client engagement.

23 January 2024 updates.

22

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Beyond Japan, MUFG is adopting a similar
approach of building deep market understanding,confirming facts and calibrating across theecosystem. This approach allows MUFG tocreate tailored solutions for its clients, and isparticularly helpful in Asian markets where
detailed government plans and credible transition
pathways are still in development.
In addition to building market-specific expertise,
MUFG has published an Environmental Policy

Statement and an Environmental and Social
Policy Framework (E&S Framework) that guidethe bank’s transactions (Figure 11). The E&S
Framework provides guidelines to identify, assess
and manage ESG risks, with certain transactions
being prohibited. It also details policies andguidelines for emission-intensive or high-risk
sectors (such as coal-fired power generation,mining, oil and gas, large hydropower generation,
biomass power generation, forestry, and palm oil).

Figure 11: MUFG’s Environmental and Social Policy Framework includes sector-specific guidelines

Source: MUFG Climate Report 2024

For example, enhanced due diligence of oil andgas clients must be conducted for projects thatinvolve the development of oil sands, shale oiland gas, extraction activities in the Arctic, andoil and gas pipeline construction and operation.
These projects and activities are categorized
as “transactions of high caution” in the E&S
Framework. For other conventional oil and gas
transactions, MUFG ensures that it follows theEquator Principles, paying due consideration
to transition risk and GHG disclosure. MUFG
conducts a separate assessment of climatechange risk for upstream oil and gas development
and pipelines that includes specific checkpoints

and criteria, including: alignment with regionaland national transition strategies; transitionand sustainability strategies of sponsors; and,environmental impact arising from technologies
used.
Its policy statement, E&S Framework andwhitepapers collectively provide clear boundaries
and direction for MUFG’s financing consistent
with its net-zero ambitions. They also articulate
a transition strategy and priorities that reflectnational policy and global developments, thereby
enhancing corporate transparency and credibility
with key stakeholders.

24 An industry benchmark for determining, assessing and managing environmental and social risk in projects. Available here.

23

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Implementation
Strategy

Engagement
Strategy

Client andPortfolio
Foundations
Companies

Metrics
And
Targets

Governance

Policies support transition assessments andclient engagement
MUFG prioritizes supporting real economy
decarbonization over “greening” its balance sheet(i.e. “paper decarbonization”). It has developed atransition assessment framework and a transaction
screening process to evaluate clients in sectors
covered by its 2030 targets25 and to provide thenecessary transition solutions. Based on publicly
available information and past engagements, theprocess evaluates clients on three key assessment
categories: 1) targets (including availability
and credibility of net-zero and interim targets,alignment with a science-based 1.5-degree
pathway, transition plan); 2) governance (whether

there are adequate climate governance and risk
management processes in place); and 3) GHG
reduction and progress.
For the power and upstream oil and gas sectors
where transition risks are higher and ambitioustransition is required, an enhanced review isconducted on clients’ decarbonization plans,
including key technologies selected. Analysis fromthe whitepapers also provides market- and sectorspecific views to support transition assessments.
Based on the results of the evaluation process,each client is categorized according to MUFG’s six
tiers of client transition. Tier 1 indicates that theclient has high potential and a reliable pathway to
net zero by 2050, while Tier 6 indicates that theclient has low potential due to absence of a netzero target. (Figure 12).

Figure 12: Sector-based results from MUFG’s 2023 transition assessments*1 Among clients subject to 2030 interim targets, MUFG conducted transition evaluations basedon CDP data for each year with confirmation via client division representatives

Source: Climate Report 2024

The whitepapers are also used constructively
as a tool for engagement, particularly related totechnological development and the selection of
future technologies for decarbonization. Engaging
on specific topics is a leveling exercise that

integrates MUFG’s macro view with its clients’unique circumstances, enhancing understandingof where their plans sit in the context of Japanand Asia’s transition, and identifying the specifictransition issues that require further work. The

25 Power, Oil and Gas, Commercial Real Estate, Residential Real Estate, Steel, Shipping, Automotive, Aviation, Coal.

24

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

whitepapers also support dialogue with hardto-abate sector clients who do not yet havea transition plan, through demonstrating theimportance of having a transition strategy while
evaluating the need to provide transition support.

inform MUFG’s future strategies and transition
documents. This dynamic and collaborative
process is particularly helpful in the fast-shifting
global environment where timely insights areneeded to make decisions.

Having a clear internal stance and sector-specificpositions detailed in policy documents provides
clarity for internal decision-making and external
engagements, irrespective of developments intechnological innovation, or policy and regulation.
Client responses from engagements will also

Taking a collaborative approach with clients andstakeholders has also extended to MUFG working
with industry and the Japanese government to
identify new solutions that are economically andcommercially viable.

INTERNAL EXPERTISE SUPPORTS CLIENTS AND ADVANCES AMBITIONSEngagement
Strategy

Implementation
Foundations
Strategy

Metrics
Products
andEngagementAnd
servicesStrategy
Targets

Foundations
GovernanceMetrics
Roles andAnd
remuneration
Targets

MUFG’s transition-focused reports and tools
collectively support its net-zero ambitions
and financing activities. Development of the
documents included significant input from
MUFG’s management and advanced theirunderstanding of Japan’s energy transition
landscape and pathways to net zero – including
technological developments and commercial
challenges faced by clients in pursuing a justtransition. Management has also participated in
key discussions with regulators and strengthened
internal governance mechanisms to support thebank’s net-zero efforts. For example, 11 out of 16
appointed board members possess sustainabilityrelated knowledge, expertise or experience.26
Sustainability-linked indicators, including
ESG ratings and the bank’s ESG efforts andsustainability initiatives are also used to determine
executive compensation.
Growing transition expertise is also influencing
the products and services available to clients.
Since creating its transition-focused frameworks,
MUFG has assisted its clients in developing
ambitious and science-based emission reductions
targets and arranged financing support, such astransition-linked loans.

Supporting a Japanese power generationclient via transition-linked loans
Governance• Through ongoing engagement anddiscussion with senior management as wellas site visit to power plant facilities, MUFG
enhanced its understanding of the client’s
strategy to decarbonize through developing
renewable energy and pivoting to hydrogen
power generation.
• Leveraging knowledge gained through its
whitepapers, MUFG originated transitionlinked loans with relevant sustainability
performance targets, such as emission
reduction from power generation.
MUFG has a sustainable finance target of JPY
100 trillion by 2030 (including JPY 50 trillion
earmarked for environmental finance), with
JPY 27.7 trillion achieved as of October 2023
(cumulative from FY2019). It is committed tocontributing to global climate action by building
momentum for new capital flows toward net-zero
solutions in Japan, Asia, and the rest of the world;
through guiding / supporting clients to transitionand contributing to the creation of new markets
for innovative technologies that unlock real
economy decarbonization.

26 Further information found in MUFG Climate Change Initiatives and Views on the Shareholder Proposals document, p.15 onwards.
25

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Engagement Strategy
Component: Clients and Portfolio Companies — HSBC
Example 4: HSBC: Advancing net zero through assessing and engaging customers on their transitions
Sub-sector: Banking
Engagement with clients and portfolio
companies
Recommendation: Proactively andconstructively provide feedback and support toclients and portfolio companies to encourage
net zero-aligned transition strategies, plans,
and progress with an escalation framework withconsequences when engagement is ineffective.
HSBC27 is one of the world’s largest banking
and financing services organizations, serving
around 42 million customers across 62 countries
and territories. Its customers range fromindividual savers and investors to some of theworld’s biggest companies, organizations, andgovernments.

Along with announcing its ambition to becomea net-zero bank by 2050, HSBC recognizes thecritical role of banks in engaging customers on
their transitions. As a member of the Net Zero
Banking Alliance (NZBA), HSBC has set 2030 onbalance sheet financed emissions targets across a
broad range of high-emitting sectors.28
In its inaugural Net Zero Transition Plan publishedin January 2024, HSBC provides an overview of its
approach to net zero (Figure 13) and the actions
it is taking to embed its net-zero ambition. The
transition plan is organized into three sections:vision and strategic approach; sector transitions;and implementation plan. In preparing thetransition plan, HSBC took into consideration
available guidance including the recommendationsin the GFANZ FI NZTP voluntary Framework.29

Figure 13: Overview of HSBC’s approach to net zero
Our net zero strengths
Where we believe we canbest promote change

Our implementation plan
Embedding net zero into
how we engage, operateand collaborate

Our net zero principles
Aligned to our corevalues and guiding our
implementation

Transition industry

Catalysing the
new economy

Decarbonising tradeand supply chains

Supporting ourcustomers

Embedding net zero
into the way we operate

Partnering forsystemic change

Science-based, transparent
and accountable

Integrating nature

Just and inclusive

Source: HSBC’s Net Zero Transition Plan (2024)
27 Unless the context requires otherwise, ‘HSBC’ refers to HSBC Holdings plc together with its subsidiaries.
28 To date, combined on-balance sheet financed and facilitated emissions targets have been set for the oil and gas and power andutilities sectors, and on-balance sheet financed emissions targets for cement, iron, steel and aluminum, aviation, automotive, andthermal coal mining.
29 GFANZ. Recommendations and Guidance on Financial Institution Net-zero Transition Plans, 2022.
26

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

ASSESSING CORPORATE CUSTOMERS’ TRANSITIONS FOR TAILORED ENGAGEMENT
AND SUPPORTTransition-focused engagement enables HSBC toguide corporate customers while also advancing
its own net-zero ambition. To be effective,
engagement needs to fully recognize that thepathway to net zero differs for each sector andthat customers within a sector may be at different
stages of their transition.
To steer corporate customer engagement, HSBC
has designed and implemented a differentiatedapproach to the assessment of transition plans.

The type of assessment undertaken (deep diveor high level) depends on how material thecustomers are to HSBC’s portfolios and financed
emissions targets (Figure 14). This allows the bankto identify opportunities to support customers
on their transitions and define areas for strategic
engagement. Completed assessments can also
be used to support business decisions in relation
to financed emissions portfolio management andalignment, and climate risk-management efforts.

Figure 14: HSBC’s differentiated approach to assessing corporate customers’ transitions
Deep-dive transition plan assessment conducted for customers that are the mostmaterial to our portfolio and financed emissions targets!
Sustainability Centre of
Excellence conducts deep
dive assessment

Transition plan informationcollected alongside wider
ESG performance data by
relationship managers
based on public documents
and customer engagement

Strategic actions agreed
with relationship manager
to inform decision-making
and customer engagement

If required, escalation to
governance forums fortransaction and/or
relationship approval

High-level transition assessment calculated for other relevant corporate customers

High-level assessment of
net zero and sustainability
performance

Outcome shared with relationshipmanagers to inform deisionmaking and customer engagement

Source: HSBC’s Net Zero Transition Plan (2024)

To assess corporate customers’ transition risks
and plans, HSBC has defined criteria across fivecategories:• Emissions trend: Requests the customer’scurrent and historic Scope 1, 2, and 3 GHG
emissions, including the completeness of thecompany’s emissions reporting and whether it
has been validated by a third party.
• Ambition of plan: Indicates whether thecustomer has announced a commitment to
net zero and set interim targets to reduce
emissions over the short, medium, or long term
and across relevant emission scopes.
• Credibility of plan: Identifies details of thecustomer’s plans to achieve its ambition,
including the specificity of these plans (e.g.
the investment required) in the context of its••

business activities, current source of emissions,and operating context.
Credibility of action: Requests evidenceof actions that the customer has taken to
implement its plan and reduce emissions.
Climate risk: Considers physical and transition
risks to which the customer may be exposed.

The collection of information for the fiveassessment categories is led by relationshipmanagers who review customers’ sustainability
reports and climate disclosures. This issupplemented by discussions with the customers.
The detail of collected information varies basedon factors such as the size and materiality ofcustomers.

27

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Deep-dive and high-level transition planassessments
For customers that are the most material to
HSBC’s portfolios and financed emissions
targets, a deep-dive transition plan assessment
is conducted. These assessments are performedby specialists from HSBC’s Sustainability Centreof Excellence that have deep expertise in sectortransitions and emerging technologies, with input
from relationship managers.
This process is designed to provide insights
specific to each customer and their circumstances.
The assessment process creates a rating for eachof the categories described above and provides acomposite rating to indicate overall confidence inthe customer’s plan. Through this process, HSBC isable to pursue specific opportunities to support its
customers as well as identify areas where further
development of their transition plans may beneeded. Assessment findings are then built into
ongoing customer engagement.
With many corporate customers yet to havecomprehensive transition plans in place or plansconsistent with HSBC’s targets and ambitions,customer engagement and support will be
required over time. For other relevant corporate
customers outside of the boundaries of the

deep-dive transition plan assessment, a high-leveltransition plan assessment is conducted. These
reviews draw on publicly available information,
supplemented with information collected directlyfrom customers.
The assessments that have been completed so
far show large variations amongst corporate
customers in terms of maturity of their plans andalignment with a net-zero transition. HSBC aims totake these factors into account in how it continues
to engage its customers in their transition.
To date, HSBC has completed most assessments
for customers in scope of its thermal coal phaseout policy, major oil and gas and power andutilities customers globally, as well as othercustomers in EU and OECD markets in scope of
its energy policy. As part of its next steps for 2024
and beyond, HSBC will complete assessments
for customers in scope of its energy policy andthermal coal phase-out policy across all markets
and commence roll-out of assessments for its
most material customers in other material sectors
where it has set 2030 financed emissions targets.
Where relevant, completed assessments will also
be reviewed to ensure customer progress on theirtransitions is captured.

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Catalyzing Climate Action:
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SUPPORTING THE MOBILIZATION OF CAPITAL AND STRONGER CUSTOMER ENGAGEMENT

Implementation
Implementation
Strategy
Strategy

Products
andEngagement
Engagement
Implementation
services
Strategy
Strategy
Strategy

Engagement
Foundations
Foundations
Strategy

Metrics
MetricsAnd
And
IndustryFoundations
Targets
Targets

Metrics
And
Governance
GovernanceTargets

Skills andGovernance
CultureThese tags refer to the themes and components of the GFANZ FI NZTP voluntary Framework(Figure 1 on p.5) and indicate the interlinkages and interplay between different parts of thefinancial institution’s net zero transition plan.

Recognizing the central role that banks havein mobilizing finance to support the transition,
HSBC has set an ambition to provide and facilitate
US$750 billion to US$1 trillion of sustainablefinance and investment by 2030 — $294.4 billionof this ambition has been achieved as of end
2023. Its business lines are assisted by HSBC’s
Sustainability Centre of Excellence for theactivation of commercial opportunities and thedevelopment of financing solutions that support
customers’ transitions.
HSBC is also contributing to the global dialogue
and creation of impactful transition financesolutions, in collaboration with the public sector,
industry, civil society and its peers. It has, forinstance, been actively exploring how financial
solutions can credibly support coal phaseout in
Asia, in line with the goals of the Paris Agreement.
This includes co-leading a workstream of the
GFANZ APAC Network to develop voluntary
guidance for financial institutions on financing themanaged phaseout of coal-fired power plants in
Asia-Pacific. The report was launched by GFANZ at
COP 28 in December 2023.
In addition, HSBC has been building its
sustainability capabilities to strengthen customer
support and engagement, and a range of upskilling
initiatives that include online training, practicalworkshops, leadership development and sharing
on-the-ground experiences from deals have been
implemented. An online learning platform – theHSBC Sustainability Academy – was launched in
2022 to provide a central point for employees toaccess learning plans and resources. With morethan 200 comprehensive modules on topics
such as net-zero policies, nature restoration andpreservation, climate science, new technologies
and sustainable finance, the Sustainability
Academy provides a range of resources for
employees who are supporting customers throughtheir net-zero transitions.

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Catalyzing Climate Action:
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THEME

Engagement Strategy
Component: Clients and Portfolio Companies — SMTAM
Example 5: Sumitomo Mitsui Trust Asset Management – Exercise of shareholder rights via corporate
engagement and escalation
Sub-sector: Asset Management
Engagement with clients and portfolio
companies
Recommendation: Proactively andconstructively provide feedback and support toclients and portfolio companies to encourage
net zero-aligned transition strategies, plans,
and progress with an escalation framework withconsequences when engagement is ineffective.
Headquartered in Tokyo with subsidiaries in the US
and UK, Sumitomo Mitsui Trust Asset Management(SMTAM) is one of Asia’s largest asset managers,
with US$617 billion of assets under management
as at end December 2023. Its portfolio is invested
60% in Japan and 40% globally.
SMTAM joined the Net Zero Asset Managers(NZAM) initiative in July 2021 and is an active
participant in GFANZ Japan Chapter’s Core

Working Group. Its net-zero transition plan is
broadly captured in its Investor Climate Action
Plan (ICAP) Case Study, Carbon Neutrality
Progress Report30, TCFD Report, Stewardship
Report and Voting Rights Policy.
SMTAM pursues three key pillars of stewardshipin line with its responsible investment approach:corporate engagement, exercising voting rights,
and incorporating ESG factors into investment
decision-making processes. As part of efforts to
reduce financed emissions by 46% in alignment
with the Paris Aligned Investment Initiative (PAII)Net Zero Investment Framework, SMTAM isstrengthening its voting policy on climate change,
engaging with investee companies on setting firm
GHG reduction plans, and contributing to researchon relevant technologies required to achieve netzero emissions by 2050.

UTILIZING SHAREHOLDER INFLUENCE WITH CLARITY AND PURPOSE
Thematic-focused corporate engagement
SMTAM has long identified climate change asa material ESG issue with tangible impacts on
the corporate value of investees. Corporate
engagement is done with the objective of
encouraging performance improvement andgrowing investee value, while contributing to thebroader outcomes of sustainable growth andglobal decarbonization. Key topics of engagement

for SMTAM include GHG emission reduction andportfolio alignment with the Paris Agreement, as
well as setting interim (2030) targets and having
a detailed transition plan in place. Noting theimpacts of nature loss on climate change, SMTAM
is also accelerating efforts on natural capital andbiodiversity, as well as sustainable supply chains,and engaging on the issue of deforestation incommodity supply chains.

30 “Carbon Neutrality” is used interchangeably with “Net Zero” in Japan. Japan’s Ministry of Economy, Trade and Industry (METI) has
publicly confirmed this.

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Catalyzing Climate Action:
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Done globally from SMTAM’s three main bases —Japan, London and New York — the engagement
process includes the review and validation of
investee company GHG reduction plans to prepare
an opinion, direct meetings and dialogue toencourage performance improvement followed by
the ongoing monitoring of company performance.
Further engagement and escalation are done as
required.

Although engagement is done with a broad
range of portfolio companies — including thosein high-emitting sectors such as utilities, oil andgas, steel, cement and financial services — SMTAM
has prioritized engagement with the 100 investee
companies (40 Japanese and 60 foreign) thatcumulatively account for an estimated 40% of its
total portfolio GHG emissions (Figure 16). Asiancompanies (outside Japan) account for the largest
share of emissions from the 100 companies.

Figure 16: Estimated GHG emissions from SMTAM’s priority 100 companies by region and sector(representing 40% of total portfolio emissions)

Source: SMTAM

Complementing its direct engagement, SMTAM is
also active in investor collaborative engagement
programs and working groups that engage andadvocate for corporate climate action. It is oneof the lead investors in Climate Action 100+ (aninvestor-led global initiative to advocate forclimate action from the world’s largest corporate
emitters), and a member of the Asia Investor
Group on Climate Change’s (AIGCC) Asian Utilities
Engagement Program that focuses on large
Asian utilities, particularly those with a significant
coal-fired power capacity. SMTAM also co-chairs
AIGCC’s Forest and Land Use Working Group
that aims to support investors in developing risk

management processes, investment policies, andengagement programs that will contribute toending deforestation, amongst other initiatives.
With the collective investor voice often stronger
than an individual’s, collaborative engagements
are used as a functional and efficient method ofengaging a broader range of companies. Industry
engagement with key stakeholders including
policymakers, voting advisory companies anddata service providers also enables a broader
understanding of relevant issues, while supporting
the advancement of enabling public policy anddata infrastructure.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Corporate Engagement example via Climate Action 100+ with local asset managers:
UltraTech Cement (cement manufacturer headquartered in India)••

SMTAM’s prepared opinion (pre-engagement): Cement production in a business-as-usual
scenario is emission intensive, particularly at the manufacturing stage. Ultratech needs toreduce its emissions via a realistic transition plan and work on: (1) implementing measures for
low-carbonization during production, (2) stimulating demand for low-carbon cement, and (3)disclosing specific measures to confirm the effectiveness of capital policy support.
Company’s response and actions: Accepting the urgent need to reduce emissions following
three years of ongoing engagement, UltraTech produced a clear roadmap for decarbonisation
measures that included plans to be Science Based Target Initiative (SBTi) certified and toenhance disclosure to align with the TCFD framework (both measures were subsequently includedin the company’s June 2023 Sustainability Report). UltraTech has also announced specificmeasures for adopting 100% renewable energy across its portfolio.

Escalation via proxy voting and climate
resolution support
As a responsible institutional investor, SMTAM
also deploys escalation techniques such as proxyvoting and supporting shareholder resolutions
when investee companies are not demonstrating
adequate progress on climate change issues.
The exercise of voting rights is considered
as a governance-related engagement and an
opportunity to call for a minimum standard ofcorporate governance with portfolio companies.
SMTAM prioritizes three key objectives in
exercising its voting rights: (1) high-quality
governance that respects shareholders’ equity;(2) efficient utilization of shareholders’ capital forsustainable growth; and, (3) appropriate actionin the event an incident occurs that damages
corporate value.31 Engagement with companies
prior to voting helps ensure SMTAM’s standards
are communicated and understood.

31

SMTAM has a policy of opposing proposals for theelection of directors when an investee company
makes insufficient efforts to disclose informationor set targets, with no reasonable explanations
provided. This includes insufficient disclosurein line with TCFD voluntary recommendations(or an equivalent global framework), failure to
set medium- and long-term targets in line with
the Paris Agreement and disclosure of specificmeasures and actions to achieve them, as well as alack of progress in GHG emission reduction.
SMTAM’s structure for the exercise of voting
rights is detailed in the diagram below (Figure17). The Executive Officer in charge of the
Stewardship Development Department has
authority in exercising voting rights, supportedby the Sustainability Committee (that spearheads
engagements and ESG-related activities) andthe Advisory Committee providing feedback andoversight.

Stated in SMTAM’s Voting Rights Policy.

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Catalyzing Climate Action:
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Figure 17: Structure for the exercise of SMTAM’s voting rights
Sustainability Committee(Former” Stewardship Meeting)

Chairperson:
Executive oﬃcer in charge of Stewardship
Developement Department (Approval #1)

Deliberation

Recommendation

Stewardship Activity
Advisory Committee #2

ReportStewardship
Developement Department(4)
Results of exercise of voting rights

Proposal for individual exercise of voting rights(3)
Exercise voting for case notstipulated guideline

Establishment or revision of guideline

Draft of guideline(1)

Consultation#1 Making decision based on recommendationfrom Stewardship Activity Advisory Committee#2 Committee members• External experts (the majority of members)• Oﬃcer appointed by the board of directors#3 Making a proposal for individual exercise of
voting rights with reference to research,
analysis or advice from a proxy advisory ﬁrm(2) Exercise of voting rights based on guideline
Proposal for
individual exercise
of voting rights #3

General Manager of
Stewardship Development
Department (Approval)

Source: SMTAM’s Voting Rights Policy

In 2023, SMTAM exercised voting rights for about 2,500 Japanese companies and 2,700 foreigncompanies. It also supports climate-change resolutions that call on companies to address materialand systemic risks and opportunities. For example, SMTAM voted ‘For’ in a shareholder proposal ofa European energy company that asked the company to set its Scope 3 emission target in line with
the Paris Agreement.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

ADDRESSING ENGAGEMENT CHALLENGES AND CREATING SOLUTIONS

Implementation
Strategy

Products&
Engagement
Implementation
ServicesStrategy
Strategy

Engagement
Foundations
Strategy

MetricsAnd
IndustryFoundations
Targets

SMTAM believes that its corporate engagement
and escalation methods are generally effectivein encouraging investee companies to adopt
best practices to address climate change. Whileseeking to contribute to the enhancement oflong-term corporate value, SMTAM recognizes thatengagement must be based on a comprehensive
understanding of the company’s state ofmanagement and business operations.
This understanding is firmly based on awarenessof the specific challenges faced by both investors
and portfolio companies in Asia. Challenges
include the decoupling of continued growth andreduction of operational GHG emissions alongwith recognizing the number of active ESGfocused investors is significantly lower in Asia
than in Europe (as evidenced by NZAM initiative
membership).
SMTAM is thus active in helping to support theconsideration and inclusion of Asian investors’
voices and priorities in NZAM’s overall strategy
and workplan through its involvement in the NZAM
initiative’s Advisory Committee and activities

to increase Asian representation. For example,
Metrics President and CEO, Yoshio Hishida, has
SMTAM
And
Governance
Governanceattended
NZAM seminars and called on otherTargets
asset managers to join the initiative. In May 2023,
SMTAM also attended a meeting arranged by the
NZAOA and NZAM in London to exchange regionspecific views on corporate engagement andstewardship to tackle climate change.
Beyond actively engaging, in 2021, SMTAM
launched the SMT ETF Carbon Efficient Index
Japan Equity listed on the Tokyo Stock Exchange.
The index comprises Tokyo Stock Price Index(TOPIX) constituents, with the weighting ofeach constituent based on the status of its
environmental disclosure and the level of carbon
efficiency (carbon emissions per net sales). By
allocating a greater relative weight to companies
with better environmental-related disclosure andhigher carbon efficiency (lower carbon emissions
per net sales), the index promotes improved
disclosure and GHG reduction across the market,
while achieving similar returns to TOPIX. Its
relative carbon intensity was 28% lower than TSE
TOPIX in Q3 2023.32 The index is also anticipatedto be a useful tool in guiding the formation of
new core Japanese equity portfolios that also
address climate change risk, and as an extension
or alternative to TOPIX-linked funds.

32 Data from S&P / JPX Carbon Efficient Index timeseries published by S&P Dow Jones.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Engagement Strategy
Component: Policy Advocacy and Industry — BNPPAM
Example 6: BNP Paribas Asset Management – Collaboratively engaging policymakers to advocate for2050-aligned climate policy
Sub-sector: Asset Management
Engagement with industry
Recommendation: Proactively engage withpeers in the industry to 1) as appropriate,exchange transition expertise and collectively
work on common challenges and 2) represent
the financial sector’s views cohesively to
external stakeholders, such as clients andgovernments.
Engagement with government and public
sectorRecommendation: Direct and indirect lobbying
and public-sector engagement should, in aconsistent manner, support an orderly transition
to net zero, and as appropriate, encourage
consistency of clients’ and portfolio companies’
lobbying and advocacy efforts with theinstitution’s own net-zero objectives.

33

BNP Paribas Asset Management (BNPPAM) is a
global manager of €501 billion of assets33, serving
institutional clients in 67 countries with a largecommercial presence in Europe and Asia-Pacific(the region represents approximately 17% of total
AUM). Considering the global shift toward a lowercarbon, environmentally responsible and more
inclusive economy essential for planetary andfinancial-system sustainability, one of BNPPAM’s
key priorities is to deliver long-term sustainable
returns to its clients while leveraging its emerging
market presence to advance the energy transitionin Asia.
Its 2015 commitment to achieving the Paris
Agreement goals was strengthened in 2021 with
its joining of the Net Zero Asset Managers (NZAM)
initiative. In 2022, BNPPAM’s Net Zero Roadmap
formally introduced its climate commitments
covering three key aspects of its business:
Investments (portfolio alignment), Stewardshipand Operations (Figure 18). The Roadmap will
be instrumental in enabling a coherent andaccountable organizational transition, while also
strengthening external engagement with key
stakeholders.

As at December 2023.

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Catalyzing Climate Action:
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Figure 18: Net-zero commitments outline priorities across Investments, Stewardship and Operations
Net Zero Commitments
1. Reduce the carbon footprint of our in-scope corporate investments (Scopes 1 and 2)1a) -30% by 2025b) -50% by 2030
2. Align with net zeroa) 60% of in-scope investment to be Achieving, Aligned or Aligning with Net Zero (NZ-AAA)by 2030b) 100% of in-scope investment to be NZ-AAA b y 2040

Investments

3. Exit coal
We will exclude mining companies that do not have a strategy to exit thermal coal activities,
and power generators that still have coal capacity in their generation mix, in 2030 for
European Union and OECD countries and in 2040 for the rest of the world.
4. Invest in climate solutions
Substantially increase our climate and environmentally themed investments.
5. Engage with our clients
Engage with our clients to transition towards net zero investing with us.
6. Vote for climate actiona) Signal our expectation for companies to report on their carbon footprint, and for theworld’s largest greenhouse gas (GHG) emitters to set an ambition to achieve net zero by2050 or sooner.
b) Vote in favour of thoughtful shareholder proposals and submit proposals of our own toaccelerate corporate action on climate change.

Stewardship

7. Engage with companies on net zero
Implement an engagement strategy that is consistent with our ambition for all assets undermanagement to achieve net zero emissions by 2050 or sooner.
8. Advocate for NZ2050 aligned climate policy
Play an active role in advocating for net zero aligned policy, and seek to ensure that any
relevant direct and indirect policy advocacy that we undertake is supportive of achieving
global net zero emissions by 2050 or sooner.

Operations

9. Reduce our operational emissions footprintContinue to offset our operational emissions while we improve energy efficiency and use more
green energy.
10. Report on progress
Produce TCFD2-aligned reporting.

Source: BNPPAM Net Zero Roadmap (2022)

Development of the Net Zero Roadmap was led by BNPPAM’s Sustainability Centre (SC) which is
responsible for implementing the firm’s global sustainability strategy and related policies, with oversightfrom the board and executive teams. To ensure integration of specific considerations for Asia andemerging markets, the SC includes members strategically based in Singapore, Hong Kong, and Mainland
China. It also works in collaboration with Asia-based colleagues and clients to develop regionally
relevant ESG research and engage with local companies and regulators to advance their transitions.

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Catalyzing Climate Action:
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PUBLIC POLICY ADVOCACY SUPPORTS AN ORDERLY TRANSITION
Recognizing climate change as a systemic riskthat cannot be resolved by the private sector
alone, BNPPAM believes public policy advocacy is
consistent with its fiduciary duty and stewardshipstrategy, fitting alongside its proxy voting andcorporate engagement efforts. Encouraging
and supporting strong climate action frompolicymakers is a requirement for a just andorderly transition.
Guided by its Roadmap commitment and
Stewardship Policy, BNPPAM is actively engaging
public policymakers, including regulators andstandard setters, to advocate for sustainableoutcomes in market-shaping measures forinvestments and the rules that guide andgovern company behavior. It is also involved in
shaping the standards and guidance developed
and overseen by professional bodies, such asaccounting institutes.
BNPPAM’s policy engagement focuses on critical
topics such as corporate disclosure, climate
regulation and corporate governance. Its longterm efforts include: public submissions tolegislators, regulators, and multilateral institutions;
responding to public consultations; meetings with
policymakers; publication of white papers; andendorsement of public statements. Engagement
examples include signing of the Global Investor
Statement to Governments on the Climate Crisis
in 2022 (calling for effective implementation of
the Global Methane Pledge to reduce emissions
by 2030 by at least 30% from 2020 levels)34, andparticipating in the investor call for the United
Nations Food and Agriculture Organization (FAO)
to develop a global roadmap to 2050 for the
agriculture, food and land-use sectors.

Working together to achieve common aims
Industry collaboration is critical to achieving
common aims and BNPPAM has a longstanding
commitment to participating in investor networks
and collaborative engagements to learn frompeers and jointly raise standards. BNPPAM’s
priority thematic areas are energy transition,
healthy ecosystems, and equality. BNPPAM
is an active member of multiple formal andinformal global groups and initiatives that seek tofacilitate dialogue between investors and otherstakeholders (Figure 19). For example, roundtables
convened by the Asia Investor Group on Climate
Change (AIGCC) often involve state-owned
enterprises as well as government representatives
and regulators, and its working groups (such as
the Forest and Land Use Working Group which
BNPPAM co-chairs) act as peer-to-peer forums forinvestors to strengthen their capabilities. BNPPAM
also actively participates in the Investor Policy
Dialogue on Deforestation (IPDD)’s workstreams
for Brazil and Indonesia that seek to engage
in collaborative dialogue with government
authorities and other key stakeholders to preserve
tropical forests and native vegetation.
Policy advocacy efforts have reaped results. Asan advisory committee member of the Principles
of Responsible Investment (PRI)’s collaborative
sovereign engagement program on climatechange, meetings with policymakers in Australia
preceded the establishment of a National Net Zero
Authority and plans to issue a green bond in 2024.
BNPPAM’s advocacy for increased transparency
and exclusion of areas such as ammonia co-firingand gas plants for Japan’s GX climate transition
bonds through recent collaborative and bilateralengagement with relevant government ministries
also resulted in these outcomes in the first trancheof the transition bonds.

34 Available on the Investor Agenda’s website.

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Catalyzing Climate Action:
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Figure 19: Selected thematic-focused initiatives BNPPAM participates in

Source: BNP Paribas Asset Management Global Sustainability Strategy 2023-2025 (Dec 2023)

BNPPAM’s advocacy efforts acknowledge theconstraints faced by policymakers, particularly inemerging markets where there can be significant
differences in national timelines for net zero as
well as the energy trilemma where accessibility,
sustainability and affordability considerations
need to be balanced. These situations are
addressed through providing support while
retaining high ambition; acknowledging progress
while maintaining strong investor expectations inline with 1.5 degree aligned scientific pathways;
sharing resources and knowledge; and being
prepared for long-term engagement. As an
example of how Asia’s unique circumstances are
considered, BNPPAM’s Coal Exit Policy (Figure20) has differing coal phase-out timelines fordeveloped and emerging markets to accountfor the differences in energy mix and economic
development.

Figure 20: Coal Exit Policy considers regional circumstances
BNPP AM will exclude all power
generators that:• Still have coal capacity intheir generation mix in 2030
in European Union and OECD
countries, and by 2040 for the
rest of the world.

BNPP AM will exclude all mining
companies that:• Do not have a strategy to exitfrom thermal coal activities by2030 in European Union andOECD countries and by 2040
for the rest of the world.

Source: BNPPAM Net Zero Roadmap (2022)

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Catalyzing Climate Action:
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CONSTRUCTIVE DIALOGUES AND COLLABORATIONS DRIVE ACTION

Implementation
Strategy

Products&
Engagement
ServicesStrategy

Foundations

Metrics
And
Targets

Industry and policy engagement is fully consistent
with BNPPAM’s Roadmap and its stewardshiprole, and is used as a critical tool to foster
constructive dialogues and collaborations withclients, colleagues, companies, governments andcivil society to collectively move toward a net-zero
future. With the global economy not yet aligned
to net zero, BNPPAM’s investible universe stands
to diminish over time if current and prospective
investees are not advancing on their transitions.
BNPPAM believes ESG performance can bematerial to financial performance, and that voting
and engagement can be key levers to reducing
risk, unlocking value and encouraging improved
corporate performance and transparency.
Engagement is intended to drive change andsupport transition but, in cases in which it isineffective, BNPPAM believes divestment can be alast resort. In line with its sector-specific policies,
BNPPAM will also exclude companies, sectors or
activities that violate international regulations, orcause unacceptable harm to society and/or theenvironment.
Beyond leveraging its influence through advocacy
and engagement, BNPPAM’s Roadmap includes
commitments to invest in climate solutions andsubstantially increase climate and environmentally
themed investments. These thematics enable
Governanceaccess to specific sustainable transition themesby focusing investments on qualified and relevant
companies or projects. In 2019, BNPPAM createda dedicated Environmental Strategies Group thatlaunched its Energy Transition equity strategy
followed by its Environmental Absolute Return
Thematic (EARTH) and Emerging Climate
Solutions equity strategies. Together, thesestrategies contribute to addressing the global
financing gap for energy transition.
In responding to the urgent theme of improving
the sustainability of Asian cities amidst continued
growth, BNPPAM launched an investment strategy
targeting activities that address the challenges
posed by migration and climate change. The
Sustainable Asian Cities fixed income strategy isdesigned to target opportunities in five criticalareas:• Enhancing urban mobility, incorporating lowcarbon elements where possible.
• Improving basic infrastructure to help cities
operate and thrive, as well as improving theirresilience to extreme weather events.
• Promoting integrated development to balancea mix of social, economic, and nature-based
activities.
• Building health and education facilities toincrease provision and improve access.
• Supporting innovative technological solutions
for sustainable city development.

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Catalyzing Climate Action:
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THEME

Metrics and Targets
Component: Metrics and Targets — Mizuho
Example 7: Mizuho – Beyond financed emissions measurement and disclosure, plan execution
metrics and targets steer Mizuho toward its 2050 commitments
Sub-sector: Banking
Metrics and targets
Recommendation: Establish a suite of metrics
and targets to drive execution of the net-zerotransition plan and monitor progress of resultsin near, medium, and long term. Include metrics
and targets focused on aligning financial
activity in support of the real-economy net-zerotransition, on executing the transition plan; andon measuring changes in client and portfolio
GHG emission.
Mizuho Financial Group (Mizuho) based in Japan,
is one of the world’s largest financial institutions.
It provides banking and trust services, securities,
asset management, research and consulting,among other financial services. Mizuho joined the
Net Zero Banking Alliance (NZBA) in October
2021 as part of its goal to attain net-zero GHG
emissions by 2050, align its portfolios with theParis Agreement goals, and positively contributeto the development of a climate-change resilient
society.

Mizuho’s Approach to Achieving Net Zero
Emissions by 2050 and its initial Net Zero
Transition Plan (NZTP)35 were developed in April
2022 to clarify medium-to long-term strategies
and initiatives and to outline its intended actions
to achieve a decarbonized society and limit global
temperature increase to be within 1.5 degrees C.
A comprehensive revision of its NZTP in April
2023 (Figure 21)36 streamlined its initiatives
for addressing climate change. The updated
plan prioritizes driving the transition of the real
economy, identifying new business opportunities,
and effective risk management. Developed inaccordance with global frameworks and voluntary
recommendations from TCFD and GFANZ, the
NZTP is based on four pillars: Foundations,
Governance, Strategy, and Metrics and Targets. It
further aligns Strategy with Metrics and Targets totrack progress and support tangible efforts that
benefit its clients and society.

35 Located in Mizuho’s TCFD Report 2022, p.21 onwards.
36 Located in Mizuho’s Climate & Nature-related Report 2024, p.18 onwards.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 21: Mizuho’s Net Zero Transition Plan (2023)

Source: Mizuho Climate & Nature-related Report (2024)

HOLISTIC METRICS AND TARGETS SUPPORT TRANSITION STRATEGY
Metrics and Targets are an integral componentof Mizuho’s NZTP and have been designed toenable ongoing assessment against plan strategy.
Although financed emissions is a key metric thatoffers valuable insights, it is not a panacea and has
limitations in capturing the status and progressionof Mizuho’s NZTP. The bank has thus adopted
a holistic approach that seeks to enable real
economy transition through setting broad-ranging

metrics and targets such as “capturing business
opportunities” and “risk management” that alignwith key strategic pillars. The approach effectively
tracks progress on the implementation of strategy
along with GHG emission reductions. Operational
metrics and targets are used to drive transition
plan execution and facilitate a PDCA (Plan-DoCheck-Action) cycle to monitor the execution andobjectives of each strategic initiative.

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Catalyzing Climate Action:
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Figure 22: Overview of Mizuho’s metrics and targets
Transition plan
item

Monitored metrics

Targets

Net-zero GHG
emissions

Scope 1 and 2 emissions
Scope 1 and 2 energy consumption

Carbon neutral37 by FY2030(Carbon neutrality to be maintained
thereafter)

Scope 3 (financed emissions)

Net zero by FY2050- Electric power sector

FY2030: 138-232 kg CO2e/MWh- Oil and gas sector

FY2030:
Scope 1 and 2: 4.2g CO2e/MJ
Scope 3: 12%-29% reduction (Comparedto FY2019)- Coal mining (thermal coal) sector

Absolute emissions-OECD economies: Zero by FY2030-Non-OECD economies: Zero by FY2040- Steel sector

FY2030: 17%-23% reduction (Comparedto FY2021)- Automotive sector

FY2030:
Scope 1 and 2: 38% reduction (Comparedto FY2021)
Scope 3: 31%-43% reduction (Comparedto FY2021)- Maritime transport sector

FY2030: Portfolio climate alignmentscore 0% or less

- Real estate sector

FY2030: 33-42 kg CO2e/m2

Capturingbusiness
opportunities

Sustainable financeTotal for FY2019 to FY2030: JPY 100
trillion(of which JPY 50 trillion is earmarked forenvironment and climate-related finance)

Riskmanagement

Outstanding credit balance of coal-fired
power generation plants

Reduce the FY2019 amount by 50% by
FY2030, and achieve an outstanding
credit balance of zero by FY2040

Exposure to high-risk areas in transition
risk sectors

Reduce over the medium to long term

Engagement

Status of clients’ transition risk
responses–

Capability
building

Sustainability Transformation talent KPI-Sustainability management experts-Environment and energy sector
consultants

FY2025:- 1,600 experts- 150 consultants

Source: Mizuho

37 “Carbon Neutrality” is used interchangeably with “Net Zero” in Japan. Japan’s Ministry of Economy, Trade and Industry(METI) has publicly confirmed this.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

GHG reduction metrics and targets drive
portfolio alignment with net-zero goals
Key metrics selected in relation to GHG emissions
are the reduction of Scope 1 and 2 emissions,as well as portfolio emissions arising from
Mizuho’s financing and investment activities(Partnership for Carbon Accounting Financials’
Scope 3, Category 15).38 Mizuho is committed toachieving net-zero in Scope 1 and 2 emissions by
2030 through year-on-year reductions and net
zero in its Scope 3 emissions by 2050. Interim(2030) sectoral targets are in line with the NZBA
voluntary Target Setting Guidance and have been
set for electricity, oil and gas, coal mining (thermalcoal), automotive, maritime transportation, steel,and commercial real estate.

Mizuho has taken a lead among Japanese banks
in calculating and disclosing its exposure andfinanced emissions for 19 sectors based on TCFD
voluntary recommendations and other global
guidance (Figure 23). Mizuho uses the information
to isolate significantly impacted sectors andstrategically establish shorter- and mediumterm emission reduction targets, and adjusts its
operations and plans accordingly. Credit exposurefor high-risk sectors, including year-on-yearchange, is also measured and disclosed in the
TCFD Report, providing internal insights on credit
risk while offering increased accountability andtransparency to enhance external stakeholder andinvestor confidence.

Figure 23: Measuring financed emissions across 19 sectors supports targeted action

38 PCAF Global GHG Standard.

43

Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans*1. Companies / projects: Excludes clients and projects without a loan balance as of the base date andclients without measured financed emissions.
*2. Measurement coverage percentage: The percentage of financed emissions that we were able tomeasure from the targeted loan amounts in each sector.
*3. Regarding sectors for which Mizuho has set Scope 3 medium-term targets, the measured financed
emissions above cover entire value chains, whereas the medium-term targets cover only part ofvalue chains. (Examples: The medium-term target for oil and gas covers upstream production
businesses (including integrated oil and gas businesses); the medium-term target for coal covers
thermal coal mining)*4. Scope 3 emissions in the automotive sector increased compared to the previous year due to theimprovement in data accuracy during the process of setting Mizuho’s medium-term targets.
*5. Other sectors: Represents the total for sectors that do not fall under the 19 sectors, such as
telecommunications, finance, retail, and services.
Source: Mizuho Climate & Nature-related Report (2024)

Engagement
Strategy

Implementation
Foundations
Strategy

Metrics
Products&
Engagement
And
ServicesStrategy
Targets

Foundations
GovernanceMetrics
SkillsandImplementation
And
CultureStrategy
Targets

Plan execution metrics and targets guide
implementation
In addition to GHG reduction, Mizuho’s transition
plan includes metrics and targets focusedon capturing business opportunities, risk
management, engagement, and building internal
capability. Together, these components monitor
progress and guide plan implementation.
Mizuho seeks to develop business opportunities
with clients to support their necessary structuraltransformations to a more sustainable future
by providing both financial and non-financial
solutions. An ambitious sustainable finance targetof JPY 100 trillion by 2030 has been set, with half
earmarked for environment and climate-related
finance including green, transition and sustainablefinancing.39 By the end of FY2023, JPY 31 trillion
had been achieved (from its 2019 baseline).

Engagement
Governance
Strategy

Clients andPortfolio
Foundations
Companies

Metrics
And
Targets

GovernanceRisk management is based on Mizuho’s balanceof exposure to coal-fired power generationand high-risk areas within transition sectors. Its
target is to halve its 2019 outstanding balance by
2030 and achieve a zero outstanding balance by
2040. Further risk reduction for high-risk sectors
and strengthened risk control in carbon-related
sectors will be guided by its regularly reviewed
Environmental and Social Management Policy for
Financing and Investment Activity.
Strengthening client engagement to support
their transition toward a net zero-aligned future
will utilize the recently enhanced two-axis risk
control framework40 which evaluates risk basedon the clients’ sector and the status of their
responses to transition risks. Engagement efforts
are increased for higher-risk clients with a focus
on managing transition risks, disclosing progress,

39 Includes eligible projects under Mizuho’s Green Bond Framework and other programs, as well as financing that contributes toaddressing climate change. A breakdown of Mizuho’s sustainable finance performance can be found on p.84 of Mizuho’s Climate &Nature-related Report 2024.
40 Figure 39 of Mizuho’s Climate & Nature-related Report 2024.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

and supporting early-stage business structuraltransformations. Mizuho has seen steady progress
amongst its clients but will assess its relationships
with those unwilling to address transition risks orformulate a transition strategy after one year ofengagement.41
Mizuho is committed to assist clients in their netzero transitions through enhancing its internal
capabilities by upskilling its workforce, andultimately supporting a wider market transition.
It targets the cultivation of 1,600 internalsustainability management experts (relationshipmanagers who have obtained recognizedcertifications) and 150 environment and energy
sector consultants by the end of FY2025. Notable
progress has been achieved on both targets while
also enhancing staff subject matter knowledge andpractical skills for effective client engagement.

METRICS AND TARGETS ASSESS AND SUPPORT CLIENT TRANSITIONS

Implementation
Strategy

Engagement
Strategy

Clients andPortfolio
Foundations
Companies

Metrics
Implementation
And
Strategy
Targets

Products&
Engagement
Governance
ServicesStrategy

Mizuho’s foundational approach relies directly
on metrics and targets to support transition
progress of its broad client base in Japan andinternationally. Assessing and categorizing clients’transition status manages associated risks andsupports positive transformation within highemitting sectors.
As the transition path differs for every client
depending on factors such as sector, region,and size, Mizuho is working to foster a common
understanding that recognizes differences anduses client engagement to co-create transition
solutions. Priority is placed on championing a
progressive shift from the client’s initial status
to 1.5 degrees C aligning and subsequently, 1.5
degrees C aligned.

In FY2022 and FY2023, Mizuho had provided
Metrics
JPY 0.8 trillion intransition finance, which covers
And
Foundations
Governancearrangingtransition
and transition-linked
loans
Targets42
and underwriting of bonds. As the lead arranger
for a JPY 120 billion syndicated transition-linked
loan to an electric power generation company
in 2023, Mizuho set a sustainability performancetarget (SPT) for the company to halve the carbon
emissions produced from its electricity retailbusiness by 2030, as compared to 2013. The
proceeds are to be utilized for decarbonized
power sources such as renewable energy or
nuclear power, and critical measures such as thestrengthening and upgrading of electric power
networks.
Mizuho’s NZTP serves as a comprehensive
articulation of its stance on climate change
for both internal and external stakeholders.
Recognizing the need for the broader ecosystem
to share purpose and direction in addressing
the collective challenge, the plan is usedcollaboratively to guide the bank toward achieving
its sustainability ambitions.

41 Figure 41 of Mizuho’s Climate & Nature-related Report 2024.
42 Defined based on global guidance including ICMA’s climate transition finance handbook.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Metrics and Targets
Component: Metrics and Targets — UOB
Example 8: United Overseas Bank Limited – Interim sectoral targets covering majority of corporate
lending portfolio support real-economy transition
Sub-sector: Banking
Metrics and targets
Recommendation: Establish a suite of metrics
and targets to drive execution of the net-zerotransition plan and monitor progress of resultsin near, medium, and long term. Include metrics
and targets focused on aligning financial
activity in support of the real-economy net-zerotransition, on executing the transition plan; andon measuring changes in client and portfolio
GHG emission.
United Overseas Bank Limited (UOB) is
headquartered in Singapore, with banking
subsidiaries in China, Indonesia, Malaysia, Thailand,
and Vietnam. It operates a global networkthat spans 19 countries and territories in AsiaPacific, Europe and North America. UOB has
three core business segments — Group Retail,Group Wholesale Banking, and Group Global
Markets — that provide a wide range of financial
services including consumer, private, commercial,corporate, and institutional banking.
In support of regional and global decarbonization
efforts and in alignment with its corporate
purpose to build the future of ASEAN, UOB

joined the Net Zero Banking Alliance (NZBA) in
October 2022, concurrently publishing its netzero commitment and interim targets across six
key sectors in its transition report Forging Our
Net Zero Future. UOB is using NZBA voluntary
technical guidance and engagements with thebroader net-zero community to build internal
capabilities.
A comprehensive review was initiated in 2023
to ensure UOB’s existing processes and internal
operating model were optimized to deliver on
its net-zero commitment. The review provided
the foundation for an operationalization programthat covers 10 core aspects across governance,risk management and business policies andprocesses, as well as capabilities and culture(Figure 24). A multi-year and multi-stakeholder
project, UOB’s operating model is regularly
reviewed and adapted to emerging challenges
and opportunities. Net-zero transition planning
is a bank-wide effort, with target setting afoundational element. The operationalization andcommercialization of targets and commitments
are critical levers to align sustainability withoverall strategy.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 24: UOB’s net-zero operating model covers 10 key components

Source: UOB Forging Our Net Zero Future progress report (2022)

TARGET SETTING FOR KEY HIGH-EMITTING SECTORS DRIVES REAL-ECONOMYDECARBONIZATION
Alongside its initial 2050 net-zero commitment, UOB has set interim targets across six priority sectors(power, automotive, real estate, construction, steel, oil and gas) to support the transition of the real
economy, using 2021 data as the baseline (Figure 25).
Figure 25: Summary of UOB’s interim and long-term targets for six key sectors
Sectors2030
Reduce emissions intensity by:

2050
Reduce emissions intensity by:

Power

64%

98%

Automotive

58%

100%

Real Estate

36%

97%

Construction

31%

85%

Steel

20%

92%

Oil and Gas

Stop new project financing for upstream oil and gas projects approved after 2022

Source: UOB

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

The six sectors span two key emitting ecosystems(energy and the built environment) that areamongst the most important and interconnected
sectors to achieve net zero. In particular, thesupply of fossil fuels (coal, oil and gas) is
responsible for 73% of direct emissions globally;
while the power, automotive, real estate,
construction and steel sectors, through their use
and creation of electricity, vehicles, iron, steel andbuildings, account for 67% of global emissions
arising from fossil fuel combustion.43 These
sectors are material contributors to regional GHG
emissions and make up approximately 60% of
UOB’s corporate lending portfolio.
UOB considered three key principles in prioritizing
sectors for target setting: 1) emissions materiality:(“brown” sectors with the highest GHG emissions
and criticality for achieving climate goals); 2)
sector abatement horizon (sectors with the largest
expected decline in GHG emissions in coming
years); and 3) portfolio materiality (sectors
representing a significant portion of UOB’s
corporate loan book, in which it has the greatest
potential to effect change).
Methodology and data considerations
UOB’s approach to target setting is guided byscience and global transition guidance, including
voluntary guidance published by GFANZ.44 While
globally available Paris-aligned pathways provide
useful references, UOB determined the pathways
generally do not consider regional challenges
and are often not realistically applicable acrossall sectors in ASEAN. As such, UOB took theapproach of basing some sectoral targets onregional pathways described by internationallyrecognized climate models (such as NGFSREMIND, NGFS GCAM, CRREM45), while also
constructing bottom-up reference pathways
using the above models to ensure region-specificchallenges and nuances that support a justtransition are considered.
Establishing a baseline and measurement of Scope
3 financed emissions (clients’ emissions and/or emissions intensity) is a critical first step intarget setting, but is often challenging due to data
limitations. While standards for carbon accounting
and disclosure are increasingly adopted globallyby larger corporations, adoption is nascent forsmall and medium enterprises (SME) that form asignificant portion of UOB’s portfolio. A significant
number of UOB’s SME clients do not report suchinformation and the issue is further complicatedif client operations span multiple countries andbusiness lines. UOB provides financial support at
both headquarter level (where reporting is morecommonly available) and in specific geographies
and activities (where data is rarely reported). As aresult, utilizing the headquarter-level numbers may
result in material miscalculations.
UOB addressed this issue by considering a
combination of additional data sources (in order ofpriority):
1. Company-reported emissions data aggregatedin established independent databases;
2. Company-reported emissions data sourced
directly from clients’ climate disclosures;
3. Information of country-specific activity andsales information (e.g. the split of EVs versus
ICE vehicles sold within country, to derivecompany-level data);
4. Bottom-up estimations of energy consumption
using the company’s asset-level data;
5. Proxies based on country or sector averages
as a fallback, in scenarios where the above
data collection and estimation methods areunavailable.
Referencing PCAF’s guidance46, UOB’s selectionof data sources gives preference to company
reported data and asset-level calculations, whileproviding a hierarchy for different fallbacks toensure consistency across data sources. For data
accuracy and quality, physical-based proxies are
preferred to economic-based proxies.
Target setting was done via a five-step approach,detailed below in Figure 26.

43 University of Oxford, Our World in Data - Emissions by sector, 2020.
44 GFANZ.Sectoral Pathways for Financial Institutions, 2022.
45 NGFS, Guide to climate scenario analysis for central banks and supervisors, 2020; CRREM; IEA, Global Energy
and Climate Model Documentation, 2023; Mission Possible Partnership Sector Transition Strategies.
46 Partnership for Carbon Accounting Financials (PCAF) Standards.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 26: UOB’s approach to target setting

Source: UOB Forging Our Net Zero Future report

UOB believes that its approach to target setting
provides the most accurately available estimateof client emissions and/or emissions intensity.
As it works with clients to encourage improved
disclosure and validate its estimates, UOB
recognizes baselines may need to be restated ortargets recalibrated.

The first annual progress report published in
October 2023 indicated a decline in emission
intensities across five sectors for the previous
year, with the bank remaining 7-14% below thetarget reference pathways.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

METRICS AND TARGETS INFORM OTHER PLAN COMPONENTS AND SUSTAINABLE
FINANCE OFFERINGS

Metrics
And
Targets

Governance

Roles,
Responsibilities
andImplementation
Remuneration,
Strategy
Skills andCultureEngagement
Strategy

Clients andPortfolio
Foundations
Companies

UOB’s transition target setting andoperationalization provide a foundation to trackand monitor progress, while supporting advice
and financing to clients. Its net-zero metrics andtargets have cascaded to governance, engagement
strategy and implementation transition efforts inthree main areas:• Building a climate-focused dimension into thebank’s risk appetite statement;• Developing sector-specific commercial
strategies to support clients with theirtransition journeys through sustainable financeofferings; and• Embedding climate considerations into
underwriting processes and strengthening ESGrelated due diligence.
A robust net zero-focused governance frameworkhas been established, in alignment with existingsustainability governance efforts. Environmental
risk appetite and sector policies guide UOB’slending activities and support delivery of net-zerocommitments. Appropriate escalation processes
and clarity around roles and responsibilities for
ESG risk management by both business units anddedicated teams further support the policies.47

Metrics
Implementation
And
Strategy
Targets

Products
and Services,
Engagement
Governance
Activities
andStrategy
Decision Making

Foundations

Metrics
And
Targets

Governance

Priority is also placed on ensuring UOB’s
employees are equipped with climate-related
training and development. Essential changes
in employee behavior and their technology areencouraged by developing clear climate-relatedroles and responsibilities across all functions andimplementing targeted training plans.
UOB’s business strategy to support
decarbonization by target-sector clients includes
exploring new climate-related commercial
opportunities, including the financing of climate
solutions, supporting clients along the spectrumof their alignment toward a net-zero pathway,
and the managed phaseout of high emitting
assets, where appropriate. Sustainable financeframeworks have been developed for six sectors(green buildings, smart cities, circular economy,agribusiness, sustainable trade finance, andtransition finance) with a defined list of green and/or social activities eligible for financing, to take
into account unique challenges, opportunities
and the available solutions (Figure 27). UOB thenworks closely with clients to tailor specific use ofproceeds or performance targets, depending on
the type of sustainable financing instrument.

47 Further information available on UOB’s responsible financing webpage.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 27: Sector-driven sustainable finance frameworks and solutions

Source: UOBUOB has also prioritized finding solutions for SMEs
that make up 97% of Southeast Asia businesses
to help them monitor and report data to meetincreasing regulatory requirements. Findings
from SMEs surveyed in the region indicate thatsustainability is important to their businesses,
but only a minority have started implementing
sustainable practices, with many citing insufficientknowledge as a key barrier.48
To assist SME clients that lack the resources orcapacity to calculate their GHG emissions ordevelop transition plans, UOB has developed

targeted initiatives to provide support on alarger scale. They include: U-Series (connecting
businesses to service providers to drive adoptionof sustainable practices); UOB Sustainability
Compass (an online customized reporting toolthat offers actionable insights); and UOB FinLab’s
Sustainability Innovation Program (training
program focused on topics such as energy
efficiency, sustainable finance, renewable energy
certificates, sustainable packaging, carbon
management and sustainability reporting).49
Meaningful collaborations with clients to support
ecosystem decarbonization across their value
chains are also explored.

48 UOB Business Outlook Study 2023.
49 UOB Sustainability Compass and UOB Finlab Sustainability Innovation Program.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

THEME

Governance
Component: Roles, Responsibilities and Remuneration, Skills and Culture — Prudential
Example 9: Prudential — Robust climate-governance incentivizes management and empowers staff
Sub-sector: Asset Owner
Roles, responsibilities, and remuneration
Recommendation: Define roles for the
Board or strategy oversight body and senior
management ensuring they have ownership,oversight, and responsibility for the netzero targets. Assign appropriate individuals
and teams to all aspects of both design anddelivery of the transition plan. Use remuneration
incentives for all roles, where possible. Review
the transition plan regularly to ensure material
updates/developments are incorporated;challenges are reviewed as an opportunity tocorrect course; and implementation risks areproperly managed.
Skills and culture
Recommendation: Provide training anddevelopment support to the teams andindividuals designing, implementing, andoverseeing the plan so that they have sufficient
skills and knowledge to perform their roles(including at the Board and senior managementlevel). Implement a change management
program and foster open communications toembed the net-zero transition plan into theorganization’s culture and practices.
Prudential plc provides life and health insurance
for 18 million customers across 24 markets in Asia
and Africa. A long-term steward of more than
US$220 billion of client assets, Prudential engages

in responsible investment and applies ESG
considerations into investment decisions as well as
its fiduciary and stewardship duties.
Prudential joined the Net Zero Asset Owner
Alliance (NZAOA) in 2021 to stay informed
about leading responsible investment practices
while supporting awareness of the need for
global standards to reflect emerging market
contexts. Experience operating in diverse markets
across Asia and Africa underlines its belief ina thoughtful and adaptable approach to the
low-carbon transition. Prudential’s pursuit ofsustainability reflects market-tailored efforts that
capture opportunities, while understanding local
challenges and addressing specific transition risks.
Prudential’s inaugural Climate Transition Plan
(CTP) published in March 2023 references global
frameworks50 and takes a phased approach that
addresses both investments and operations(Figure 28). It sets out the foundations to its
approach, including a long-term net-zero pledge,
interim targets, objectives and priorities, and areas
where further work is needed. Its implementationand engagement strategy— covering responsible
investment, industry engagement and advocacy,
products and services and operations—is further
detailed, alongside key climate metrics andgovernance efforts. An update of climate-related
targets was published in Prudential’s recent FY23
Sustainability Report, which acts as an interim
update of the CTP.

50 Glasgow Financial Alliance for Net Zero: Financial Institution Net-zero Transition Plans- Fundamentals, Recommendations, andGuidance and Supplemental Information; Transition Plan Taskforce (TPT): The Transition Plan Taskforce Disclosure Framework andsupplementary Implementation Guidance; TCFD: Guidance on Metrics, Targets and Transition Plans; CDP Technical Note: Reportingon Transition Plans; The Grantham Research Institute on Climate Change and the Environment: Making Transition Plans Just.

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Catalyzing Climate Action:
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Figure 28: Prudential’s journey and approach to net zero by 2050

Source: Prudential Climate Transition Plan (2023)

Led by Prudential’s Group Sustainability
function, the CTP is a result of cross-functional
collaboration with other internal teams suchas responsible investment, finance and risk.
Prudential’s management and board provided
input and oversight throughout the development

process, and both continue to monitor progressagainst the plan. The inaugural plan is intended
to be utilized as an engagement and feedback
mechanism as Prudential further develops its
climate-related targets.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

ROBUST GOVERNANCE PROMOTES RESPONSIBILITY AND FOSTERS COMMITMENT
Prudential’s leadership at both board andmanagement level places great emphasis on
governance for sustainability matters, including
climate change.
Board
The Board is responsible for determining
overall strategy and priorities, including climatechange and other sustainability matters.
The Board’s Group Risk Committee (GRC)
oversees environmental and climate-related
issues, including progress against net-zerotargets and other climate-related investmentcommitments. The GRC is also responsible forexternal sustainability disclosures, including
TCFD voluntary reporting. The GRC advises theBoard Remuneration Committee on climaterelated considerations to be applied to executive
remuneration, to ensure remuneration is
structured to encourage a culture and conductof managing risk, and taking climate action. It isfurther supported by other board committees
responsible for specific aspects of sustainability
matters. Policies and processes such as thoserelated to major capital expenditures, acquisitions,and divestitures are structured to consider theirpotential impacts on the Group’s sustainability
strategy, to support the Board in its duties.
The GRC receives updates on climate-related
issues from management at least twice each year.
It then makes recommendations and obtains
relevant approvals from the Board. In 2023, theBoard approved Prudential’s interim portfolio
emissions reduction target – a 55% reductionof weighted average carbon intensity (WACI)
from the 2019 baseline. It also approved aninternal capital mobilization target to support
the commitment to financing the transition in
emerging markets.
Management
Prudential’s management oversees sustainability
activities, including the impacts of climatechange and TCFD reporting, through a Group
Sustainability Committee (GSC). The committee
is led by the Chief Financial Officer and includes
the Chief Risk and Compliance Officer, Chief
Investment Officer, Chief Corporate Affairs Officer,
Chief Human Resources Officer, along with senior
representatives from the asset owner and asset
management businesses, including the chief
executives of Eastspring and Prudential Singapore.
The GSC manages key sustainability issues througha multi-disciplinary approach that includes regular
engagement with regional leads to facilitate
understanding of Asia-specific information andto ensure decisions reflect local challenges andnuances. It met five times in 2023.
Responsible investment activities are overseenby the Group Investment Committee (GIC)
which is chaired by the Group Chief Investment
Officer and driven by the Group Responsible
Investment Working Group (GRIWG). Operational
responsibilities have been delegated to the
GRIWG, which also serves as a regular forum fordiscussing responsible investment approaches andmonitoring progress toward decarbonizing theGroup’s investment portfolio.

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

Figure 29: Prudential’s sustainability governance structure

Source: Prudential plc Sustainability Report (Dec 2023)

The Group Sustainable Finance Committee (GSFC)
was recently established to oversee and manage
certain issues and processes susceptible togreenwashing risk, through ensuring transparency
and consistency in Prudential’s definition andapproach to sustainable finance and qualifying
investments.

which it could take (e.g. products, labels, brandnames). The insights gained were shared with risk
management staff through group-wide training
initiatives, and informed subsequent revisionsof Prudential’s internal fund policies. The GSFC
currently oversees Prudential’s qualification andmonitoring of transition finance investments, withthe strategy approved by the GIC.

Prior to this, a cross-functional taskforce had been
established to improve internal awareness andunderstanding of greenwashing risk, and identify
key areas of exposure. To ensure consistency withemerging best practice, this work was informedby external sources, including the IAIS Application
Paper on the Supervision of Climate-related
Risks in the Insurance Sector, EU Proposal for a
Directive on Green Claims (2023/0085(COD)), EU
Taxonomy Regulation (EU 2020/852), SFDR Level
2 (EU 2022/1288), and Green Finance Industry
Taskforce (GFIT)’s paper on identifying a green
taxonomy and relevant standards for Singapore
and ASEAN. The taskforce determined thecharacteristics of greenwashing by considering
the different ways and avenues it could occur,
potentially impacted stakeholders and the format

Adopting remuneration linked-incentives andenhancing capacity
Sustainability has been included as a strategic
priority for Executive Directors since 2022, andremuneration is used to incentivize progresson climate change. Carbon-reduction targets
aligned with updated WACI targets have now
been attached to their Prudential Long Term
Incentive Plan (PLTIP) awards for three annual
cycles. Sustainability metrics comprise 10% of
the total 2024 Executive Director’s PLTIP award,
with 5% linked to carbon reduction and 5% linked
to gender diversity. Viewing decarbonization
as a cross-functional and collaborative effort,
rather than a solo one, the target is based on the
Prudential Group’s overall progress on emissions

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Catalyzing Climate Action:
Emergent Asia-Pacific Case Studies of Financial Institutions’ Net-zero Transition Plans

reduction. The Remuneration Committee has also
adopted a transition finance underpin target forthe carbon reduction component of the PLTIP
award. This underpin takes into account the valueof qualifying investments that will contribute to a
low-carbon future.
Prudential is targeting all people-managers tohave sustainability linked KPIs by 2026. This
commenced in 2024 with senior team members
who hold leadership positions across key
functions.

To empower its staff to deliver on sustainability
commitments, Prudential provides sustainabilityrelated training and capacity building. Climate
capacity building sessions delivered to the GRC
have been expanded to include local boards
across different jurisdictions. A foundationalsustainability training module has also been
introduced across the entire organization and is
mandatory for people-managers (who make up an
estimated 28% of the organization). Other training
includes a climate-focused webinar series for risk
teams and a responsible investment workshop
tailored to the investment leads of regional
business units.

CLIMATE GOVERNANCE THAT SUPPORTS OVERALL OBJECTIVES AND PRIORITIESEngagement
StrategyFoundations

Metrics
Objectives
andImplementation
And
Priorities
Strategy
Targets

Engagement
Governance
Strategy

Clients andPortfolio
Foundations
Companies

Prudential recognizes the critical role climate
governance plays in informing strategic directionand ensuring accountability. Board oversightof all sustainability matters, including climatechange, alongside the organization’s overall
strategy, enables integration and alignment
with its overarching objective to be the mosttrusted partner and protector for current andfuture generations. This governance approachpromotes responsibility and provides direction
on the relevance, ambition and managementof Prudential’s climate-related strategy andtargets. Reporting lines to the specific board
and management committees drive net-zero
implementation efforts.

51

Prudential considers net-zero transition planning
toMetrics
be a critical process and an occasional
And
Governanceprecondition
to considering relevant financing
Targets
opportunities. An internal framework ontransition finance that refers to GFANZ’s fourvoluntary financing strategies51 and other regionaltaxonomies and transition finance guidelines (e.g.
ASEAN Taxonomy) is currently being developed,
and transition planning will be a key topic ofengagement with companies who constitute
65% of Prudential’s absolute carbon emissions.
Other critical topics of engagement to accelerate
decarbonization progress include improving
disclosure, net-zero target setting, adapting ofbusiness models and financing of green projects.
Prudential’s asset manager, Eastspring
Investments, further engages with portfolio
companies on its behalf through thematic
engagement, investor collaborative engagements
and investment-led engagements. In 2023,
Eastspring had conducted 875 engagements withportfolio companies.

Climate solutions, Aligned entities, Aligning entities and Managed Phaseout. From GFANZ. Recommendations andGuidance on Financial Institution Net-zero Transition Plans, 2022.

56

For more information, please visit gfanzero.com