Strengthening Efforts
against Climate Change
May 13, 2022

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MESSAGE FROM THE GROUP CEO

Our Determination against
Climate Change
Sumitomo Mitsui Financial Group
Director, President and Group CEO

Jun Ohta

Transitioning to a decarbonized society and leaving a green planet for future generations are our obligation as
human beings and pressing issues for companies. Under this recognition, we are committed to achieving net
zero emissions in our overall loan and investment portfolio by 2050 and are enhancing our measures against
climate change as the entire group.
On the other hand, forging a decarbonization pathway towards carbon neutrality requires consistentengagement with customers. Simply withdrawing existing loans that constitute the economy’s lifeblood will not
solve climate issues essentially. Instead, it would disrupt stable energy supplies and innovation in technologies
for decarbonization. The NZBA1 takes the same stance, encouraging member banks to engage with customers
in order to accelerate their decarbonization efforts.

Each country’s circumstances should be considered carefully as well. For example, there are geographical andmeteorological challenges in Japan, our home market, to implement renewable energy abundantly. However,
our customers are striving for the transition and innovation towards a decarbonized society at the same time.
There is no single path forward, but as a financial institution, we are responsible for supporting our customers
in their genuine and realistic efforts towards a decarbonized society by 2050.
*1 Net-Zero Banking Alliance. International banking initiative that aims to reach carbon neutrality by 2050. SMBC Groupjoined the alliance in October 2021.

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2

The global response to climate change represents a paradigm shift - and also an opportunity for financial
institutions. For example, the IPCC1 estimates that halving greenhouse gas emissions around the world by2030 will require USD 30 trillion of new investments. SMBC Group is eager to provide not only financial
solutions, such as sustainable finance, bonds, leases and advising, but also non-financial solutions bymobilizing our own expertise and collaborating with external partners.
Given this background, SMBC Group today publishes our enhanced initiatives countering climate change. As afinancial institution, we will take pride in supporting our customers advance towards decarbonization and maketechnological innovation. In addition, we are expanding our capability at the group and global levels, capturing
climate-related business needs, and increasing our enterprise value unceasingly.
We also believe that the creation of social value as well as economic value will become more and more
important in assessing and enhancing enterprise value. SMBC Group will tackle various social issues in
addition to climate change - such as respect on human rights, biodiversity, and economic growth - andcontribute to realizing a sustainable society, sustainably.

Stone monument placed alongthe "Earth Path" at Furano Fieldin Hokkaido, founded byscreenwriter Soh Kuramoto“Today’s earth is what we owe tochildren in the future.”*1 The Intergovernmental Panel on Climate Change.

May 13th, 2022
Sumitomo Mitsui Financial Group
Director, President and Group CEO

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3

Summary (1)New disclosures and targets
We expanded the phase-out plan for coal-fired power generations, set mid-term (2030) financed emissions
reduction target for the power sector, and disclosed financed emissions for the energy sector. Mid-term
financed emissions reduction target for the energy sector (O&G and coal) will be disclosed in the TCFD
report in August
2020
Balance ofloans forcoal-fired power
generation

Project
Finance

2030

2040

c.300
Disclosed•

In addition to project financewhich the phase-out plan isset already, added zerobalance target to corporate
finance tied to facilities by2040•

Support the transitions andinnovation of customers•

Achieve well below 2°C
target and aim at 1.5 °C
target as a global financial
institution•

Disclosed current financed
emissions•

Announce mid-term reduction
target in August•

Set targets in three sectors
ahead of NZBA schedule(Power, O&G, coal)

c.150
(50)%

c.80

(JPY bn)

Corporate
FinanceSee P.7(tied to facilities)

Mar. 22

Financed emissions
Power Sector

New

0

332

New

138-195(gCO2e/kWh)
See P.8

Financed emissions
Energy Sector (oil and gas, coal)(MtCO2e)

New

87.6

Reduction target

To be announcedin AugustSee P.9* Calculated financed emissions in this document are the results as of May 2022. Figures are subject to revision due tochange of calculation methodology, etc.

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Summary (2)Other major updates (updates since April 2022)
We are accelerating groupwide efforts to achieve carbon neutrality, by enhancing resources, reducing inhouse GHG emissions, advancing scenario analyses and expanding solutions
Items

Contents#

Organizational
Structure• Established the “Sustainability Division” and the “Environmental and Social Risk
Management Dept” to strengthen organizational capabilities for sustainability with morehuman resources

P.13

Executive
Compensation• Introduced quantitative ESG evaluation in addition to the existing qualitative evaluation
to further strengthen management commitment to sustainability

P.13

Rules and Policies

Scope 1 and 2
Reductions
Enhanced Scenario
Analyses
Sustainability
Investment FundSMDAM joined NZAMI• Formulating the “SMBC Group Environmental and Social Framework”• Establishing the “Social Contribution Policy” and the “Sustainable Procurement Policy”• Four HQ buildings fully implementing renewable energy to achieve net zero Scope 1
and 2 emissions by 2030
• Launched the “SMBC Kawasaki Mega Solar Place” project - the first 1MW class solar
power generation facility owned by a Japanese major bank
• Conducted scenario analyses of transition risks in iron & steel and automotive sectors,
in addition to energy and power sector (first Japanese bank to include the iron & steel
sector)

P.14

P.17

P.18

• Set a JPY 20 billion “Sustainability Investment Fund” to create new solutions, etc.
• Participated in “Carbonplace”, a payment platform for carbon credit transactions, as thefirst sustainability investment project• SMDAM joined NZAMI, a global initiative of asset managers, to achieve net zero GHG
emissions from the investment portfolio by 2050

P.21

P.23

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5

I. New Disclosures and Targets

Expand phase-out plan for coal-fired power generations
In addition to project finance for which the phase-out plan is already set, loan balance of corporate financetied to facilities will be reduced to zero by 2040
RevisedMay 2022

Phase-out plan

⚫ SMBC Group will not provide new project finance andcorporate finance tied to facilities for new or existing coalfired power generations under the current credit policy⚫ Current lending exposure is expected to be reduced to zeroby 2040 due to scheduled repayments
2020(JPY bn)

Project
Finance

2030

2040

c.300
c.150

Coal-fired power generations

RevisedMay 2021

SMBC Group will not provide support for new or
expansion of existing coal-fired power generations(Understanding of the Business/Sector)⚫ SMBC Group expects our customers to establish and publicly
announce long-term strategies aimed at realizing a carbon neutral
business model and other efforts to address climate change⚫ SMBC Group will support the activities of our customers contributing
to the transition toward and realization of a decarbonized society.

(50)%

Corporate
FinanceCoal-related financing policyc.80
0Mar. 22(tied to facilities)

Coal mining

RevisedMay 2022

New

Reference: Lending to coal-fired power generations
c. JPY 810 bn⚫ Based on the awareness of risks our assets turning stranded during

Corporate
Finance(tied to facilities)
Project
Finance

March 2022

SMBC Group will not provide support for new or
expanstion of existing themal coal mining projects

2040

the transition to a decarbonized society, issues of human rights withrespect to the elimination of illegal labor and child labor in coal mines
and consideration of biodiversity associated with mining, SMBC
Group revised our policy to not support newly planned and the
expansion of thermal coal mining projects, as well as newly planned
and the expansion of infrastructure developments that are dedicatedto such projects
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7

Mid-term financed emissions reduction target in the power sector
We will support the transitions and innovation of customers and achieve the well below 2°C target, and aim
for the 1.5°C target as a global financial institution
Mid-term FE reduction target (2030)

New

gCO2e/kWhConcept of the target
Emissions
Intensity

258

Consistent with the 2°C target

195

Consistent with the Paris Agreement(well below 2°C)

195

⚫ Based on these characteristics, an emissions
intensity target is suitable as the metric for
tracking efficiency during the transition process

195g
CO2e/kWh138

Consistent with the 1.5°C target(power sector)

138⚫ Japan‘s overall GHG reduction target, energy
circumstances of each country, and region-wisepotential of renewable energy implementation
are also considered

332g

138g
2030

⚫ Calculated based on the outlook of existingloans, loans for renewable energy and theglobal transition finance market, as well as
the results of client engagement⚫ 195 gCO2e/kWh is well below the IEA 2°C
scenario*1 for 2030

195g

2020

⚫ Total demand is expected to increase in the
power sector due to continued economic
growth in developing countries and theincreasing electrification of industries, such as
the shift from ICEV to Electronic Vehicles

138g
CO2e/kWh⚫ We will aim to achieve the 1.5°C scenario*2
as a global financial institution

Portfolio Coverage: Approx.90%*1: IEA SDS scenario*2: IEA NZE2050 scenario

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Commitment to set mid-term financed emissions reduction target in
the energy sector
Here we disclose current financed emissions in the energy sector (O&G, coal) (87.6 MtCO2e, absolute)
After customer engagement, we will announce mid-term financed emissions reduction target in the TCFD
report in August.
New

Curent financed emissions (Mar. 21)
EnergysectorOil & Gas

70.9

Coal

16.8

87.6

(MtCO2e）

Portfolio Coverage: Approx.70%
Improve coverage by AugustComparison with NZBA schedule⚫ Financed emissions reduction targets to be announced in

power, O&G, and coal sectors ahead of the NZBA
schedule⚫ Aim to set targets for other sectors as soon as possible

Breakdown of lending (Mar.21)

Japanese

New

Disclosure of financed emissions

Corporate
Finance

Project
Finance

Total

15%

8%

23%

Non-Japanese

65%

12%

77%

Total

80%

20%

100%

NZBA

Oct.21
Participation

SMBC

Mar.22
Power

Apr.23At least 1 sector

Aug.22
Oil & gas
Coal

Oct.249 sectors

Earlyannouncement

Illustration of reduction target
Lending balance to upstream oil & gas projects⚫ Upstream projects in the O&G

JPY 2.3 tn
JPY 1.5 tn

Mar.17Mar.22

sector have been controlled toreduce the risk of resource
price fluctuations.

⚫ As in the power sector,

87.6
MtCO2eMar.212030

the target for energy
sector (O&G and coal) will
be set in a range, aiming
to achieve the 1.5°C
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9II. Sophistication of Sustainability
Management System

Sophistication of sustainability management system
Regarding climate change issues as one of our significant management issue, we are continuously
improving our sustainability management system under the leadership of the Group CEO.
Advancement of management system

October
2018

Established “Corporate Sustainability
Committee”⚫

Chairman - Group CEO⚫

Members - Head of each Group Company

Revised management philosophy andestablished “Statement on Sustainability”
April 2020

SMBC Group GREEN x GLOBE 2030
“Create the future of the earth and humanity withour customers”

Group CSuO/Sustainability Committee⚫ In addition to the Group CSuO position, the Sustainability

Committee was established last year ahead of competitors,
to enhance sustainability management from both execution
and supervision perspectives⚫ The Sustainability Committee was held twice in FY2021

Board of Directors
Nomination Committee

Compensation Committee

Audit Committee

Risk Committee

2021/07

Sustainability Committee

April 2021
July 2021

Appointed Group CSuO
Established “Sustainability Committee”• Established “Sustainability Division” and“Environmental and Social Risk
Management Department”

April 2022
Details
P13, 14• Introduced quantitative ESG evaluation to
executive compensation• Formulated “SMBC Group Environmental
and Social Framework”

Chairperson

External Director
Eriko Sakurai

External Director
Masaharu Kohno

Professor, University of Tokyo
Yukari Takamura

Chairman of the Board of
Directors
Takeshi Kunibe

Director
Jun Ohta

JRI Senior Counselor
Eiichiro Adachi

Report2021/04

Group CSuO (Chief Sustainability Officer)
Climate change response
including businessCorporate initiatives(Social contributions etc.)

Responding to ESG rating
agencies and disclosure of nonfinancial information

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11

Roadmap Addressing Climate Change
We have established a long-term action plan “Roadmap Addressing Climate Change” in order to realize acarbon neutral society by 2050. Setting short- to medium-term measures as “Action Plans”, we are
addressing climate change issues as the entire group
2022-

2030

2040

2050

Scope３

Scope1,2

Scope３Disclose
mid- to longterm goals

Net zero
GHG emissions

Zero balance for loans
extended to coal-fired
power generations

Net zero
GHG emissions

Medium-Term
Management Plan

Roadmap

Action Plan
STEP1

Action Plan
STEP2Main measures

Specific efforts

1

Measure portfolio GHG emissions
and set reduction targets

Achieve net zero emissions (Scope3) by2050

2

Reduce GHG emissions of the entire Achieve net zero emissions (Scope1,2) by
SMBC Group
2030

3

Enhance businesses addressing
climate change and decarbonization

Execute JPY 30 tn of sustainable financeby 2030

4Enhance governance/business
management framework

Appoint Group CSuO and establish the
Sustainability Committee

5

Enhance risk management
framework

Expand scope of scenario analysis andrevise policies for businesses and sectors

Grasp changes in
the industrial
structure1
Calculate portfolio
GHG emissions

Set mid- to long-term
reduction targets

Comprehendrisks

Captureopportunities

Engagement
towards transition

3
Promote businesses
addressing
decarbonization

Risk mitigation

5
Enhance risk
management

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12Efforts this year (1)This year, we implemented a large-scale organizational reform, increasing the number of employees andrevising the executive compensation system
RevisedApril 2022

Organizational reforms⚫ Introduced quantitative ESG evaluation in addition to the⚫ Established the “Sustainability Division” and the“Environmental and Social Risk Management Department”
to strengthen organizational capabilities for sustainability
adding more human resources

Group
CSuO

Quantitative ESG evaluation for compensation
existing qualitative evaluation to further strengthen
management commitment to sustainability
Base salary

Annual performance-linked (0-150%)

Group
CRO
Bonus

Sustainability
Division

Risk
Mgmt Unit

Consolidating knowledge/expertise of theGroup

Consolidating
related functions

New

Fixed compensation⚫ Cash⚫ Stock

Compensation Plan II

Standardlevel×Annualperformance

New ESGevaluation

Individual’s performance, etc.

Quantitative Achievement of in-house targtets⚫Sustainable finance⚫Reduction of Scope1/2 GHG emissions
Qualitative±10%

Evaluation of major ESG rating agencies

New
Sustainable Solution
Department

Corporate
Sustainability
Department

Environmental andSocial Risk
Management Dept.

Mid-term performance-linked(0-150%)
Stock
Compensation Plan I

Standardlevel×

All domestic Corporate Business Offices
New

Sustainability
Ambassador

Mid-term performance, etc.
Financial
Shareperformance
performance
Qualitative evaluation

Including “ESG initiatives”
Stock
Compensation Plan III

Promotion reward plan

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13

Efforts this year (2)We formulated the “SMBC Group Environmental and Social Framework” to organize our basic stance andapproach to these issues and to improve our accountability to stakeholders
New

SMBC Group Environmental and Social Framework
SMBC Group Environmental andSocial Framework

Social Contribution Policy⚫ Established to strengthen value creation of SMBC GroupSMBC Group Statement on Sustainability

by creating social impact through social contribution⚫ To clarify SMBC Group’s approach to social contribution

Group
Environmental
PolicyEnvironment

New

Statement on
Human Rights

Climate Change

SocialContribution
PolicyNatural CapitalNew

Sustainable
Procurement
Policyactivities from the following four perspectives: 1. Role inthe society, 2. Social contribution as SMBC Group, 3.
Approach to our employees, 4. Approach to public
disclosure

Sustainable Procurement Policy
Revision

Policies forSpecificBusinesses andSectors

Governance Structure and Approach to
ESG Risks⚫ Established to strengthen responsible procurement andcontribute to realizing a sustainable society with our
suppliers⚫ To clarify our expectations towards suppliers regarding theenvironment, respect for human rights, compliance withlaws, information management, and fair businesspractices, etc

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(Reference) Structure of the Board

Knowledge and experience we expect in particular
Legal/risk
ManagemAccount
Sustainabi
Finance Global managem
IT/DX
ent
ing
lity
ent

Ratio :47%
Outside Directors

Internal Directors(executive)

7 directors

5 directors

T.Kunibe
J.OhtaM.Takashima# of theBoard of Directors

T.Nakashima

15 directors

T.KudoA.Inoue
T.IsshikiInternal Directors(non-executive)

Y.Kawasaki

3 directors

M.Matsumoto

Non-executive directors: 67%

A.M.Mitchell
S.Yamazaki
M.Kohno2 women1 foreign national

Y.Tsutsui
K.Shinbo
E.Sakurai

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15

III. Continued Efforts to Realize
Carbon Neutrality

Net zero in-house emissions
We are accelerating initiatives to achieve net zero emissions in Scope1 and 2 by 2030, including theimplementation of renewable energy at offices and setting mega solar power generation facilities
Scope1/2 reduction target

KPI(2030)

RevisedMay 2021

Scope2SMBC Group’s Plan

Renewable energy for 4 HQ buildings

140 K（unit: tCO2e）

Net Zero

Scope2in the 4 HQ buildings (Head Office,East Bldg., Osaka Head Office,
Kobe Head Office)“SMBC Kawasaki Mega Solar Place”

・・・

2020

2030

SMBC’s plan (domestic)
(3)%

22/4
completed⚫ Renewable energy is now fully implemented

Scope2

Scope1

64 K

Measures for emissions reduction

Operationfrom FY22⚫ First 1MW class (1,037kW) solar power generation facility

in idle space owned by a Japanese major bank
(11)%

36 K
(34)%

Scope2GHG
emissions
reduction

440t annually

Scope1

2020

2021E

2022E

2023E
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Deepening engagement with customers
We are deepening dialogue with customers while improving the solution tools and scenario analyses, etc.,
for grasping business opportunities and enhancing risk management
Number of engagements

Advanced scenario analyses⚫ Number of engagements at SMBC Group have tripled in

one year, in terms of capturing business opportunities andadvancing risk management
6K clients

3x⚫ Added iron & steel and automotive to the sectors
analyzed for transition risk
⚫ First Japanese bank to include iron & steel setor in
scenario analysis
Energy2K clients

New

Electricity

Automotive

Iron & steel

1.5°C scenario, 3 °C scenario (IEA/NGFS)

Expected increase in credit cost (up to 2050)
FY3/21

FY3/22 Q1

Q2Q3

JPY 2-24 bn annual

ESG risk summary sheet⚫

Introduced a framework to better understand the ESG
risks and non-financial information of each customer for
qualitative utilization in credit decisions and engagementwith customers
Sectors covered

Analyzed items✓ Power✓ Coal mining✓ O&G✓ Tobacco✓ Palm oil plantation• GHG emissions• Response to ESG risks➢ General risks➢ Sector-specific risks• Third party evaluations

JPY 2.5-28.0 bn annual

Examples of customer engagement
SUMITOMO CHEMICAL/SUMITOMO JOINT ELECTRIC
POWER（Domestic,
Chemicals/Power）

SMBC was mandated as sole arranger of thetransition loan which became the first Climate
Transition Finance model in the chemical sector
conforming to METI’s technology roadmap

Company A・ Company B（Domestic,
Chemicals/Pulp and Paper）

To drive energy conversion of CO2 heavy
industries, we conducted demonstration studies
along with several corporates

Company C（Domestic, Oil and gas）

We were appointed the advisory role forformulating the decarbonization roadmap andare providing solutions to execute the strategy
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18

Business opportunities from climate change (1)Market growth has brought good progress towards the 2030 target for sustainable financeWe aim for greater upsides by offering unique solutions
Sustainable finance

Examples of unique solutions

Sustainable finance market *1

Green deposits

1,644(USD bn)

Customers

FY3/22

USD 528 mn
CAGR

SMBC

+62%

Green Project
Minister of theEnvironment Award

242
Support for energy conversion
2017

2021

⚫ Along with our customers, we are developing effective
measures for carbon neutrality

KPI(JPY tn)

FY3/22

Total*2

FY3/21-30
TargetEnergy companies, etc.

Sustainable Finance

5.4

8.2

30

SMBC Groupo/w Green finance

5.0

7.5

20

Decarbonization
strategy

YoY*3

+78%

*1 Source: Bloomberg *2 FX rates are based on fiscal year-end TTMs *3 Excluding FX impact

Operating companies

Decarbonization
technologies
Electric power
Heat and steam
Transportation

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Business opportunities from climate change (2)We provide various solutions to support customers efforts addressing climate change and transition
Cloud service supporting GHG
emissions calculations and reductions

Transition Finance
Sumitomo Chemical Group
Transition Finance

Applying global standard
GHG protocols⚫ Support for LNG power generation

facility constructions⚫ Selected as a model case by METIGHG emissions including
supply chain⚫ First model case in Japan in thechemical sector

Equipped with database necessary

CO2 emissions
reduction
890 K tons/year

Project finance for green hydrogen (Sep.21)••

40% of the participants in the POC were not our frequentcustomers

Acquired various groupwide transactions through Sustana⚫ First project finance globally for renewable energy using green hydrogen

located in French Guiana⚫ SMBC was the only non-French commercial bank to participate in thefinance

H2
Solar power PPA

Digitalization of thecontracting process

Solar Power

Water
electrolysis

Storage
tank

Fuel
cell

Lithium-ion battery*1 International Capital Market Association

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Inventing unique solutions
We established an investment fund to develop decarbonization-related projects and are nurturing new
solutions for the furtureNew

Sustainability Investment Fund

Clean Energy
1

Investment
fund

JPY 20 bn

Main areas ofinvestments

２ Seize finance opportunity for clean energy area

✓ Areas contributing to business developments
and providing solutions for our customers’
decarbonization

３ Creating and developing new business with our customers✓ Areas where expertise should beaccumulated for realizing a sustainable
society in the mid-to-long term

2020: Leading role in establishing the association and became one of the
management board members companies

Mar.21: Made policy proposals to METI for the transition to a hydrogen society

Apr.22: Established Japan Hydrogen Association (General Incorporated
Association)

Japan Hydrogen Association (Dec.20-)

Carbon Credit Business

Food and Agriculture⚫ Participating in “Carbonplace”, an international transaction

platform for carbon credit as a founding member
Banking
Group

Support social implementation of hydrogen and ammonia

1

２ Creating and developing new business with customers

Carbonplace

Investment/
Development

Trading

Payment

Building a sustainable agricultural management model

Records

３ Supporting customers in utilizing our agricultural expertise“Mirai Farm Akita” (Aug.16-)
Sell

Carbonplace
introduction

SMBC

Suppliers

CarbonCreditPurchaseBuyerAug.16: Established a ”corporation qualified to own cropland” in Ogata, Akita

Entered rice and onion farming to realize sustainable agricultural management

Engaging in various demonstration and business creation with our customers andcommunity

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21

SMBC Group Solutions
We offer a wide range of financial and non-financial solutions to support our customers’ efforts towards
decarbonization

Various solutions of SMBC Group
Banking•

Project Finance•

ESG evaluation based
finance

Trust banking•

Collaboration with external partners

Workshop etc

Business matching

Sustainability related
real estate

Leasing•

Regional Revitalization•

Lease for energy

Industry/Government/
Academia collaboration

saving facilities

Securities

Cards・CF•SDGs lease•

Green Bond•

Social Bond•

Cashless•

Financial literacy

Creating Digital Solution

education

Consulting

Asset management•

ESG/SDGs evaluation•

TCFD reporting•

ESG investments•

Impact investments

GHG emissions
visualization tool

Scenario analysis using
AI and satellite data

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22

Participation in initiatives
GFANZ⚫ As a member of the workstream, we are involved in thediscussions of cross-sectional initiatives towards carbonneutrality, making suggestions to the industry and aiming to pusheach discussions to policy proposals

SMDAM joins the NZAMI

Apr. 22⚫ SMDAM joined the NZAMI, a global initiative of asset

management companies, to achieve net zero GHG emissions
from their portfolio by 2050
⚫ We will engage with investee companies to support transition to

Net-Zero Banking Alliancedecarbonized society, environment conservation, and circular
economy
GFANZ
NZBA
Banks

NZAMI
Asset
management

ParticipatedOct.21

ParticipatedApr.22NZIA
Insurance

GX League Basic Concept

NZAOA
Asset Owners

Feb. 22⚫ SMBC Group endorsed the “GX（Green Transformation）

League Basic Concept” announced by METI⚫ GX League is for companies with ambitious carbon reduction

goals, and it promotes the collaboration among various
stakeholders to transform globally to a carbon neutral society

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23

IV. Appendix

Power sector: Details of interim target and guidelines
We have set interim targets follow guidelines and guidance such as NZBA, PACTA, SBTi, PCAF.

Methodology
Base Year
Basic
information

Scenario

Fiscal year 2020
(loan amount as of March 31, 2021)
IEA NZE 2050
(Selected IEA Net-Zero by 2050 emissions pathway, a scenario
limits warming to below 1.5C by 2050)

Target year 2030 interim targets set

Guideline and guidance
The base year for the targets shall be set to be no more than two fullreporting years prior to the year when the target is set. (NZBA)
The scenarios used by banks shall come from credible and wellrecognized sources and banks should provide rationale for the
scenario chosen. (NZBA)
Banks shall set an interim target for 2030 or sooner and may set
further interim targets prior to that date.(NZBA)

Emissions intensity(g-CO2e/kWh)
Metric(In the transition stage to a decarbonized society, the demand for
power is expected to increase. For this reason, selected
emissions intensity which is used to track efficiency)

Asset class Balance sheet lending(exclude investment activities)

InterimtargetScope of
Emissions

Scope1

Value
Chain

Power generation businesses(Scope1 accounts for the majority of GHG emissions in this
sector)(Power generation businesses accounts for the majority of GHG
emissions in this sector)

Targets shall be set based on: Absolute emissions; and/or Sectorspecific emissions intensity.(NZBA)Over time, banks should increase the volume ofinvestment activities covered by the targets in line withmethodological developments. (NZBA)
If a company’s relevant and mandatory scope 3 emissions are 40%
or more of total scope 1, 2, and 3 emissions, a scope 3 target isrequired. Scope1 is especially important for this sector. (SBTi)Power generation is by far the most carbon intensive segment of thesector. (PACTA)

In line with PACTA for Bank methodology
Calculation
methodAsset
Coverage

Portfolio weight approach.(TCFD*, PACTA for Bank) Provide an
explanation of the methodology. (NZBA)

90%

Each bank shall disclose the asset class and sector coverage of theemissions (provide rationale). (PCAF, NZBA)

PCAF
score

Average PCAF score: 2.5

FIs should publish a weighted score by outstanding amount of the data
quality of reported emissions data or should explain why they are unable to
do so. (PCAF) Banks should provide an assessment of the data quality usedin their calculations. (NZBA)

Data
sourceInformation disclosed by each customer, CDP, etc. Provide references to external public sources of information. (NZBA)* TCFD ”Guidance on Metrics, Targets, and Transition Plans”, Portfolio Alignment Team “Measuring Portfolio
Alignment : Technical Considerations”

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25

Energy sector: Details of interim target and guidelines
Similar to the power sector, we will set interim targets follow guidelines and guidance such as NZBA, PACTA,
SBTi, PCAF.
Guideline and guidance
Methodology
Basic
information

Base Year

Fiscal year 2020
(loan amount as of March 31, 2021)

Scenario(To be disclosed in August 2022)

Target year (To be disclosed in August 2022)
MetricAbsolute emissions (Mt-CO2e)

Balance sheet lending
Asset class (exclude investment activities)

InterimtargetScope of
Emissions

Scope1,2,and 3

Value
Chain

Upstream businesses

The base year for the targets shall be set to be no more than two fullreporting years prior to the year when the target is set. (NZBA)
The scenarios used by banks shall come from credible and wellrecognized sources and banks should provide rationale for the
scenario chosen. (NZBA)
Banks shall set an interim target for 2030 or sooner and may set
further interim targets prior to that date. (NZBA)
Targets shall be set based on: Absolute emissions; and/or Sectorspecific emissions intensity. (NZBA)Over time, banks should increase the volume ofinvestment activities covered by the targets in line withmethodological developments. (NZBA)
If a company’s relevant and mandatory scope 3 emissions are 40%(Scope3 accounts for the majority of GHG emissions in this sector, or more of total scope 1, 2, and 3 emissions, a scope 3 target isinclude scope 1,2,and 3)
required. (SBTi)(Upstream businesses including integrated O & G companies)

The methodology concentrates on the upstream segment as theleading indicator for the whole sector value chain. (PACTA)

In line with PCAF methodology
The attribution factor is calculated by the outstanding amount of loan
over the total equity and debt of the company. (PCAF) Provide an
explanation of the methodology. (NZBA)

Calculation
methodAsset
Coverage(70%. To be improved by August 2022)

Each bank shall disclose the asset class and sector coverage of theemissions (provide rationale). (PCAF, NZBA)

PCAF
score

(Average PCAF Score: 2.3)

FIs should publish a weighted score by outstanding amount of the data
quality of reported emissions data or should explain why they are unable to
do so. (PCAF) Banks should provide an assessment of the data quality usedin their calculations. (NZBA)

Data
sourceInformation disclosed by each customer, CDP, etc. Provide references to external public sources of information. (NZBA)

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26

LinksIssuance

URL

QR code1

Annual Report

Aug.21

https://www.smfg.co.jp/english/gr2021/

2

TCFD report

Sep.21

https://www.smfg.co.jp/english/sustainability/materiality/environment/climate/3

Sustainability
ReportMar.22https://www.smfg.co.jp/english/sustainability/report/backnumber/4

ESG data book

Jul.21

https://www.smfg.co.jp/english/sustainability/report/databook/

5

SMBC Group E & S
Framework

Apr.22https://www.smfg.co.jp/english/sustainability/group_sustainability/esframework/

6

Principles for
Responsible
Banking Report

Mar.21

https://www.smfg.co.jp/english/sustainability/group_sustainability/structure/
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27