Strengthening support for sustainable businesses
The SDGs and the Paris Agreement have clarified the goals of the international community, the needs and actions of stakeholders have changed, and expectations and demands for companies to create value for society are on the rise. Against this backdrop, initiatives to improve sustainability are becoming an ever more critical aspect of business strategy.
At Mizuho, we have established materiality for our business, as well as KPIs (monitoring indicators). In order to capture expanding business opportunities, we have also strengthened our structure for promoting sustainable business and set long–term targets for sustainable finance and environmental finance.
Structure for promoting sustainable business
In light of the indirect impact that we, as a financial group, have through our clients, we strive to deepen our understanding of the issues and needs of clients through proactive engagement. We aid client SDG and Environmental, Social, and Governance (ESG) initiatives, sustainability–related innovation, and risk reduction, including initiatives that address climate change and the transition to a low–carbon society. We are also creating a group–wide structure for supporting sustainable businesses to enable Mizuho to pursue business opportunities.
Specific elements of the structure include appointing a person at each company and unit to be in charge of promoting sustainable business, holding regularly scheduled sustainable business strategy meetings of employees involved in Group sustainable business activities, and engaging in discussions about changes in the external business conditions and the status of the Group’s internal activities with the aim of strengthening our business.
In fiscal 2021, we aimed to strengthen our framework by establishing the Sustainability Promotion Committee, and by forming and expanding specialist departments for promoting sustainable business. Moreover, based on thorough discussions by our business execution and supervisory lines and with attention to both opportunity and risk, we strengthened initiatives related to climate change responses, respect for human rights, environmentally and socially responsible financing and investment activity, and sustainable business. In addition, in September 2022, we established the new position of Group Chief Sustainability Officer (Group CSuO) to promote sustainability initiatives throughout the Mizuho group. The Group CSuO will not be affiliated with any specific in-house company, unit, or group, but rather report directly to the Group CEO, and will plan and promote sustainability initiatives for the entire Mizuho group.
Outline of sustainable business promotion through dialogue (engagement)
Structure for promoting sustainable business
Mapping out our sustainable solutions
We strive to meet our clients' diversifying needs to address the SDGs and ESG issues, and we have been proactively developing and providing both financial and non–financial solutions.
Sustainable finance and environmental finance
In line with our key sustainability areas, we have defined sustainable finance and environmental finance for Mizuho and set long–term targets looking towards 2030, the SDGs target year. This is allowing us to proactively fulfill our role in directing capital towards environmental protection and the achievement of the SDGs.
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Training and Awareness
Initiatives for enhancing knowledge of RM
Mizuho is paying special attention to improving employee knowledge and skills. Part of this is assisting relationship managers (RMs), who are responsible for direct client engagement, in expanding their expertise about sustainability, including climate change, and strengthening their ability to identify clients’ challenges and make proposals. Regarding transition finance, and other themes of particular interest to clients, we have been holding informational sessions tailored to the characteristics of our client segments. We are also encouraging Mizuho Bank employees to acquire certification in sustainable business.
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Participation in the UNDP’s SDG Impact Standards Training Programme
The participation in SDG Impact Standard training programme will enable Mizuho to further promote sustainable business by encouraging the adoption of SDG Impact Standards across our wide customer base.
Training sessions on the Equator Principles
Mizuho Bank conducts regular training sessions for its employees on environmental and social risk assessments and Equator Principles requirements involved in large–scale project financing.
Training sessions on the Equator Principles
Main initiatives
Investment and products: ESG investment
Finance
FY2021 initiatives
Commencement of Mizuho Sustainability linked loans PRO (Japanese Text only)
FY2020 initiatives
Arranged first transition loan in Japan
In March 2021, Mizuho extended a transition loan to Kawasaki Kisen for funds to build a next–generation environmentally friendly car carrier ship fueled by liquefied natural gas. This transition loan is the first loan in Japan to follow the Climate Transition Finance Handbook (International Capital Market Association) and the Green Loan Principles (Loan Market Association).
(Photo provided by Kawasaki Kisen)
Sustainability–linked bonds/loans
We are supporting our clients' sustainability strategies by providing sustainability–linked bonds and loans which link preferential terms to the borrower's achievement of sustainability performance targets. Mizuho arranged Japan's first sustainability–linked bond (SLB), and we are also issuing sustainability–linked loans (SLL) both inside and outside Japan. In 2021, Mizuho was appointed as one of the arrangers of a SLL for a company in Thailand, and sustainability-linked syndicated loan. The SLL focused on marine resource conservation, in addition to greenhouse gas reductions. It also included enhanced traceability in procurement of marine resources among the KPIs.
SDG initiative support finance
We are supporting the SDG initiatives of middle–market firms and SMEs.
Finance for renewable energy
To facilitate the adoption of renewable energy, we proactively finance a wide range of projects, from those on a large scale to those rooted in local communities. In fiscal 2019 to 2020, we arranged approximately ¥700 billion in project finance and approximately ¥160 billion in asset based lending.
FY2019 initiatives
Mizuho Eco Finance
To promote initiatives and disclosures furthering the shift to a low–carbon society, in June 2019 Mizuho Bank and Mizuho Information & Research Institute (Currently Mizuho Research & Technologies) developed a new environmental assessment–based finance product entitled Mizuho Environmentally Conscious Finance ("Mizuho Eco Finance"). The product utilizes globally accepted environmental verification and evaluation standards to assess clients’ environmental initiatives. Mizuho Bank provides financing to clients who meet a certain minimum score in the assessment.
Through assessment and monitoring, Mizuho Research & Technologies provides advice to clients to improve and maintain their scores.
Financing support for renewable energy projects
Since our founding, we have continually assessed project risks and financed a variety of renewable energy projects, including wind, solar, solar thermal, geothermal, and offshore wind. In fiscal 2019, we were involved in arranging approximately ¥380 billion in financing. Our involvement includes serving as a financial advisor to support financing in the growing sector of large–scale offshore wind power projects in Japan and Taiwan and to support JERA's participation in an offshore wind power project in Taiwan. We will apply the expertise we have gained from past deals in Europe and the US, which have led in this field, and continue making multi–faceted, long–term, positive contributions to our clients' renewable energy projects, not only with financing support but also through our advisory business.
(Photo provided by JERA)
Sustainability–linked loans
By proposing and providing sustainability–linked loans (SLL) that link loan terms to the borrower's achievement of sustainability performance targets, we are supporting our clients' sustainability strategies both inside and outside Japan. In March 2020, we served as the arranger for an SLL to Cosmo Energy Holdings. Cosmo Energy Holdings' anticipates that the trend away from fossil fuels will accelerate over the long term and so has positioned renewable energy as a key growth area to pursue in its medium– to long–term business strategy. Taking this into account, we held thorough discussions on business strategy and CSR strategy that resulted in our proposal and arrangement of an SLL linked to Cosmo Energy Holdings' sustainability performance targets for renewable energy.
(Photo provided by Cosmo Energy Holdings)
Support for issuance of SDG bonds
With the sustainable finance market growing worldwide, Mizuho Securities is further advancing our sustainable finance initiatives. We have partnered with the environmental certification organization Climate Bonds Initiative and in 2019 launched a sustainability team in Mizuho International (London) to gather the latest information on a global basis. In Japan, we have assisted with the structuring of industry–first SDG bonds, such as the first bond in Asia to receive Programmatic Certification from the Climate Bonds Initiative, the first social bond issued by an expressway company, and the first portfolio–type green bond issued by a non–financial company. Outside Japan, we served as a principal dealer for the issuing of a transition bond by a UK gas company, and we are leading the market with our insights backed by a high level of expertise.
(Photo provided by NEXCO EAST)
5th Mizuho Executive Syndicated Loan Seminar
In November 2019, Mizuho Bank held our 5th Mizuho Executive Syndicated Loan Seminar. The seminar featured presentations on the SDGs along with information for investors and drew attendance from major institutional investors in fields such as life insurance as well as general managers of regional banks.
Research and consulting
RCU Sustainability Transformation Initiative
The Research & Consulting Unit (RCU) is responsible for research related to industries, companies, the economy, and financial markets, as well as consulting related to management strategy, sustainability, digital transformation, and similar areas. Having accumulated expertise in sustainability, RCU launched the Sustainability Transformation Initiative, a unit-wide initiative, in November 2020 to deepen collaboration within the unit. The mission of the Sustainability Transformation Initiative is to integrate the broad research and consulting knowledge of the entities that make up RCU and to bring together all of Mizuho to meet the sustainable business needs of our clients.
Specifically, with Mizuho Financial Group (the holding company) serving as the hub, we are working with relevant departments within and outside RCU, including the Mizuho Bank Industry Research Department and the Consulting Sector of Mizuho Research & Technologies, to respond to the diverse and increasingly complex sustainability business needs of our clients. We are doing this by disseminating our expert knowledge on sustainability, developing new ideas and solutions based on such expert knowledge, and providing advice on how to address challenges.
The strength of Mizuho lies in our ability to solve the challenges facing our clients and society through cooperation and collaboration across RCU, which possesses a high level of expertise in both financial and non-financial areas, and banking, trust banking, securities, and other financial functions within our group.
Mizuho Business Innovation Forum
Mizuho Information & Research Institute (now Mizuho Research & Technologies) held the Mizuho Business Innovation Forum on the topic "The Objective and Impact of Financial Decarbonization" in February 2020.
The purpose of the forum was to broadly discuss the application of financial sector science-based targets (SBTs) to investments and loans and how the international rules and financial SBTs that are currently being formulated will impact financial institution investment and lending to corporate entities.
SDG/ESG consulting
We are supporting our clients' development and implementation of sustainability strategies by applying our in–depth insight into industry, the economy, and society and our high–level expertise in sustainability.
We support our clients to review sustainability–centered business portfolios.
- Formulate strategy by adding sustainability as a new decision-making criterion
- Support clients closely across upstream discussions, downstream consulting, and financial business
Mizuho supports customer efforts to address issues related to the SDGs and ESG, particularly issues concerning the environment and society. In fiscal 2021, Mizuho Research & Technologies engaged in 500 new projects.
Investment and products: ESG investment
In the Asset Management Company, we are engaging in constructive, purposeful dialogue (engagement) with the companies in which we invest. In addition to supporting improvements in these companies' corporate value and supporting sustainable growth for society, we are also pursuing ESG investment, making investment decisions with not only financial information but also ESG factors and other types of non–financial information. For example, we are offering ESG investment products, such as those using our ESG Low Volatility High Dividend Payment Strategy in which we select stocks from an ESG perspective with a focus on dividend yields and low volatility and aim to produce stable returns, our Sustainability Research Strategy in which we consider positive contributions to solving social issues as revenue opportunities and employ selective investment. Our Future Works (ESG) in which we actively select stocks with high ESG evaluations based on the management philosophy and investment process of our Future World series. Going forward, we will continue to practice ESG investment, with the goal of creating a positive cycle for society's sustainable development.