Environmental Rating Loans with Evaluation of Natural Capital Preservation

The sustainable use of natural capital as resources is vital for a company to continue its business. There is a growing awareness that natural capital-related procurement risk management across the global supply chain is an indispensable part of management strategy. In April 2013, SuMi TRUST Bank launched its Environmental Rating Loans with Evaluation of Natural Capital Preservation, which embed the concept of evaluating impacts on natural capital and a company’s initiatives into the environmental-rating evaluation process that assesses its environmental measures. This is the world’s first attempt to incorporate natural capital evaluation into loan criteria, and the Bank’s efforts have been cited in Japanese government environmental white papers and European Commission reports as an example of leading-edge practice.

"Optional" refers to ESCHER calculations provided by PwC Sustainability LLC that are not available without loan products.

Establish Policies for Specific Sectors

SuMi TRUST Bank has established policies for specific sectors that promote businesses that have a large impact on society, and prohibits or restricts investments and loans to companies and projects that have a negative impact on society, while sharing awareness of environmental and social issues and contributing to building a sustainable society through engagement with loan clients. With regard to natural capital, we have developed policies relating to forests and palm oil.

Positive Impact Finance

SuMi TRUST Bank is working on Positive Impact Finance (PIF), which considers not only the relationship with clients but also the relationship between clients and society, and helps transition to a sustainable society by ensuring an optimal relationship (see pages 50-51). Many companies have some level of exposure to natural capital in their supply chain. SuMi TRUST Bank supports client initiatives by identifying these impacts, setting KPIs for reducing negative impacts and increasing positive impacts, and monitoring them.

Examples of Natural Capital-related KPIs set as a part of PIF

Client Theme Description KPI (metrics and goals)
Fuji Oil Group headquarters Biodiversity and ecosystem services
  • Sustainable sourcing that considers the environment and human rights
  • Supply chain improvement activities and RSPO initiatives aimed at NDPE (No Deforestation, No Peatland development, No Exploitation) in the sourcing process
  • Traceability scores all the way back to the oil extraction plant
Sumitomo Forestry Co., Ltd. Sourcing that considers sustainability and biodiversity
  • Forest management that balances global warming prevention and biodiversity conservation
  • Expansion of sustainable use of forest resources
  • Environment creation that considers biodiversity
  • Raise domestic and overseas forest certified area to 221,467 ha by FY2021
  • Reach company-made tree sapling planted area of 7,920 ha and supplied volume of 7.26 million trees by FY2021
  • Achieve chips and pellets for main fuel use handling volume of 1,363,930 tons by FY2021
  • Raise percentage of sustainable timber and timber products handled to 100% by FY2021
  • Achieve company-made seedling unit sales of 500,000 in FY2021
Nippon Paper Industries Co., Ltd. Sourcing that considers sustainability and biodiversity
  • Sustainable raw material sourcing
  • Conservation of biodiversity
  • Maintain 100% forest certification rate for company-owned forests
  • Use materials approved by the forest certification system for 100% of paper manufacturing materials
  • Achieve 100% survey completion rate for overseas wood chip and pulp suppliers
  • Maintain domestic timber utilization rate higher than the domestic timber self-sufficiency rate
  • Achieve 100% forest certification rate for company-owned forests
  • 100% implementation of rare species checks prior to logging in company-owned forests
Sumitomo Rubber Industries, Ltd. Greening
  • Global warming prevention and biodiversity conservation
  • Establish a method for calculating the amount of CO2 absorbed by tree planting as a KPI, then set a target
Toray Industries, Inc. Providing clean water and air
  • Realizing a world where everyone has access to clean water and air and the natural environment is restored.
  • Quadruple supply of green innovation products by FY2030 (compared to FY2013)
  • Reduce groupwide water consumption per unit of operating revenue by 30% by FY2030 (compared to FY2013)
Sumitomo Dainippon Pharma Co., Ltd. Biodiversity conservation
  • Efficient use of water resources
  • Reduce water consumption by 12% by FY2030 (compared to FY2018)

Adoption of the Equator Principles in Project Finance

SuMi TRUST Bank has adopted the Equator Principles, a guideline for private-sector financial institutions, in its decision-making process for risk management in loans such as project financing. SuMi TRUST Bank understands that financing for large-scale projects such as mining development, oil and gas development, power plants, petrochemical plants, and infrastructure development may indirectly have a negative impact on natural capital. In addition, we believe that it is our responsibility as a sound financial institution to avoid or reduce the risk of deterioration in the value of our loan portfolio in the event that a project is discontinued due to environmental or social issues.

Natural Capital Products and Services

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