Initiatives for Natural Capital

We recognize that not only climate change related risks, but natural capital related risks are significant risks to our lending and asset management businesses. And we have developed a wide variety of financial products and services that contribute to proper evaluation and preservation of natural capital since the 2000s.

In September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) that promotes companies to disclose their information on natural capital, was announced to shift the global finance to flow into the nature positive businesses, by which the entire society has recognized the importance of natural capital more clearly.

We joined the TNFD forum in 2023 and started the experimental analysis to grasp nature-related risks and deepen our basic understanding in the 2024 fiscal year.

As financial institutions are linked with natural capital and biodiversity through their borrowers and investees, to identify our nature related dependency, impacts, and risks, we selected important sectors from the investment and loan portfolios of Sumitomo Mitsui Trust Bank and made an analysis in each sector with “ENCORE.”*

*ENCORE has been developed by the ENCORE Partnership made of UNEP World Conservation Monitoring Centre (UNEP-WCMC), UNEP FI, and Global Canopy, as a tool that enables financial institutions to collectively evaluate the outcomes of existing various tools on nature related risks.

Group Companies’ Major Initiatives

Sumitomo Mitsui TRUST Bank

Entrusted with a Forestry Trust

In 2020, they were entrusted with a “Forestry Trust,” in which a forest is a trust asset, from individual clients that own approximately 10 hectares of forest in Nishiawakura Village, Okayama Prefecture. They have entrusted management activities to forestry entities on behalf of the owners, managed revenues, and distributed dividends. It not only enables the forestry entities to manage forests efficiently, but also secures the perfect management and the continuous preservation of the forests by preventing the situation where the owners of the land becomes unclear due to inheritance and other factors.

Developed Positive Impact Finance

In 2019, they developed Positive Impact Finance (PIF), a loan that does not specify the use. PIF aims to support clients in enhancing their corporate and social value by comprehensively analyzing and evaluating the impact of corporate activities on the economy, society, and the environment, and by expanding positive impacts and mitigating negative impacts. Its unique feature is that it uses evaluation indicators to specifically indicate and disclose the degree to which borrowers contribute to achieving the SDGs. The evaluation indicators are set according to the business characteristics of each client, and some PIFs also include KPI related to natural capital and biodiversity.

ESG/Environmental Real Estate Consulting

Sumitomo Mitsui Trust Bank established an exclusive organization for environmental real estate in 2010 and has played a leading role in the spread of environmental real estate, focusing around supporting a client to gain CASBEE, a certificate which evaluates the environmental efficiency of a building. As a menu of construction consulting, they now give advice on environmental consideration such as total life cycle costs of a building, introduction of energy saving systems, consideration to the landscape and ecosystems, and a longer lifespan of a building.

Sumitomo Mitsui Trust Asset Management

Sumitomo Mitsui Trust Asset Management has joined natural capital related global initiatives as an investor and actively engaged with its stakeholders including companies. They have joined the TNFD since the launch of the preparatory committee in September 2020 as the only Japanese asset manager and contributed to starting it through the framework preparation and the discussion on its administration. As a TNFD Early Adopter, they declared early disclosure based on the recommendation in January 2024, and issued the first edition of the TCFD and TNFD reports in October that year.

Page Top