Sustainability Progress Report
2024
June 2024
2/18
Contents
Message from the President | 3 |
Japan Post Bank's Progress To Date | 4 |
Enhancement of the Sustainability Management Framework | |
Strengthening the Organizational Structure | 5 |
Incorporation of ESG Evaluation Items into Executive Compensation | 6 |
Human Capital Management | 7 |
Initiatives Towards Achieving Net Zero Emissions | |
Impact of Climate Change on the Bank | 8 |
Roadmap | 9 |
Japan Post Bank Emissions (Scope 1+2) | 10 |
Finance Portfolio Emissions (Scope 3) | 11 |
Activities as an Institutional Investor | |
Promotion of ESG-themed Investments and Financing, Etc. | 12 |
Positive Impacts of Investments and Financing | 13 |
Engagement with Investees | 14 |
Investment and Financing Policy | 15 |
Balancing Corporate Value Enhancement and Solutions to Social Issues | |
Respect for Human Rights | 16 |
Natural Capital & Biodiversity | 17 |
Links to References | 18 |
3/18
Message from the President
Sustainability Management: Our approach to finding solutions to social issues as well as enhancing corporate value
Takayuki Kasama
Director, President and
Representative Executive Officer
This report summarizes the progress of Japan Post Bank's sustainability initiatives, primarily the progress made in FY2024/3. While we have been providing detailed and comprehensive information on our Sustainability Website and through various disclosures, this report is our first undertaking to present a focused overview of the background and recent progress of our initiatives to our institutional investors and other stakeholders.
As climate change remains a crisis issue that demands urgent action, with global temperatures continuously reaching all-time highs, we recognize we have an important role to play as a bank that provides services throughout Japan and as one of the country's largest institutional investors. Based on this recognition, we have set a new interim emissions target (FY2031/3) for the entire finance portfolio, and we have raised our target for the balance of ESG-themed investments and financing, to aim for 7 trillion yen by March 31, 2026. Moreover, we are committed to responding promptly in a manner required of us with respect to not only climate change but other social issues as well, as demonstrated by the publication of our first Human Rights Report in April 2024.
Since joining Japan Post Bank, I have been involved in market investment operations, mainly credit investments, and have conducted analyses of many companies. As such, I can say that we are pursuing these sustainability initiatives with the conviction that they will contribute to the enhancement of the Bank's corporate value over the long term. In the revision of the Medium-term Management Plan announced in May 2024, sustainability management is described as a management strategy itself, and is positioned as an approach for controlling the cost of shareholders' equity through stable and transparent business operations.
The Bank will continue to promote sustainability management with the concurrent objectives of finding solutions to social issues and enhancing corporate value, thereby contributing to the realization of a sustainable environment and society together with our stakeholders.
4/18
Japan Post Bank's Progress To Date
Since endorsing the TCFD recommendations and developing a basic policy on ESG in 2019, the Bank has continuously promoted initiatives related to sustainability, including climate change mitigation measures. In particular, we have accelerated our efforts since we declared in 2022 that we will achieve net zero GHG emissions by 2050.
2019 | 2020 |
2021 | 2022 |
2023 | 2024 |
| Endorsement of | | Establishment of |
TCFD | the ESG Promotion | ||
recommendations | Office (currently the | ||
Revision of the | Sustainability | ||
| Promotion Office) | ||
Japan Post Bank | within the | ||
Environmental | Corporate Planning | ||
Policy | Department |
- Establishment of the ESG Investment Policy (currently the ESG Investment and Financing Policy)
- Establishment of the Human Rights Policy
- Clarification of the identification of priority issues (materiality) and ESG management in the Medium-term Management Plan
- Establishment of the Basic Sustainability Policy
- Participation in climate change response operations
- Target set for the balance of ESG- themed investments and financing (¥2 trillion)
- Publication of the Sustainability Report (formerly CSR Report)
- PCAF membership
- CDP signatory
-
Announcement of
Japan Post Bank's net zero GHG emissions declaration - Interim target set for the Bank's emissions volume
- Disclosure of finance portfolio GHG emissions
- Revision of the target for the balance of ESG- themed investments and financing (¥4 trillion)
- Publication of TCFD Report
| UN Global | | Publication of Human | |
Compact signatory | Rights Report | |||
| Revision of the | | Revision of the | |
interim target for | target for the | |||
the Bank's | balance of ESG- | |||
emissions volume | themed investments | |||
and financing (¥7 | ||||
trillion) | ||||
| Interim targets set | |||
for the finance | ||||
portfolio (entire | ||||
portfolio) | ||||
Publication of | This | |||
the Sustainability report | ||||
Progress Report |
Enhancement of Management Framework | Initiatives Towards | Activities as an Institutional Investor |
Achieving Net Zero Emissions |
Strengthening the Organizational Structure
Balancing Corporate Value Enhancement
and Solutions to Social Issues
5/18
Based on the recognition that management strategy and sustainability promotion go hand in hand, the Sustainability Promotion Office was established within the Corporate Planning Department in FY2021/3 to oversee the entire process, and the results of discussions held by the Sustainability Committee, which includes executives from all divisions, are reported to the Executive Committee and the Board of Directors.
In FY2024/3, the Working Group (WG) on Climate Change and Other Issues was established to further strengthen cooperation with each division and strengthen the Bank's response to various sustainability-related issues.
Governance structure
Main agenda items | Main agenda |
items for | |
FY2024/3 |
Sustainability promotion framework
Board of Directors
Discussions | Supervision |
& reporting | |
Executive Committee
Chairperson: Takayuki Kasama
(Director, President and
Representative Executive Officer)
Discussions | Issues directives |
& reporting | |
Sustainability Committee
Chairperson: Harumi Yano
(Representative Executive Vice
President*)
Discussions | Issues |
& reporting | directives |
Corporate Planning
Department
Sustainability Promotion Office
Reporting | Confirmation |
Each department in charge
• Management conscious of cost | |
of capital, etc. (continuous | |
improvement of ROE and PBR) | |
Board of | • The revision of the Medium-term |
Directors | Management Plan (accelerate |
transformation to a sustainable | |
business model and promote | |
human capital management) | |
• The revision of the Medium-term | |
Management Plan, sustainability | |
Executive | management |
Committee | • Annual sustainability plan |
• System for promoting measures | |
to address climate change | |
• Details of investments and | |
financing to be actively pursued, | |
and emissions levels and | |
Sustainability | method of setting interim targets |
for investees and borrowers | |
Committee | |
• Method of confirming human | |
rights risks at the time of | |
contracting and in investment | |
and financing decisions | |
President and Representative
Executive Officer
Corporate Administration
Division
Corporate Planning
Department Established
April 2020
Sustainability Promotion Office
Public Relations
Department
Financial Accounting
Department
Research Department
:
Risk Management Division
Risk Management
Department
Credit Department
Investment Division
CIO Office
Global Credit Investment
Department
:
Regional Relations Division
Regional Relations
Management Department
Investment Business
Promotion Department
Established
October
2023
WG on Climate
Change and Other
Issues
(Secretariat)
Sustainability Promotion
Office
Disclosures, Etc.
Compliance with
statutory disclosure requirements, etc.
Risk
management
Scenario analyses,
etc.
Investment &
financing
ESG investment and
financing policy
Emissions of investees and borrowers
Engagement
* Executives' job positions are current as of the time of publication
:
Enhancement of Management Framework | Initiatives Towards | Activities as an Institutional Investor | Balancing Corporate Value Enhancement |
Achieving Net Zero Emissions | and Solutions to Social Issues |
Incorporation of ESG Evaluation Items into Executive Compensation
6/18
In promoting overall management and the operations of each department, the Bank has reflected the promotion of sustainability management in the compensation of executive officers since FY2022/3, from the perspective of providing sound incentives not only from the short-term perspective of single fiscal year performance, etc., but also for efforts towards the Bank's sustainable growth over the medium to long term.
The evaluation items will be reviewed each fiscal year as necessary in response to changes in the external environment and the Bank's internal environment.
Compensation system for executive officers (FY2024/3)
Payment | Payment | ||||||
Type | Payment standard | time | method | Composition* | |||
Base salary | Fixed amount of compensation based on job responsibilities | Monthly | Cash | 66% | |||
Performance-linked compensation (0-150%) | At | Shares | 34% | ||||
Reference points | Performance-linked indicators | retirement | 70% | ||||
Net income | Cash | ||||||
Basic points | OHR/G&A expense reduction | 30% | |||||
Awarded on basis of | Retail Business | ||||||
prescribed duties | Quantitative | Market Business | |||||
- Business (a corporate business for creating futures for societies and local
communities through investment)
Stock | Evaluation | ESG | |||||
points | |||||||
compensation | Awarded on basis of | Qualitative | Corporate value enhancement initiatives | ||||
individual evaluation | IT system problems, etc. | ||||||
Reflects the status of promotion of sustainability management | |||||||
Market Business | Balance of ESG-themed investments and financing | ||||||
Σ Business | Number of investments in local revitalization funds | ||||||
External evaluation by major ESG rating agencies, percentage | |||||||
ESG | of female managers, etc. | Added in FY2024/3 | |||||
Percentage of male employees taking childcare leave | |||||||
Corporate value | Initiatives on non-financial indicators, including | Added in FY2024/3 | |||||
enhancement initiatives | human capital management | ||||||
- Composition of compensation for all executive officers (performance-linked stock compensation is calculated by multiplying the points granted based on FY2024/3 results by the stock price on the date the points are granted for those in office and by the stock price on the date of retirement for those who retire).
Enhancement of Management Framework | Initiatives Towards |
Achieving Net Zero Emissions |
Human Capital Management
Activities as an Institutional Investor
Balancing Corporate Value Enhancement
and Solutions to Social Issues
7/18
We have established KPIs based on a quantitative understanding of the gap between "the situation as it is" and "what we want it to be," as well as a human resource strategy linked with our management strategy and Medium-term Management Plan. In response to changes in the external environment, we have set new KPIs, such as for the "number of expert market operations professionals" and "overall employee satisfaction rate."
In addition, we are implementing a cross-organizational initiative to reform our organizational culture with the aim of creating a more comfortable and rewarding workplace. At the same time, we recognize the importance of further analyzing each employee's contribution to corporate value and how employees contribute.
Human resource strategy
Missions
Management strategy
Human resource strategy[ Three pillars|KPI ]Revised in May 2024
Our vision of | Individuals who share Japan Post's purpose, management philosophy, and |
missions, and who are willing to take on the challenge of financial innovation while | |
human capital | |
learning to understand change and aspire to achieve it. |
Reform of the organizational culture
The "Voice of the Employee" subcommittees (Culture Reform PT and Productivity Improvement PT) have been established under the umbrella of the Service Improvement Committee, which is overseen by the President and Representative
Encourage
growth
Encourage professional development and growth through challenges driven by each employee's passion and energy
Nurture self-motivated
employees
Actively recruit professionals
KPIs | |
Number of market | 105 |
operation | |
professionals | |
DX training | 100% |
attendance Ratio | |
Number of Career | 100 or |
Challenge | more |
applicants | |
Discover
abilities
Provide opportunities and an environment that brings out the best in each employee to enhance job satisfaction
Strategic allocation of
human resources
Improve engagement
KPIs | |
Overall employee | 70% or |
satisfaction rate | higher |
Effectively
utilize diversity
Create a corporate culture that respects the diverse values of each employee and treats them as a source of power within the organization
Diversity management
KPIs | |
Ratio of women | 20% |
in managerial | |
positions | |
Rate of employees | |
taking childcare | 100% |
leave (regardless | |
of gender) | |
Rate of employees | 3.0% or |
with Disabilities | higher |
Executive Officer.
The aim is to maximize organizational results by creating a better and more rewarding workplace.
To this end, in cooperation with related departments, we are working to strengthen communication between organizations and among employees, improve productivity, etc.
Enhancement of Management Framework | Initiatives Towards | Activities as an Institutional Investor |
Achieving Net Zero Emissions |
Impact of Climate Change on the Bank
Balancing Corporate Value Enhancement
and Solutions to Social Issues
8/18
As a bank that provides services throughout Japan and as one of the largest institutional investors in Japan, Japan Post Bank has taken on the responsibilities of ensuring a sustainable environment and society, and has been promoting initiatives to achieve net zero GHG emissions. At the same time, we have positioned climate change as one of the top risks in our risk appetite framework, based on our belief that climate change will directly impact the sustainability of the Bank's earnings and profits due to a decline in the prices of securities held and an increase in funding costs.
Risk appetite framework*
Calculation of risk appetite | Preparation | ||||||
Recognition of the | |||||||
internal and external | Organize top risks | ||||||
environments | |||||||
Risk appetite policy | of | ||||||
risk | |||||||
Selection of risk | |||||||
appetite indicators, | Formulation of | ||||||
achievement of | various plans, etc. | appetite | |||||
targets | |||||||
statement | |||||||
Business | |||||||
Risk taking | |||||||
execution | |||||||
Monitoring | Status of control |
of top risks | |
Review and discuss
Review risk appetite in response to changes in the environment, etc.
- A business management framework that uses risk appetite (the type and total amount of risk that a bank is willing to accept to achieve its business plan, taking into account the specifics of its business model) as a common language within the bank regarding overall risk-taking policies, including
capital allocation and profit maximization.
Main impacts of climate change on the Bank
Risk category | Transition risk | Physical risk | Time |
frame | |||
As an institutional investor | As an institutional investor | ||
Credit & | Decline in the prices of securities | Decline in the prices of securities | |
market | held due to deteriorating business | held due to deteriorating | Short to |
performance of investees and | business performance of | long term | |
risk | borrowers resulting from their | investees and borrowers amid | |
inability to adapt to the | extreme weather conditions. | ||
decarbonization of industry. | |||
As an institutional investor | As a business enterprise | ||
Liquidity risk | Deterioration in the Bank's | Increase in the outflow of funds | Short to |
reputation and increase in funding | due to stronger demand for | long term | |
costs owing to delayed climate | funds from customers affected | ||
change response. | by extreme weather events. | ||
As a business enterprise | As a business enterprise | ||
Operational | Losses result from the failure to | Extreme weather conditions | |
properly implement CO2 reduction | cause damage to the head office, | Short to | |
risk | measures in response to regulatory | sales branches, data centers, | long term |
changes related to climate change, | and other facilities, resulting in | ||
fluctuations in renewable energy | damage to assets held and | ||
supply and demand, etc. | restoration costs. | ||
As an institutional investor | As a business enterprise | Short to | |
Reputational | |||
External stakeholders come to view the Bank's efforts and disclosures | long term | ||
risk | on climate change response and mitigation as inadequate, and the | ||
Bank's reputation deteriorates. | |||
Enhancement of Management Framework
Roadmap
Initiatives Towards
Achieving Net Zero Emissions
Activities as an Institutional Investor
Balancing Corporate Value Enhancement
and Solutions to Social Issues
9/18
In March 2022, the Bank announced the "Japan Post Bank Net Zero GHG Emissions Declaration" and has been working to reduce GHG emissions.
Previously, the Bank had set an interim target for the electric power sector to be achieved by FY2031/3, but it has now set a new interim FY2031/3 target for portfolio emissions covering all sectors. In addition, the end-FY2026/3 target for the balance of ESG-themed investments and financing has been raised from ¥4 trillion to ¥7 trillion.
Roadmap for achieving net zero emissions
Final year of | |||
▼Net Zero | Medium-term | Interim | |
Management | Final target | ||
Declaration | Plan | target | |
Fiscal Year | 2019 | 2020 | 2021 | 2022 | 2023 … | 2025 | … | 2030 | … | |||||||
Net zero GHG emissions | ||||||||||||||||
Accelerate efforts to achieve net zero | ||||||||||||||||
Target raised | ||||||||||||||||
Japan Post Bank emissions (Scope 1+2) | 4.8 | 4.4 | 4.3 | 2.4 | March 2023 | |||||||||||
Vs. FY2020/3 | ||||||||||||||||
[10,000 t-CO2] | Switch to renewable | energy | Increasingly adopt EV/HV vehicles, | |||||||||||||
See P.10 | -60% | |||||||||||||||
for the Bank's facilities | renewable energy | |||||||||||||||
Finance portfolio emissions*1 | Boost reductions through engagement | |||||||||||||||
(Scope 3, category 15) | ||||||||||||||||
Absolute volume*2 [Mt-CO2] | 48 | 47 | New target | set | ||||||||||||
All sectors | ||||||||||||||||
Per unit of investment*2 | May 2024 | |||||||||||||||
120 | 99 | 85 | 81 | Vs. FY2020/3 | ||||||||||||
[t-CO2/¥100 million] | See P.11 | -50% | ||||||||||||||
Contribute to solving social issues through ESG-themed | ||||||||||||||||
Financing to boost decarbonization | ||||||||||||||||
investments and financing | ||||||||||||||||
Target | raised | |||||||||||||||
Balance of ESG-themed investments | 1.2 | 2.1 | 3.2 | 4.6 | May 2024 | |||||||||||
¥7 trillion | ||||||||||||||||
and financing (¥ trillion) | See P.12 | Investment and financing using green bonds, etc. | ||||||||||||||
Balance of financing for coal-fired | Maintain balance of zero | Investment & | ||||||||||||||
power plant construction projects | See P.15 | financing policy | ||||||||||||||
revised April 2024 | ||||||||||||||||
2050
Net zero emissions
*1 Finance portfolio emissions may be revised retroactively in the future if there is a change in the vendor acquiring the emissions data or the calculation method is improved.
*2 The absolute figures for FY2022/3 have been changed from those disclosed in the past due to the refinement of calculation methods, such as the expansion of the scope of investee and borrower companies (e.g., from non-consolidated to consolidated). In addition, the attribution factor used to obtain the values in the table above is calculated using corporate value based on book value(see p. 11 for details). The emissions of the finance portfolio, for which corporate value is calculated on a market value basis, are shown on the Sustainability website (see p. 18).
Enhancement of Management Framework | Initiatives Towards | Activities as an Institutional Investor |
Achieving Net Zero Emissions |
Japan Post Bank Emissions (Scope 1+2)
Balancing Corporate Value Enhancement
and Solutions to Social Issues
10/18
Regarding emissions from the Bank's own business activities, we are striving to reduce emissions through the use of renewable energy at our independently owned facilities, etc., and succeeded in reducing emissions to approximately 24,000 t-CO2 in FY2023/3.
In March 2023, we raised our emissions reduction target from -46% to -60%, compared to the level in FY2020/3. We aim to achieve net zero emissions from our business activities by switching to EV/HV vehicles for our sales fleet and proactively pursuing other such initiatives.
Roadmap for Scope 1+2 emissions reductions
(10,000 tCO2) Scope 1 Scope 2
4.8
4.4 | 4.3 | Target raised | ||||||||
March 2023 | ||||||||||
Interim target | ||||||||||
4.2 | 2.4 | -60% compared to FY2020/3 | ||||||||
3.9 | 3.9 | 1.9 | ||||||||
1.9 | ||||||||||
Net zero | ||||||||||
0.6 | 0.5 | 0.4 | 0.4 | |||||||
+ | ||||||||||
- | ||||||||||
2019 | 2020 | 2021 | 2022 | 2030 | 2050 | |||||
Third-party certification acquired | ||||||||||
Switching to renewable | ||||||||||
energy for facilities | Planning to gradually switch from gasoline-powered vehicles | |||||||||
independently owned by | (four-wheeled vehicles) for sales activities to EVs and HVs | |||||||||
the Bank |
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Japan Post Bank Co. Ltd. published this content on 19 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 June 2024 01:03:03 UTC.