Measures against global warming and climate change(TCFD)

The Concordia Financial Group believes that addressing global warming and climate change is an important priority and has endorsed the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)* in December 2019. The Group recognizes the importance of disclosing information on climate change and will enhance the disclosure of information on climate change based on the disclosure framework of the TCFD recommendations.

  • *
    Task Force on Climate-related Financial Disclosures (TCFD): A privately-led task force established by the Financial Stability Board (FSB) in December 2015 to encourage companies to disclose climate-related information


Sustainability promotion structure

The Group Sustainability Committee, chaired by the President, deliberates on policies and action plans for sustainability initiatives, including global warming and climate change, and reports on the progress of these initiatives.

The deliberations of the Group Sustainability Committee are reported to the Board of Directors meeting approximately once every three months for discussion and the Board of Directors oversees efforts related to climate change. Based on the results of reporting and deliberations, climate change-related risks and opportunities are reflected in business strategies.

Matters reported and deliberated on at the Board of Directors meetings (FY2021)

  1. In-house carbon neutrality
    We are bringing forward from FY2050 to FY2030 the expected time frame for the Bank of Yokohama (manned branches) to achieve a switch to realrenewable energy.
  2. Status of Sustainability Initiatives
    Review TCFD disclosures, status of carbon-related assets, and scenario analysis
  3. Sustainability Strategy
    Policies on initiatives according to materiality, strengthening the organizational structure
  4. Risks related to climate change
    Selection of "occurrence of major natural disasters" and "transition to a decarbonized society" as the top risks

In addition, from April 2022, we have established specialized departments, mainly in the planning and sales divisions, to strengthen our company-wide sustainability efforts.

Invitation of outside experts

From FY2022, external experts in the field of sustainability have been invited to serve as outside members of the Group Sustainability Committee. Through regular exchanges of opinions at the Group Sustainability Committee, we utilize outside expertise in our sustainability efforts.

Kotaro Fukai, Outside Expert

Nomura Research Institute, Ltd.
Sustainability Business Consulting Department
Chief Consultant

Reflecting ESG Factors in Executive Remuneration

We will work to strengthen our management foundation by establishing sustainable management to solve community issues and by upgrading governance. To realize these initiatives, we have added ESG external evaluation indicators to the judgment targets for determining the performance-linked coefficients for stock-based remuneration (Trust II) in the medium-term management plan (FY2022-FY2024). The final performance-linked coefficients will be determined after deliberation by the Compensation and Nomination Committee from the performancelinked coefficients based on financial indicators for evaluating the degree of achievement of the performance targets of the medium-term management plan (target indicators), ESG external evaluation indicators, and non-financial items in the medium-term management plan such as the company's CO2 emissions reduction rate, and qualitative items. The president, directors (excluding outside directors), and executive officers are eligible to receive executive remuneration that incorporates ESG external evaluation indicators etc.


1. Risk

Risks related to climate change

Our risks related to climate change are as follows.

Implementation of Scenario Analysis

This financial year, a scenario analysis was conducted for transition and physical risks under certain scenarios based on TCFD recommendations.

Physical risk analysis included flood disasters, taking into account the impact of recent river flooding and other disasters in our operating areas. In the transition to a decarbonized society, we first screened the entire group for analysis, focusing on the electrical power and automotive sectors, which have the highest greenhouse gas emissions and are the most vulnerable to climate change impacts.

We will continue to review and refine our analysis methods.

Scenario Analysis Results

Under the scenarios and assumptions analyzed and applied in this analysis, the results indicate that credit costs have a cumulative transition risk of ¥9 billion to ¥17 billion and a physical risk of ¥3 billion to ¥7 billion, both of which have a limited impact on our investment and loan portfolio.

We will continue to work on the expansion of target sectors and sophistication of scenario analysis.

Carbon-related assets

Of loans in FY2021, the credit balance of carbon-related industries (energy and utilities sector) disclosed in FY2020 *1 remained limited at 0.6%.

Based on the TCFD revision in 2021, the share of new carbon-related assets *2, including real estate rental business, in the loan balance *3 is 39.8%.

We conducted a multifaceted analysis using internal indicators (e.g., degree of impact on individual company finances) and external indicators based on transition risk, and the risk for each industry was graded. *2

As a result, in addition to the energy and utilities sectors, we have identified the "iron and steel", "ceramic and earthenware", "pulp and paper", "textile", and "nonferrous metals" industries as carbon-related sectors to be managed, recognizing that these industries have significant climate change risk impacts.

The sector's share of outstanding credit as a percentage of loans in FY2021 is 2.5%.
We will continue to promote engagement with customers in this sector. In addition, we will continue to improve our analysis of the effects of climate change and manage risks.

  • *1
    The total credit balance includes loans, foreign exchange, acceptances and guarantees, and open lines of credit such as commitment lines.
  • *2
    Although the Global Industrial Classification Standard (GICS) industry classification is recommended for the industries covered in the TCFD recommendations, differences may occur because we compiled the data based on the Bank of Japan's industry classification.
  • *3
    Loan balances include loans, acceptances, etc. and do not include open lines of credit such as commitment lines.

2. Opportunities

The transition to a decarbonized society is increasing opportunities for financial institutions to provide finance and services, as demand for funds increases, business restructuring is expected, and new financial products and services are created.

The Concordia Financial Group is working together with its customers to reduce climate change risks in order to achieve the long-term sustainability KPI announced in 2020 of 'Sustainable finance of ¥2 trillion by FY2030, including Green Finance of ¥1 trillion'.

To realize a decarbonized society, we proride not only finance projects contributing to climate change mitigation, such as renewable energy, but also solutions tailored to the phase of customer decarbonization efforts, and strive to solve customer issues in the area of sustainability.

Sustainable Finance Lineup
Category Products Customers' needs

Financial institutions

Sustainable finance

SDGs Friends Loan Incorporate the SDGs into their business Bank of Yokohama
<Hamagin> Private placement of SDGs medicaland welfare support bonds We want to contribute to solving social issues through donations to SDGs-related organizations Bank of Yokohama
<Hamagin> SDGs animal welfare private placement bonds We want to contribute to solving social issues through donations to SDGs-related organizations Bank of Yokohama
<Hamagin> Loan with a special clause for waiver of principal in case of earthquake Strengthen BCP as a countermeasure against earthquakes Bank of Yokohama
SDGs Business Evaluation Loan Fund - Habataki We want to utilize SDGs business feasibility assessment efforts in procurement of finance. Bank of Yokohama
Positive Impact Finance We want to evaluate the impact of the business on the environment and society, and to communicate these efforts to the outside. Bank of Yokohama
SDGs sustainability linked loans Promoting efforts to achieve the SDGs goals in a comprehensive manner to the outside world Bank of Yokohama
Donation-based SDGs promotion loans Contributing to the achievement of the SDGs by making donations to local governments or other organizations that contribute to the promotion of the SDGs Higashi-Nippon Bank
Higashi-Nippon Bank Regional Enterprise Revitalization Fund Working to revitalize the local economy Higashi-Nippon Bank
SDGs Step Loans Incorporate the SDGs into their business Higashi-Nippon Bank
Green finance "Kagayaki" SDGs Growth Fund Loan - We want to work on growth areas. Bank of Yokohama
Fund for solar power generation business and energy service company business We want to work on solar power generation business and energy service company business. Bank of Yokohama
Local Government Collaboration - Business Activities Global Warming Countermeasures, Linked Loan We want to utilize the global warming action plan submitted to local governments in Kanagawa Prefecture Bank of Yokohama
SDGs green loans/social loans We want to limit the use of funds to environmental improvements only and to appeal to the outside. Bank of Yokohama
<Hamagin> ESG interest subsidy loan Using the Ministry of the Environment interest subsidy for capital investment having CO2 reduction effect Bank of Yokohama
SDGs Eco-Loans (with interest subsidy) Using the Ministry of the Environment interest subsidy for capital investment having CO2 reduction effect Higashi-Nippon Bank

Engagement through "SDGs Business Feasibility Assessment"

To support our customers' sustainability management, we launched the "SDGs Business Potential Assessment" * in October 2021 to promote dialogue with our customers. This is the first such initiative in Japan and was implemented for approximately 150 companies by March 2022. Through the SDGs Business Potential Assessment, we are working to understand the status of our customers' initiatives and provide them with optimal solutions.

  • *
    This is an initiative to score customers by adding items related to the SDGs to the "business potential assessment," which evaluates a customer's business and growth potential without relying on financial data.
Results of the "SDGs Business Potential Assessment" (status of efforts for each item)
Item Already addressed or planned to be addressed
Environment (E) Environmental considerations 73.4%
Society (S) Contribution to the community 58.0%
Human Rights and Job Satisfaction in the Workplace 82.9%
Governance (G) Compliance 82.9%
Management and Organizational Structure 71.4%

Engagement based on transition risk

Efforts to understand the impact of climate change through scenario analysis

Given that a significant portion of our investment and loan portfolio consists of investments in businesses related to automobile manufacturing, we conducted a scenario analysis to understand the impacts related to climate change, including transition risk. In analyzing the data, we are working to leverage knowledge from both inside and outside the Group.

Based on a certain severe scenario in which the shift to all electric vehicles will simultaneously cause a decline in sales due to a decrease in the number of parts and intensified price competition due to new entrants from other industries, etc., we analyzed the impact on our customers' sales and profit margins and found that many parts suppliers would be severely affected.

Engagement with automotive suppliers

Based on a scenario analysis, executives from the Bank of Yokohama' s sales division interviewed the management of several primary subcontractors that manufacture internal combustion engines regarding matters such as their awareness of the shift to electric vehicles, issues they face, and the status of their responses. We then examined approaches to sharing awareness of issues relating to issues the automobile industry must respond to in the future.

The automotive suppliers we engaged with have a high level of awareness and a sense of urgency regarding the shift to electric vehicles, and while promoting internal measures, they are also looking to utilize their proprietary technologies to commercializenew businesses.

Due to the strong influence of finished car manufacturers and mega suppliers, the level of awareness of the trend to electric vehicles was reasonably high. However, the survey also revealed an issue with the wide gap among the various OEMs in terms of such things as how they respond and the specifics of their electric vehicle strategies.

In addition, because it is expected that key players in CASE* (especially those involved in the trend to EVs) are not expected to be vertically structured around OEMs, but instead be focused around companies that are strong in future systems, there is a chance that suppliers may be required to have multifaceted points of contact, and that there will be more need for financial institutions to provide more information and solutions than ever before.

We will continue engaging in this way to help our customers reduce impacts related to climate change, such as transition risk.

  • *
    CASE: Technological innovation in new areas such as automotive IoT, automated driving, car sharing, and electric vehicles

In-house training etc.

We provide internal training for all employees on TCFD- and ESG-related sustainability initiatives etc. through e-learning and other means to deepen their understanding of these issues. In addition, we invite outside instructors to conduct study sessions for our officers, including our president, and distribute videos to all employees to improve the knowledge level of the entire organization.

Regional decarbonization platform

Together with local governments in Kanagawa Prefecture ("local governments"), we have established a "Regional Decarbonization Platform". The platform will support and promote decarbonization efforts throughout Kanagawa Prefecture by providing a forum for networking and information exchange among local governments in charge of decarbonization, and by introducing the latest technologies and case studies from inside and outside the prefecture, especially from regions with leading decarbonization efforts.

Odawara City Impact Assessment

The Bank of Yokohama, Odawara City, Sumitomo Mitsui Trust Bank, and Hamagin Research Institute are collaborating to conduct an impact assessment (a method for measuring and analyzing the environmental, social, and economic impacts of a project) that targets local energy production for local consumption through the construction of a regional microgrid in Odawara City. This is the first time in Japan that a regional public body and a financial institution have entered into a partnership agreement to conduct a full-scale impact assessment.

Risk Management

  • Of risks related to climate change, next to physical risk (occurrence of large-scale natural disasters), transition risk (transition to a decarbonized society) is recognized as a top risk, taking into account its impact and probability. We will continue to work on building a system that can be managed within the framework of comprehensive risk management.
  • We are working to construct a management system for credit risk, risk related to the Group's tangible fixed assets, operational risk, etc., based on the impact of climate change risks on the Group's loans.
  • We have established a policy (sector policy) for investments and loans where the use of funds is likely to have a negative impact on the environment and society, and are working to reduce or avoid environmental and social impacts. Since FY2020 when the sector policy was established, we have not made any new investments or loans that fall under the sector policy.

Indicators and Targets

We have set targets for sustainable finance, green finance and CO2 emission reductions. which will act as long-term sustainability KPIs for global warming and measures to deal with climate change.

Sustainable Finance and Green Finance

We have set a target of allocating ¥2 trillion in finance to sustainability purposes by FY2030, including ¥1 trillion in "green" finance. Results (cumulative) up to the end of FY2020 show ¥1.5 trillion is held in sustainable finance, of which ¥0.4 trillion is in green finance.

Bringing Forward Carbon Neutrality Target

In January 2022, we moved up our own expected time frame for achieving carbon neutrality from FY2050 to FY2030 in order to further promote our efforts to reduce CO2 emissions. We have also set a target of 80% reduction in CO2 emissions from FY2013 levels by FY2024. (Applies to Scope 1 and 2) As a regional financial institution, our Group will continue to work together on initiatives that play a part in solutions to social and environmental problems and continue to contribute to the sustainable growth of regional communities.

Switching our power contracts to real renewable energy

In May 2022, we switched over all of the energy contracts for The Bank of Yokohama' s branches and office centers (manned branches only) to renewable energy sources. In the future, Higashi-Nippon Bank will also change to real renewable energy, promoting the decarbonization efforts of the Group as a whole.

CO2 emissions reduction results (Scope 1, 2)


Scope 3 Categories 1-14 were added to the scope of the calculations from FY2021. Scope 3 Category 15 (Investments and Loans) is being prepared for disclosure as we consider initiatives for priority sectors and greenhouse gas reductions to be addressed in the future.

Third-party verification

Third-party verification of Scope 1, 2 and 3 has been conducted by the Japan Quality Assurance Organization (JQA) since FY2021. We will continue our efforts to improve the reliability of our environmental data.

Endorsement of national and international initiatives