Policy for Specific Sectors

Concordia Financial Group has established a Sector Policy to ensure that its commitment to investments and loans likely to contribute to negative environmental and social impacts is carefully evaluated in making lending and other decisions in order to reduce or avoid environmental and social impacts.

In April 2023, this policy was revised to address initiatives to combat climate change, respect human rights, and conserve biodiversity. The revision was discussed by the Group Sustainability Committee, decided on by the Management Conference, and supervised by the Board of Directors. The Group Sustainability Committee will continue to discuss whether or not to review this policy on a regular basis, and will revise it as necessary in response to changes in our business activities and the external environment.

Sector Policy

We, the Concordia Financial Group, are committed to reducing and avoiding negative environmental and social impacts by making prudent decisions regarding investments and loans that are likely to contribute to negative environmental and social impacts through our transactions.

1. Governance

  • This Sector Policy sets forth our investment and loan policy on environmental and social issues and has been constructed to ensure that environmental and social issues and risks are properly identified and managed.
  • This Sector Policy has been decided by the Management Committee and supervised by the Board of Directors.
  • In order to deepen the understanding of this Sector Policy, we provide ongoing education and training to all officers and employees to ensure that they comply with the rules and procedures.
  • In managing environmental and social issues and risks, we engage in dialog with various stakeholders, including customers, investors, and those involved in our initiatives, in order to enhance the effectiveness of this sector policy.

2. Blanket Prohibition of Investments and Loans for Certain Sectors

We do not make investments or loans for the following projects because they are considered to involve significant risks or negative impacts on the environment and society.

  • Businesses with illegal purposes
  • Businesses that are offensive to public order and morals and not permitted under socially accepted norms
  • Projects with negative impacts on Ramsar wetlands
  • Projects that have a negative impact on a UNESCO-designated World Heritage site (except with the prior consent of the government of the country concerned and of UNESCO)
  • Projects in violation of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (with due consideration given to each country's reservations)
  • Businesses that use child labor or forced labor

3. Sectors for which investments and loans require particular attention

When considering investments and loans for the following projects, which may involve significant risks and negative impacts on the environment and society, we check the counterparty's measures to reduce or avoid the risks and we make a careful decision.

  • Projects with negative impacts on indigenous communities
  • Projects involving eminent domain leading to involuntary resettlement
  • Projects with negative impacts on areas of high conservation value

4. Specific Sectors

① Coal-fired thermal power generation

We will not, in principle, engage in new investments or loans for coal-fired power generation projects, which are highly likely to have a negative impact on the environment.
However, when considering a project as an exception, we will reference international guidelines, etc., and carefully consider each project's background and characteristics, such as power generation efficiency and performance, impact on the environment, and impact on local communities, etc.

② Coal mining

We will not make investments or loans for the following projects because coal mine development may have negative environmental and social impacts, such as increased greenhouse gas emissions, ecological impacts from toxic waste from coal mines, casualties from mine collapses, and human rights violations.

  • Coal mining operations using the mountain top removal (MTR) method
  • General coal mining projects for new power generation projects
③ Oil and gas extraction

Oil and gas extraction operations have the potential to negatively impact the natural environment, biodiversity, and the living conditions of residents. Therefore, investments and loans for the following operations will be handled carefully, with due consideration given to the impacts on the environment and on local communities.

  • Oil sands mining
  • Shale oil and gas extraction
  • Oil and gas extraction in the Arctic (the region north of 66 degrees 33 minutes north latitude)
  • Pipeline installation
④ Large-scale hydroelectric power generation

Because dam construction may have a negative impact on the natural environment, biodiversity, and the living environment of residents, investments and loans for large-scale hydroelectric power generation (output of 30 MW or greater and dam wall height of 15 meters or higher) will be carefully decided on with due consideration of the impact on the environment and local communities.

⑤ Manufacture of inhumane weapons

In light of the inhumanity of nuclear, biological, and chemical weapons, anti-personnel land mines, and cluster munitions, all investments and loans to companies that manufacture these inhumane weapons are prohibited, regardless of the use of the funds.

⑥ Large-scale plantations

Investments and loans that use funds for large-scale plantation*1 development projects may have a negative impact on the natural environment, biodiversity, the living conditions of residents, etc. Therefore, we give due consideration to the status of NDPE*2 and other policies, as well as the impact on the environment and local communities and decide carefully on such projects.

  • *1
    10,000 hectares or larger (including projects for the cultivation of soybeans, natural rubber, cacao, coffee, etc., or for use as grazing land, etc.)
  • *2
    NDPE (Zero Deforestation, Zero Peatland Development, Zero Exploitation): A policy of zero deforestation, zero peatland development, and zero exploitation created primarily by companies in the palm oil sector.
⑦ Palm oil plantation development

From the perspectives of conservation of forest resources and biodiversity and protection of human rights, we prohibit all new investments and loans for those developments of palm oil plantations that may involve illegal logging or human rights violations such as child labor. In addition, investments and loans for palm oil plantation development will be made carefully with due attention to the status of certification by the RSPO*3, which is the international certification for sustainable palm oil, as well as to the consideration being given to local communities and the environment.

  • *3
    RSPO (Roundtable on Sustainable Palm Oil): An organization that develops globally trusted certification standards to promote sustainable palm oil production and use.
⑧ Deforestation

We make new investments and loans for forest harvesting projects with great care, taking into account whether they have received international certifications (FSC*4, PEFC*5, etc.) and the consideration given to local communities and the environment.

  • *4
    Forest Stewardship Council (FSC): A non-profit organization that operates an international forest certification system based on the principle of appropriate from the perspective of environmental protection, socially beneficial, and economically sustainable forest management.
  • *5
    The Programme for the Endorsement of Forest Certification (PEFC): An international umbrella organization that promotes assessment of forest certification systems that have been individually developed in each country based on the intergovernmental processes for sustainable forest management, which covers 85% of the world's forests, and that promotes mutual recognition of these systems.