Efforts toward Climate Change

SBI Sumishin Net Bank has expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Our Group considers environmental and social issues to be key management priorities. To support our sustainability efforts, we have established a Sustainability Committee, which serves as an advisory body to the Management Meeting and meets quarterly.
The Sustainability Committee discusses action policies and management strategies for social and environmental issues, and these are　reflected in the activity plans of each department. The Board of Directors receives reports on the content discussed and reported at　these liaison meetings, and works to promote sustainability management while checking on progress and issues.

We recognize that climate change is a significant issue that also impacts the financial industry, and we are committed to addressing both climate change and other environmental issues as a key component of our management strategy.
To advance our climate change efforts, we employed scenario analysis based on the TCFD framework to predict changes in the external environment by 2030. This analysis focused on our primary business of mortgage portfolios.

Focusing on our main business of mortgage portfolios, various ｆuture impacts of climate change are anticipated. These include increased credit costs due to direct disaster exposure to customers (acute risk), a contraction in the mortgage market due to rising new construction costs from higher building material prices (chronic risk), and further mortgage market shrinkage due to difficulties in acquiring housing, such as with rising acquisition costs due to additional costs for climate change measures and higher building material prices.
Additionally, the devaluation of collateral properties that are not adapted to climate change could lead to increased credit costs (transition risk).
In addition, each of the above risks could also lead to an increase in living costs in the short and long term for customers who use services such as deposit transactions and fund settlements, and there is also the possibility that these transactions will decrease due to a reduction in surplus fund investment and expenditure control.

While we see climate change as a risk, we also recognize that it is an opportunity to respond to new customer needs.
We recognize that there is potential for our business to expand due to the need for funds to deal with disasters caused by environmental changes or to introduce new technologies for such, or to move to a new adapted house or rebuild a house to adapt to these changes, or to acquire a house in an area that is less likely to be affected by disasters. We also see opportunities to provide financing that meets the potential needs of customers, such as loans in partnership with high-quality home sellers who have taken climate change into account and adapted their homes accordingly.
We also believe that there may be other new opportunities, such as providing environmentally friendly products and services.

We evaluated the impact of risks and opportunities with significant financial implications on our mortgage business. Using the projected operating profit for 2030 as the baseline, we estimated the financially significant and quantifiable risks and opportunities under both the 1.5°C and 4°C scenarios. In terms of the increase in credit costs due to direct damage to customers caused by climate change, we calculate the damage rate that each of our collateral properties would suffer in the event of a flood based on data from the Geospatial Information Authority of Japan, and use this to estimate the increase in credit costs for our business.
For the risks identified and assessed in the scenario analysis, we are promoting measures to reduce the risks, so we assume that we have resilience in all scenarios. Furthermore, in addition to taking measures to reduce risk, we will also promote the development of new products, services and businesses that take advantage of opportunities related to climate change, which will lead to further growth for SBI Sumishin Net Bank.

SBI Sumishin Net Bank has a risk management policy that stipulates that we carry out risk management in order to pursue profits or avoid losses. Under this risk management policy, the Risk Management Department, as the overseeing department, accurately ascertains the state of risk through a series of activities including risk identification, assessment, administration, monitoring, control and reduction, and takes the necessary measures based on the risk management plan formulated for each fiscal year.
In fiscal 2023, we identified, assessed, and analyzed the impact of transition and physical risks due to climate change based on our risk management plan. We will continue to work to enhance our risk management related to climate change.

Our Group has set the following indicator and target:

In our group, we are promoting the transition to renewable energy for our contracted electricity and implementing energy-saving measures in our offices.
Additionally, we are advancing our efforts to reduce environmental impact through our carbon credit platform business and DX platform business.