Message from the Management
We would like to sincerely thank all our stakeholders for supporting the day-to-day operations of The Norinchukin Bank (“the Bank”).
The vision set forth under the Medium-Term Management Plan (FY2019–FY2023) of the Bank is to “become the leading bank that supports the agriculture, fishery and forestry (“AFF”) industries, food production and consumption, and the daily lives of local communities.” In fiscal 2023, by making the pursuit of this vision its perpetual endeavor, the Bank is proceeding steadily with its business operations.
During the first half of fiscal 2023, the financial markets faced rising interest rates mainly in the United States and Europe, as concerns continued about inflation rates hovering high against a backdrop of persistent employment and consumer demand, although the pace of price increases slowed due to monetary tightening via interest rate hikes by central banks in various countries. Stock markets remained steady, and the foreign exchange market saw a significant appreciation of the dollar against the yen due to differences in monetary policy between Japan and the United States.
As this volatile and uncertain market environment continues, we have conducted financial operations, prioritizing prudential soundness. As a result, in the first half of fiscal 2023, the Bank secured Consolidated Ordinary Profits of ¥185.5 billion, as well as a Consolidated Capital Adequacy Ratio as represented by a Common Equity Tier 1 Capital Ratio of 14.02%, a Tier 1 Capital Ratio of 18.12%, and a Total Capital Ratio of 18.13%. As the continuation of volatile and uncertain economic and financial environments is expected, the Bank will continue to engage in appropriate financial management.
Looking at business operations, the Bank is determined to continue to fulfill its overall mission of being committed to the development of the AFF industries in line with its Purpose. To achieve that, the Bank will steadily implement five specific missions: contribute to the global environment; contribute to the AFF industries and local communities; enhance the members’ management base; secure a sustainable financial/profit base; and maximize organizational vitality. These missions will be pursued in alliance with all the cooperative groups, jointly with JA Bank Medium-Term Management Strategies, JF Marine Bank Medium-Term Management Strategies, and the JForest Cooperatives Action Policy. Moreover, the Bank will steadily implement continuous self-reform as a member of JA Group.
JA Bank, JF Marine Bank, JForest Group, and the Bank will continue to perform their roles and functions with the goal of becoming financial institutions and organizations that win the confidence of their customers, and contribute to the advancement of the AFF industries and their rural communities and the resolution of environmental and social issues.
Global price increases due to changes in international situations have had a significant impact on many industries including the AFF industries. The Bank will continue to provide maximum support for the various AFF industry-related stakeholders affected by this problem, as the mission of a financial institution that operates in the foundational AFF industries and related local communities.
Finally, we would like to ask for your continued support for JA Bank, JF Marine Bank, JForest Group, and The Norinchukin Bank.
January 2024
Message from the CEO
In fiscal 2022, inflation accelerated worldwide due to the supply-demand tightening in the post COVID-19 pandemic phase and the geopolitical changes. The AFF industries were hit hard by the price surges of production inputs—i.e. fertilizers, feedstuff, and fuels—followed by the demand shrinkage during the COVID-19 pandemic which impacted negatively the industries whose production capacity resilience had been weakened structurally already by the decrease of working population in the industries and farm acreage. Yet, Japanese producers have had difficulty passing on costs in the sales price for their agricultural and livestock products, considerably affecting Japan’s AFF industries. The Bank is committed to performing its role in both the financial and non-financial fields as a financial institution founded on the AFF industries.
The Bank has upheld its Purpose of “Dedicated to sustaining all life.—Work together with our stakeholders to foster the AFF industries and to create a prosperous future for food and lifestyles, and thereby contribute to a sustainable global environment—” since 2019. This summarizes our Vision of what we intend to accomplish and our commitment to society.
To realize the Purpose, the Bank set two Medium/Long-Term Goals. One is “Net Zero by 2050,” that is, “Reduce financed emissions to zero on a net basis by 2050,” and the other is “Increase the income of farmers, fishermen and foresters.” We believe that both will be indispensable to accomplishing the Bank’s Purpose.
Our Purpose, Vision and Mission
The Norinchukin Bank’s Medium/Long-Term Goals
To achieve its Medium/Long-Term Goals, the Bank set five Management Fields under its Management Plan to formulate its Mission: Contribute to the Global Environment; Contribute to the AFF Industries and Local Communities; Enhance the Members’ Management Base; Secure a Sustainable Financial/Profit Base; and Maximize Organizational Vitality.
These management fields correspond to our perception of three layers and the Bank itself. The first three missions consist of three layers: the global environment, which is essential for the existence of the AFF industries (the top layer); the AFF industries, as well as the people engaged therein and the local communities where they live (the second layer); and the Bank’s members—AFF cooperative organizations (the third layer). The fourth and fifth fields relates to the Bank to pursue the first three fields. The fourth field represents our intent to reinforce the Bank’s financial/profit base that enables the Bank to be the organization that supports its members. And lastly the fifth field represents our human resource development effort to pursue these management fields. I believe our priority is to tackle these five management fields without hesitation.
Whilst our performance in fiscal 2022 in these Management Fields is in the following parts of this report, let me introduce here several notable initiatives.
Tackling climate change
In proceeding with our responses to climate change, we committed ourselves to “Net Zero by 2050” and joined the Net-Zero Banking Alliance (NZBA), an international interbank initiative. After having set specific targets for our investments and loan portfolios, we promote transition via engagement with our investees and borrowers.
Meanwhile, we have the target of achieving Net Zero by FY2030 regarding the reduction of GHG emissions by the Bank itself. We will promote the reduction of emissions by enhancing energy-saving measures and speeding up the conversion to renewable energy sources.
In the natural world, forests and the sea have the key role of absorbing GHG.
The Bank has set a CO2 absorption target of nine million tons per year as of fiscal 2030, to secure the amount of the forest carbon sink, together with JForest members. While forests have the important functions of absorbing CO2 and preserving biodiversity, we see a variety of industry-specific problems in Japan relative to adsorption such as the sluggish price of standing timber, high reforestation costs and the declining number of workers in the forestry industry. Accordingly, the Bank addresses these issues involving forests and/or the forestry industry from upstream to downstream fields and endeavors to achieve its targets for forestry operation acreage and forest absorption, through initiatives such as the Nochu Potential Forest Productivity Fund and forestry labor safety improvement measures.
In the fishery industry, the Bank set up the Blue Carbon Project in May 2022, together with Tottori Prefecture and JF Tottori. This project is intended to preserve algae beds by preventing damage by purple sea urchins, which have multiplied due to global warming and other effects. We aim to recover algae beds, which contribute to reducing GHG emissions, while ensuring the income of workers by establishing a system that contributes to collecting and farming purple sea urchins.
Income increase of farmers, fishermen and foresters
Having considered that the “income” is the core of various issues involved in the AFF industries in Japan, we designated “Increase the income of farmers, fishermen and foresters” as one of the Bank’s Medium/ Long-Term Goals.
There are a lot of hurdles and limitations to what extent a single financial institution can do to tackle this goal. Yet we stepped out to start from what we can do. As an initial approach, we started from definition and measurement. We defined the “added value amount” by the amount of human resources investment and capital investment directed at profits for and/or the development of farmers in the agricultural field and then started measuring the income increase amounts of farmers with reference to the defined added value amount.
Regarding JA Bank consulting activities on management problems for the AFF industries’ leaders in fiscal 2022 reached a track record of more than 300 cases. The notable feature of our consulting activities is that we go beyond solution proposals; we follow up continuously the status of proposal implementation and support clients toward the execution of the solutions.
In view of the harsh environment surrounding the AFF industries amid the price surges of production inputs, we continue our efforts to contribute to increasing the income of farmers, fishermen and foresters.
Positioning 2022 as the “Year of commitment in our D&I journey”
The Bank positioned 2022 as the “Year of commitment in our Diversity & Inclusion (D&I) journey” and proactively held many trainings and lectures to increase awareness among our directors and employees as to why D&I promotion is necessary.
Evolution or innovation in business occurs from the combination of new perspectives and individual’s talent performed without limitation. I believe D&I increases the combination patterns, which push up the likelihood of positive chemical reactions.
We have upheld our target of raising the share of female managers to 30% by FY2040, and we reached 7.6% as of March 31, 2023. The Bank has taken various measures to support the active participation of female employees.
For the Bank to develop and become an organization supported by society, we will continue our D&I initiative efforts so that we can bring in the power of diversity regardless of gender, age, nationality or disability, and each of us can continue active career participation and development while overcoming various career development difficulties such as childcare and nursing care by adjusting his/her working style in an independent, autonomous and voluntary way.
Sowing the seeds for the next era beyond our 100th anniversary
The Bank will mark its 100th anniversary in December 2023. Amid the tremendous aftermath of the Great Kanto Earthquake, the Bank was established in December 2023 as the central bank for Japanese cooperatives, “Sangyo Kumiai.” The Bank has grown continuously for a century. The Bank has faced and overcome many trials and issues over this period while implementing self-reform measures in line with the changing times.
As we reach this milestone, it is important to not only look at the past but also think about our future activities. All of our directors and employees need to think “Why has the Bank been able to consistently operate over a century?” “How can the Bank be an entity that is useful to society, communities and members in the future from a long-term perspective?” and we begin planning for future growth toward the next era.
Here’s an example. We started the “My Purpose Project” in fiscal 2022. This project offers an opportunity to reopen the eyes of our directors and employees on the significance of their jobs by encouraging them to reconsider “For what and for whom do we work?” One initiative in this project is the “JA farming support team” scheme, under which directors and employees volunteer to visit and help operations of a farm of their choice. In this project, organized by Nokyo Tourist Corporation, the participating directors and employees serve as the workforce for farm operations. The participation of the Bank’s employees allows them to directly connect with the reality of the AFF industries that are our organizational foundation. I believe that this initiative has the potential for directors and employees to better understand the connection between our Purpose and their own jobs. Many participating employees have said that they spent valuable time thinking about the Bank’s Purpose and the future of agriculture and communities while experiencing direct contact with the soil.
I hope that our directors and employees will increasingly empathize with our Purpose and become the foundation for innovating our organization and human resource development in anticipation of the next 100 years by continuously focusing on such initiatives.
Being aware of the Bank’s Purpose and the Medium/Long-Term Goals, we will continue pursuing efforts that reinforce sustainability in the future and take steps to complete the Management Plan.
July 2023
- About The Norinchukin Bank
- Message from the Management
- The Basic Mission of The Norinchukin Bank
- Our Businesses
- Medium-Term Management Plan
- Our History
- Brand Message
- Corporate Outline
- Organization Diagram
- Management
- Code of Ethics
- Corporate Governance
- Global Network
- List of Group Companies
- UK Modern Slavery Act 2015 Transparency Statement
- The Equator Principles