Initiatives to Turn Solutions for Environmental and Social Issues Into Business Opportunities：The Norinchukin Bank

Sustainable Finance

At The Norinchukin Bank, we have set a Medium/Long-Term Goal the amount of ¥10 trillion in new finance provided by 2030.
To date, of our approximately ¥59.6 trillion in market assets, we have allocated ¥3.6 trillion to sustainable investment and financing (as of March−end 2022).

2030
ustainable Finance Transaction Target
¥10 trillion

ESG Integration

We incorporate ESG integration into our investment and finance projects assessment as part of our environmental and social risk management (P.38). Our investment decisions are based on a comprehensive evaluation integrating financial analysis and ESG assessment related to the customer. By engaging in dialogue with our customer throughout this process, we learn of their concerns and issues. In so doing, we support our customer’s sustainability initiatives and create new business opportunities.

Impact Investment Creates Positive Effects on the Environment and Society

“Impact Investment,“ which creates positive effects on the environment and society while gaining appropriate economic returns, is drawing increasing attention as it contributes to solving environmental and social issues directly through investment.
In fiscal 2022, the Bank initiated an investment program that enables investing in impact private equity funds^*1 amounting up to ¥15 billion.
In April 2022, part of the program was used to invest in an impact private equity fund formed by an affiliate of Apollo Global Management Inc.^*2, aiming to create positive effects on not only climate change but also educational opportunities, healthcare, welfare and others.

*1 Private equity funds aimed at creating impacts on the environment and society as well as economic returns are collectively called impact private equity funds.
*2 Apollo Global Management, Inc., is a leading private equity investment company established in 1990.

From the Front Lines

Markets DivisionSAKAMOTO Daisuke

The Bank developed its own due diligence checklist to evaluate impact funds by the degree of contribution to the environment and society. The Bank ensures high-quality impact investment by comparing more than one impact fund using this checklist. The due diligence checklist has not yet been standardized and requires continued review, but we believe it is important to create positive effects on the environment and society through impact investments.
If we continue to accumulate measurement know-how through impact investments and become able to measure the impacts our investees and borrowers have on the environment and society, that could further enhance our sustainable finance.

Norinchukin Zenkyoren Asset Management Co., Ltd.
Investment Division
Alternative GroupOKUMURA Aya

We provide advice on impact investments mainly from the perspective of financial returns. Due to the short history of impact investment, analysis of the probability of producing returns is more difficult than that for conventional investments. However, by effectively using the knowledge and methods The Norinchukin Bank has accumulated through its private equity fund investments and ensuring close collaboration among the group companies, we have overcome the difficulty faster than expected.
Many global investors are highly aware of how their investments contribute to society and the environment, and that tendency, I believe, will be further accelerated. As an asset manager, I will continue to contribute to encouraging the growth of impact investments.

Creation of Sustainability Linked Loans and Other ESG Loan Products

The Bank handles ESG loan products with an aim to support our customers to advance their initiatives for solving environmental and social issues from a strategic approach. At the same time, we support the medium- and long-term corporate value of our customers. Sustainability linked loans involve Sustainability Performance Targets (SPTs) based on customer business strategy. Linking loan conditions with progress toward achieving SPTs motivates customers to achieve their goals.
We also launched loan products with restrictions on how funds are used and compliant with Green Loan Principles — green loans (for environmentally friendly businesses), social loans (for socially friendly businesses) and sustainability loans (for environmentally and socially friendly businesses). In addition, we started transition loans to supply funds according to companies’ engagement in the transition efforts for decarbonization.
Through these loan products, we support our customers to promote their initiatives for solving environmental and social issues.

Product name	Fund usage
Sustainability Linked Loans	No restrictions (set SPTs)
Green Loans	Restricted	Environmentally friendly businesses
Social Loans		Socially friendly businesses
Sustainability Loans		Environmentally and socially friendly businesses
Transition Loans	Limited/Not limited Climate Change Initiatives

Topics

Contribution to Reducing the Environmental Load in the Food Business

MEGMILK SNOW BRAND Co., Ltd. (the “company”), engages in such efforts as energy conservation of its factory equipment, use of environment-friendly materials and waste reduction with an aim to achieve coexistence of the food business with the global environment.
The Bank concluded a contract in March 2022 to provide sustainability linked loans with the company to support the company’s initiatives to reduce its environmental load.
For this loan product, we set a Sustainability Performance Target to reduce CO₂ emissions by 50% by FY2030 compared with FY2013.

From the Front Lines

Corporate Business Division. IV
FUTAMI Tomoyuki

Because sustainability linked loans have many benefits, including incentives regarding interest rates, appeal to investors in Japan and abroad, and motivation to achieve the SPTs, they can support operators in various industries to contribute to reducing the environmental load and achieving the SDGs.
Before concluding the contract with MEGMILK SNOW BRAND Co., Ltd., we discussed our impact on various social issues and the future of the dairy and beverage industries. These discussions led to the conclusion of the contract, sharing an aim to contribute to the realization of a carbon-free society by using sustainability linked loans.
Through daily communications with customers, I feel the growing need for ESG loans. By making full use of the Bank’s resources, I will continue to make active proposals that could contribute to the sustainability of customers and society.