Strengthening support for sustainable businesses

The SDGs and the Paris Agreement have clarified the goals of the international community, the needs and actions of stakeholders have changed, and expectations and demands for companies to create value for society are on the rise. Against this backdrop, initiatives to improve sustainability are becoming an ever more critical aspect of business strategy.

At Mizuho, we have established key sustainability areas (materiality) for our business, as well as KPIs (monitoring indicators). In order to capture expanding business opportunities, we have also strengthened our structure for promoting sustainable business and set long–term targets for sustainable finance and environmental finance.

Structure for promoting sustainable business

In light of the indirect impact that we, as a financial group, have through our clients, we strive to deepen our understanding of the issues and needs of clients through proactive engagement. We aid client SDG and Environmental, Social, and Governance (ESG) initiatives, sustainability–related innovation, and risk reduction, including initiatives that address climate change and the transition to a low–carbon society. We are also creating a group–wide structure for supporting sustainable businesses to enable Mizuho to pursue business opportunities.

Specific elements of the structure include appointing a person at each company and unit to be in charge of promoting sustainable business, holding regularly scheduled sustainable business strategy meetings of employees involved in Group sustainable business activities, and engaging in discussions about changes in the external business conditions and the status of the Group’s internal activities with the aim of strengthening our business.

In fiscal 2021, we are strengthening our ability to respond quickly to the increasing customer needs by broadening our sustainability support functions for planning and advancing sustainability business, applying our research and consulting expertise, and increasing our ability to engage with and provide solutions for customers based on the specific characteristics of their business segments. We are also assigning and appointing "ESG Champions" to advance and promote sustainable business at our overseas bases and to increase the cooperation among Group companies in Japan and overseas.

Outline of sustainable business promotion through dialogue (engagement)

Outline of sustainable business promotion through dialogue (engagement)

Structure for promoting sustainable business

Structure for promoting sustainable business

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Mapping out our sustainable solutions

We strive to meet our clients' diversifying needs to address the SDGs and ESG issues, and we have been proactively developing and providing both financial and non–financial solutions.

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Sustainable finance and environmental finance

In line with our key sustainability areas, we have defined sustainable finance and environmental finance for Mizuho and set longterm targets looking towards 2030, the SDGs target year. This is allowing us to proactively fulfill our role in directing capital towards environmental protection and the achievement of the SDGs.

Our definition of sustainable finance and environmental finance
Primary Key Sustainability Areas referenced
  • Environmental considerations
  • Sound economic growth
  • Industry development & innovation
Applicable finance areas
  • Finance for clients where the intended use of funds is environmental and/or social projects
  • Financing to support and facilitate clients' response to ESG/SDG–related areas, including financing requiring clients to meet certain related conditions, and providing consulting and assessment of clients' response to ESG/SDG–related areas
Applicable business areas
  • Loans, underwriting, investments, asset management

Targets and results

Main initiatives

Finance

Supporting solutions to social issues

Research & Consulting

Investment and products: ESG investment

Finance

FY2020 initiatives

Arranged first transition loan in Japan

In March 2021, Mizuho extended a transition loan to Kawasaki Kisen for funds to build a next–generation environmentally friendly car carrier ship fueled by liquefied natural gas. This transition loan is the first loan in Japan to follow the Climate Transition Finance Handbook (International Capital Market Association) and the Green Loan Principles (Loan Market Association).

(Photo provided by Kawasaki Kisen)
(Photo provided by Kawasaki Kisen)

Sustainability–linked bonds/loans

We are supporting our clients' sustainability strategies by providing sustainability–linked bonds and loans which link preferential terms to the borrower's achievement of sustainability performance targets. Mizuho arranged Japan's first sustainability–linked bond (SLB), and we are also issuing sustainability–linked loans (SLL) both inside and outside Japan.

SDG initiative support finance

We are supporting the SDG initiatives of middle–market firms and SMEs.

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Finance for renewable energy

To facilitate the adoption of renewable energy, we proactively finance a wide range of projects, from those on a large scale to those rooted in local communities. In fiscal 2019 to 2020, we arranged approximately ¥700 billion in project finance and approximately ¥160 billion in asset based lending.

FY2019 initiatives

Mizuho Eco Finance

To promote initiatives and disclosures furthering the shift to a low–carbon society, in June 2019 Mizuho Bank and Mizuho Information & Research Institute(Currently Mizuho Research & Technologies) developed a new environmental assessment–based finance product entitled Mizuho Environmentally Conscious Finance ("Mizuho Eco Finance"). The product utilizes globally accepted environmental verification and evaluation standards to assess clients’ environmental initiatives. Mizuho Bank provides financing to clients who meet a certain minimum score in the assessment.

Through assessment and monitoring, Mizuho Research & Technologies provides advice to clients to improve and maintain their scores.

Financing support for renewable energy projects

Since our founding, we have continually assessed project risks and financed a variety of renewable energy projects, including wind, solar, solar thermal, geothermal, and offshore wind. In fiscal 2019, we were involved in arranging approximately ¥380 billion in financing. Our involvement includes serving as a financial advisor to support financing in the growing sector of large–scale offshore wind power projects in Japan and Taiwan and to support JERA's participation in an offshore wind power project in Taiwan. We will apply the expertise we have gained from past deals in Europe and the US, which have led in this field, and continue making multi–faceted, long–term, positive contributions to our clients' renewable energy projects, not only with financing support but also through our advisory business.

(Photo provided by JERA)
(Photo provided by JERA)

Sustainability–linked loans

By proposing and providing sustainability–linked loans (SLL) that link loan terms to the borrower's achievement of sustainability performance targets, we are supporting our clients' sustainability strategies both inside and outside Japan. In March 2020, we served as the arranger for an SLL to Cosmo Energy Holdings. Cosmo Energy Holdings' anticipates that the trend away from fossil fuels will accelerate over the long term and so has positioned renewable energy as a key growth area to pursue in its medium– to longterm business strategy. Taking this into account, we held thorough discussions on business strategy and CSR strategy that resulted in our proposal and arrangement of an SLL linked to Cosmo Energy Holdings' sustainability performance targets for renewable energy.

(Photo provided by Cosmo Energy Holdings)
(Photo provided by Cosmo Energy Holdings)

Support for issuance of SDG bonds

With the sustainable finance market growing worldwide, Mizuho Securities is further advancing our sustainable finance initiatives. We have partnered with the environmental certification organization Climate Bonds Initiative and in 2019 launched a sustainability team in Mizuho International (London) to gather the latest information on a global basis. In Japan, we have assisted with the structuring of industry–first SDG bonds, such as the first bond in Asia to receive Programmatic Certification from the Climate Bonds Initiative, the first social bond issued by an expressway company, and the first portfolio–type green bond issued by a non–financial company. Outside Japan, we served as a principal dealer for the issuing of a transition bond by a UK gas company, and we are leading the market with our insights backed by a high level of expertise.

(Photo provided by NEXCO EAST)
(Photo provided by NEXCO EAST)

5th Mizuho Executive Syndicated Loan Seminar

In November 2019, Mizuho Bank held our 5th Mizuho Executive Syndicated Loan Seminar. The seminar featured presentations on the SDGs along with information for investors and drew attendance from major institutional investors in fields such as life insurance as well as general managers of regional banks.

FY2018 initiatives

Joint Sustainable Development Goals Conference

In March 2019, Mizuho Financial Group, Mizuho Bank, and Mizuho Securities jointly hosted a Social Development Goals conference with the Asahi Shimbun Company entitled Opening a Path to the Future with the SDGs: New Societal Models Change the Future, New Financial Models Create the Future. Through a panel discussion and other events, participants exchanged ideas regarding the role finance plays in the implementation of the SDGs and financial challenges.

Our initiatives for green bonds, social bonds, and other related services were introduced at the event, including Japan's first syndicated sustainability loan which was arranged by Mizuho Bank, and the establishment of the Sustainable Finance Desk and issuance of bonds tied to ESG principles by Mizuho Securities.

Initiatives for green bonds, social bonds(Japanese text only)

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Supporting solutions to social issues

At Mizuho, we are supporting companies that are working on providing various solutions to social issues, and we are also developing an SDG–related open innovation platform to facilitate business creation and promotion. Utilizing our broad customer base, we are developing a wide–ranging network of large corporations, middle–market and small– and medium–sized enterprises, and startups to advance open innovation. By doing so, we are aiming to positively contribute to new technology and business creation and solve social issues. To that end, we will also use this platform to undertake initiatives for implementing and expanding impact investment and loans.

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Sustainable Development Goals Business Matching Forum

Throughout the year we hold a number of business matching forums, providing our clients with opportunities to gather together and participate in meetings with potential business partners. In March 2019, we held a business matching forum which focused on the SDGs and comprised a seminar about corporate action on the SDGs, and on–site business meetings.

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Research & Consulting

FY2020 initiatives

SDG/ESG consulting

We are supporting our clients' development and implementation of sustainability strategies by applying our in–depth insight into industry, the economy, and society and our high–level expertise in sustainability.

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We support our clients to review sustainability–centered business portfolios.

  • Formulate strategy by adding sustainability as a new decision-making criterion
  • Support clients closely across upstream discussions,downstream consulting, and financial business

 

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Mizuho supports customer efforts to address issues related to the SDGs and ESG, particularly issues concerning the environment and society. In fiscal 2020, Mizuho Research & Technologies engaged in 440 new projects.

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FY2019 initiatives

Sustainability Promotion Project

In the Research & Consulting Unit, we have always offered expert insight into sustainability, as demonstrated by our extensive record of consulting in the field of energy and the environment. However, our insights tended to remain scattered within the unit across different entities, and we were looking to improve internal sharing of information and coordination on deals. To solve this issue and support Mizuho in responding as a united group to clients' varied sustainable business needs, beginning with the SDGs and ESG issues, in 2020 we launched the Sustainability Promotion Project. The Sustainability Promotion Project is deepening the collaboration within the unit in both the research and consulting fields and, in doing so, enhancing and promoting our sustainable business initiatives, such as expanding the areas in which we can serve clients. In terms of research collaboration, we are focusing on output usable in consulting and coordination among in–house companies, and we have formed a Task Force on Climate Change Research. In terms of consulting collaboration, we have taken client needs into account and launched a Task Force on Environmental Issues and a Task Force on Corporate/Business Strategy to make positive contributions to business through consulting.

The Task Force on Climate Change Research is composed of employees from Mizuho Research & Technologies and Mizuho Bank's Industry Research Department and is researching climate change impacts from macroeconomic and industrial perspectives. The task force's work is furthering initiatives that support Mizuho's management and business. In June 2020, the task force published a One Think Tank Report on the true nature and future of climate change issues, discussing the unprecedented changes that interactions between various actors are driving in the business environment.

The Task Force on Environmental Issues is composed of members from Mizuho Research & Technologies and Mizuho Trust & Banking's Corporate Strategy Advisory Department and is focusing on business collaboration for the environment, with consulting as a starting point. The Task Force on Corporate/Business Strategy is composed of members from Mizuho Research & Technologies and is focusing on co–creation of value, beginning with consulting to promote incorporating the SDGs in corporate management.

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Mizuho Business Innovation Forum

In February 2020, Mizuho Information & Research Institute(Currently Mizuho Research & Technologies) held the Mizuho Business Innovation Forum with the theme of "Low–carbon targets in finance and their impact". The forum featured wide–ranging discussions on the Financial Sector Science–Based Targets (SBTs), which will encourage target setting among financial institution investors. Specific topics in this regard included the potential impacts the development of international rules and the Financial Sector SBTs may have, through financial institutions, on non–financial and other businesses receiving investment.

Investment and products: ESG investment

In the Asset Management Company, we are engaging in constructive, purposeful dialogue (engagement) with the companies in which we invest. In addition to supporting improvements in these companies' corporate value and supporting sustainable growth for society, we are also pursuing ESG investment, making investment decisions with not only financial information but also ESG factors and other types of non–financial information. For example, we are offering ESG investment products, such as those using our ESG Low Volatility High Dividend Payment Strategy, in which we select stocks from an ESG perspective with a focus on dividend yields and low volatility and aim to produce stable returns, and our Sustainability Research Strategy, in which we consider positive contributions to solving social issues as revenue opportunities and employ selective investment. Going forward, we will continue to practice ESG investment, with the goal of creating a positive cycle for society's sustainable development.

Joint ESG and sustainability forum with Nikkei

In February 2020, Mizuho Financial Group, Mizuho Bank, Mizuho Securities, Mizuho Information & Research Institute (Currently Mizuho Research & Technologies), and Nikkei held a joint ESG forum entitled "Evolution of ESG in 2020: Disclosure as dialogue with markets – Critical strategies for companies and investors in loan and bond markets". The aim of the forum was further understanding of ESG with a focus on ESG–related disclosures and engagement.

In December 2020, Mizuho Financial Group, Mizuho Bank, Mizuho Trust & Banking, Mizuho Securities, Mizuho Research Institute (currently Mizuho Research & Technologies), Mizuho Information & Research Institute (currently Mizuho Research & Technologies) and Asset Management One co–sponsored with Nihon Keizai Shimbun a forum on sustainability entitled Toward a New Era of Sustainability–Building a New Growth Story and the Potential of Sustainability Solutions. The objective of the forum was to deepen understanding of the viewpoints and challenges of business initiatives aimed at realizing a sustainable society from the perspectives of investors, companies, and financial institutions.

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