Green

bird

Support the realization of a green and sustainable society through financial services
Reduce the environmental damage, including our own decarbonization initiatives

Basic Idea

Environmental Policy

The Declaration of Net Zero Greenhouse Gas Emissions

Contributing to Society through Our Core Business

ESG/Responsible Investment

Reduction of environmental pollution load

Climate Change
(Information Disclosure in line with TCFD Recommendations)

Basic Idea

We published the above environmental policy to guide our efforts toward environmentally conscious business activities. The policy describes our awareness of the environmental issues as a financial instrument operator, and our determination to use and leave finite natural resources for our children, assuming our social responsibility. We have also endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TFCD recommendations). We now apply the TFCD recommendations in our disclosures.

Environmental Policy

1．Complying with laws and regulations

We shall comply with environment-related laws and regulations, and with our own environmental policy.

2．Generating positive environmental impacts through financial service

We shall lower the environmental risk of society by supporting the business engaged in environmental protection through the provision of financial products and services.

3．Lowering negative environmental impacts caused by workplaces

Recognizing that our business activities may generate negative environmental impacts such as using natural resources and producing waste, we shall work to protect environment by recycling, and by using natural resources and energy efficiently.

4．Promoting environmental awareness

We shall educate our employees about the environment to promote meaningful environmental action.

5．Disclosing environmental information

We shall actively disclose information about our environmental impacts and communicate with local communities and customers to encourage their engagement in environmental management.

6．Measures against Climate Changes

We recognize that climate change posing a grave impact on the global environment causes our group a risk and a potential business opportunity as well. So, as we continue trying to reduce greenhouse gases, we will develop businesses that can be derived from the process of such an environmental problem mitigation and utilize our financial service capabilities. We will disclose properly the information on the status of this initiative.

The Declaration of Net Zero Greenhouse Gas Emissions

We launched the five-year management plan in April 2022 titled, “Beyond Our Limits”, which embraces its action guideline, “Social Value & Justice comes first”. Based on the spirit of this action guideline, we support the Paris Agreement adopted in December 2015 and the 2050 Carbon Neutrality Declaration announced by the Japanese Government in October 2020. Accordingly, we pledge ti achieve the following goals and tasks for the early realization of a carbon-free society.

Reduce greenhouse gas emissions associated with in-house operations (Scope 1 and 2) to net zero by 2030
Regarding greenhouse gas emissions associated with in-house operations (Scope 1 and 2), set an interim target of reducing them by half by March 2027 compared to the actual results for fiscal 2021, and disclose the progress as the medium-term management plan KPI.
By fulfilling the role as a financial service provider, the Group will work together to contribute to the realization of a carbon-free society through our corporate activities.

Contributing to Society through Our Core Business

The Ministry of the Environment registered Tokai Tokyo Securities as an issuance supporter for a green bond.

Effective August, 2018, Tokai Tokyo Securities became a registered issuance supporter for a green bond program at the Green Bond Issue Promotion Platform under the auspice of the Ministry of the Environment. Business entities and municipalities that issue green bonds can reduce the cost to be paid to external parties and the administrative work burden they bear. We will facilitate the growth of the green bond market by underwriting and placing the bond and contribute to the environment and society through our business operations.

※ Green Bond is designed to fund only the projects addressing environmental issues, and the issuance amount has rapidly increased lately against the backdrop of rising environmental awareness across the world.

Handling of Products that Contribute to Society

To help solve global social problems such as poverty, lack of medical resources, and global warming, we are handling bonds that contribute to
society, such as water bonds and green bonds.

ESG/Responsible Investment

Acceptance of the Japan’s Stewardship Code

In August 2014, Tokai Tokyo Asset Management Co., Ltd. announced its acceptance of Principles for Responsible Institutional Investors ≪Japan’s Stewardship Code*≫ in order to fulfill appropriately its stewardship responsibilities as a responsible institutional investor, and disclosed the status of the exercise of voting rights and other information on its website. In addition, based on the second revised version of the Code published in March 2020, which reflects the consideration of sustainability including ESG (Environmental, Social and Corporate Governance) factors, the Company has reviewed each principle of the Code.

Tokai Tokyo Asset Management Co., Ltd.

*“Japan’s Stewardship Code” is a code of conduct for institutional investors to promote the enhancement of corporate value and sustainable growth of investee companies through constructive “purposeful dialogue” (engagement) based on a deep understanding of the investee companies and their business environments, etc., in order to expand medium- to-long term investment returns for “customers and beneficiaries” (including final beneficiaries).

Joint-Establishment of a Venture Capital Fund to Address Social Issues

In November 2022, Tokai Tokyo Investment Co., Ltd. and Fujita Academy’s subsidiary, Fujita Innovation Capital Co., Ltd. jointly established the Fujita TT Impact Fund No.1 Investment Limited Partnership, a venture capital fund to invest in and support start-ups in the fields of medicine, biotechnology, and healthcare. The two companies, based in Aichi, will work together to foster a venture spirit in the Chubu region and lead the development of start-ups, with the aim of creating a healthcare industry, revitalizing local economies, and realizing a sustainable society.

Reduction of environmental pollution load

To use the finite resources efficiently and pass them on to the next generation, we, the Group, are working on solutions to alleviate environmental pollution. Our endeavors include, for instance, renewal to energy-efficient office equipment for lighting and air-conditioning and conversion of PC and other OA hardware to power-saving types. Further, we changed our company vehicles to fuel-efficient light automobiles, hybrid cars, Fuel cell (Hydrogen) Cars and Electric Vehicles.

graph1 — Current Usage of Company Cars ～Breakdown～

Forest conservation and biodiversity

We continue to actively use products that have received FSC certification, which certifies appropriate forest management. We are also working to disseminate information and raise awareness about forest conservation, biodiversity, and ecosystem conservation through the introduction of Rainforest Alliance certified products in our head office’s cafe and the distribution of the column “The Whereabouts of Plastic Thrown into the Sea” to Group employees.

Climate Change (Information Disclosure in line with TCFD Recommendations)

Governance

We, as a financial instruments business operator, recognize the gravity of the environmental issue including climate change as it relates to financial service. So, we laid down an environmental policy as a guiding principle, and we are implementing corporate actions that reflect our concern about the environment. We formulate such corporate actions after the deliberation and reporting at our management committee and board of directors meetings.

Strategy

Recognition of risks and opportunities

Climate change related risks include risks arising from climate change (physical risks), such as direct damage to the assets and indirect impacts resulting from supply chain disruptions, and financial and reputation risks (transition risks) caused by wide-ranging policy and regulatory changes to address climate change related issues in preparation for the transition to a carbon-free society. The Company recognizes that the occurrence of these risks, depending on their nature and speed, may have a negative impact on the Group's financial position and business performance.

		Risk	Opportunity Benefit
Risk to be Triggered by Changes	Policy and Regulatory Changes	We may suffer the increased cost of operation if the government tightens CO2 emission reduction requirements or the related regulatory constraints.	Cut the energy cost by installing energy-saving equipment. Expand the scope of operation by taking on new business opportunities like a green investment. We pursue such a new business opportunity by taking advantage of our solid geographical market in Chubu and unique alliance strategy implemented with strong regional banks.
	Impact on Market	Due to market fluctuations caused by the sudden transition to decarbonizing society, we may incur losses from our trading operation.	We expect to see the increased customer inflow to stocks, bonds, and the investment fund with the underlying asset of stocks or bonds issued by the firms aggressively coping with climate change. Also, we expect to see an appreciation of the fund betting on society’s decarbonization trend. We can grow the assets under custody facing the impacted market.
	Technology	We may lose earning opportunities if we cannot differentiate ourselves from our peers or offer products and services that suit changing industrial structure and customer needs to be prompted by decarbonization technology advancement.	The refined competence of financial product development and enhanced sales capability should enable us to deliver adequately the products and services suitable to customer needs arising from climate change. At the same time, the individual and corporate customers to be awakened to the decarbonizing society would find it meaningful to invest in climate change-related financial products. Thus, we would recognize the decarbonization trend as a viable opportunity.
	Reputation	Our reputation may be ruined if we fail to meet the stakeholders’ rising expectations for our climate change actions and related disclosures.	We would be able to win a desirable corporate reputation by supporting the companies engaging in low-environmental loading businesses or the operations for the environmental loading reduction.
Physical Risk to be Triggered by Natural Disaster		Massive typhoons, heavy rainfalls of disaster magnitude, and other natural disasters attributable to abnormal weather may deteriorate our business as it may; cause damage to properties of both our clients and the Company, disrupt our daily operation due to the employees who suffer injuries, accrue the cost to cope with the resulting situations and worsen our financial performance.

Scenario Analysis

From the scenarios publicized by Network for Greening the Financial System, we chose the three of them and conducted quantitative and qualitative analyses and assessments of the impact on the Group’s financial standing (expenses and earnings) under respective hypothesis; 1) “Orderly - Net Zero 2050”, the minimum transition risk and physical risk; 2) “Disorderly - Divergent Net Zero”, the maximum transition risk; and 3) “Hot house world - Current Policies, the maximum physical risk.

Overall, we understood that the impact on the Group’s financial standing was limited. At the same time, however, we reconfirmed the importance of creating business opportunities and promoting measures without failing to take advantage of the expanding investment needs in the green sector in the future.

We will continue to improve the level of analysis.

Scenario Analysis Overview

Scenario assumptions	Network for Greening the Financial System Orderly - Net Zero 2050 Disorderly - Divergent Net Zero Hot house world - Current Policies
Analysis period	As of 2050
Analysis method	Quantitative and qualitative analysis of impact on financial standing (expenses and earnings), and assessment of the degree of impact
Analysis results	Limited impact on the Group's financial standing

Transition Plan (Road map for early realization of carbon-free society)

As part of the medium-term management plan “Beyond Our Limits” launched in April 2022, the Group has established “Social Value & Justice” KPIs, including the goal of reducing CO2 emissions associated with our own operations to half (compared to fiscal 2021 actual results) by March 2027 and to net zero by 2030. In addition to the above targets, in December 2022 we formulated the Net Zero Declaration on Greenhouse Gas Emissions, which includes our endorsement of the Paris Agreement adopted in December 2015 and the 2050 Carbon Neutrality Declaration announced by the Japanese Government in October 2020, as well as our contribution to the realization of a carbon-free society through our operations that fulfill the role as a financial service provider. The transition plan will be reviewed as appropriate based on the TCFD and other frameworks, and the Company will promote measures toward the early realization of a carbon-free society.

Risk management

Specific climate risks and opportunities assumed are identified in Management Meetings and the results are reported to the Board of Directors. In the future, we will further enhance our analysis and assessment of climate change risks and develop an optimal management system to avoid and reduce risks.

Metrics and Targets

We have continuously reduced greenhouse gas emissions from our business activities. Going forward, we will further reduce emissions by further using renewable energy, which currently accounts for approximately 25% of the Group's energy consumption, and promoting energy conservation, with the goal of achieving “net-zero emissions by 2030.”

Greenhouse Gases Emission

（Unit tCO2：ton(s) of CO2）

	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022
SCOPE1	781	724	681	401	454	450
SCOPE2	3,070	2,866	2,701	2,590	2,493	2,090
SCOPE1+2	3,851	3,589	3,382	2,991	2,947	2,539

(Note)

The Group entities subject to the above CO2 emission monitoring include the following;

Tokai Tokyo Financial Holdings, Tokai Tokyo Securities, Tokai Tokyo Research Center, Tokai Tokyo Asset Management, Tokai Tokyo Investment, Tokai Tokyo Academy, Tokai Tokyo Service (for the operations of the afore-mentioned entities at the premises of Nihonbashi Takashimaya-Mitsui Building, Kayabacho First Building and Midland Square), Tokai Tokyo Business Services, TT Digital Platform and CHEER Securities)

Energy Consumption Intensity

The said intensity is an index used to indicate the level of energy consumption efficiency, and the Act on Rational Use of Energy states that a party that uses energy in engaging in business is expected to reduce the index by 1% or higher per year as a target to work toward attainment. We have achieved the target and are working on further reduction.

	2017	2018	2019	2020
Intensity	0.000162	0.0001576	0.0001590	0.0001604
Comparison with the previous FY (%)	97.0	97.3	100.9	100.9

※ The results shown above are those of Tokai Tokyo Securities, our primary subsidiary.

※ All the above numeric values were the calculation results made by the formula stipulated in Japan’s Act on Rational Use of Energy.

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