Climate Change Data

Hokuhoku Financial Group, Inc.

Climate Impact & Sustainability Data (2023-04 to 2023-09, FY2022)

Reporting Period: 2023-04 to 2023-09

Environmental Metrics

Total Carbon Emissions:17,127 t-CO2 (Scopes 1 & 2, FY2023 1H)
Scope 1 Emissions:5,402 t-CO2 (FY2023 1H)
Scope 2 Emissions:11,725 t-CO2 (FY2023 1H)
Scope 3 Emissions:22,695M t-CO2 (FY2023 1H, Investment)
Renewable Energy Share:Not disclosed
Total Energy Consumption:Not disclosed
Water Consumption:Not disclosed
Waste Generated:Not disclosed
Carbon Intensity:Not disclosed

ESG Focus Areas

  • Decarbonization (GX)
  • Digital Transformation (DX)
  • Human Resources
  • Sustainability

Environmental Achievements

  • Constructed Hokuhoku Solar Park (Osawano, Toyama and Shiranuka, Hokkaido), utilizing off-site corporate PPA, aiming for approx. 3,700 MWh annual power generation and CO2 emission reduction of approx. 2,900 t-CO2.
  • Raised CO2 emission reduction goals: Carbon neutrality by FY2030 for Scopes 1 and 2 at domestic business sites of Hokuriku Bank and Hokkaido Bank; Carbon neutrality by FY2050 for all Group companies.
  • Started using carbon neutral LP gas and city gas at several branches.
  • Planning to relocate Rumoi and Tsuruga branches to ZEB-certified buildings.

Social Achievements

  • Established SX and DX Promotion Departments.
  • Launched various initiatives for employee well-being, including 360° surveys, career advisors, and financial wellness programs.
  • Implemented talent management system and talent pooling for recruitment.
  • Increased number of mid-career hires.
  • Improved employee well-being and reduced clerical workload in sales offices.

Governance Achievements

  • Enhanced response to TCFD recommendations by utilizing GHG emissions calculation platform.
  • Strengthened shareholder returns.
  • Established Structured Finance Office.

Climate Goals & Targets

Long-term Goals:
  • Carbon neutrality by FY2050 (all Group companies)
  • RORA improvement to 6%
  • ROE improvement to 10 times
  • PBR improvement to 10 times
Medium-term Goals:
  • Carbon neutrality by FY2030 (Scopes 1 & 2 at domestic business sites of Hokuriku Bank and Hokkaido Bank)
  • Increase core net business profits per employee
  • Reduce administrative workload
  • Expand solution revenue by reinforcing human capital
Short-term Goals:
  • Not disclosed

Environmental Challenges

  • Difficulty in hiring new graduates and job turnover.
  • Insufficient definition and understanding of human resources necessary for realizing key strategies.
  • Insufficient response to diversifying values and workstyles.
  • Uncertain economic outlook.
Mitigation Strategies
  • Implementing talent management system and talent pooling.
  • Launching various initiatives for employee well-being.
  • Strengthening recruitment efforts.
  • Focusing on RORA improvement and cost control.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement
  • Using recycled wood louvers in Tsuruga branch construction.

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Policy changes
  • Requests from supply chains
Opportunities
  • Development of sustainable finance products
  • Support for next-generation industries

Reporting Standards

Frameworks Used: TCFD

Certifications: ZEB

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

  • Not disclosed

Not disclosed

Sustainable Products & Innovation

  • Hokuhoku Sustainable Finance (Transition finance-type and Social loan-type)

Awards & Recognition

  • Hokugin Lease Co., Ltd. recognized by the Ministry of the Environment as a designated lease operator for ESG lease subsidization program.

Reporting Period: FY2022

Environmental Metrics

Total Carbon Emissions:17,127 t-CO2e (Scope 1 & 2)
Scope 1 Emissions:4,325 t-CO2e
Scope 2 Emissions:12,802 t-CO2e
Scope 3 Emissions:51,874 t-CO2e (excluding Category 15)

ESG Focus Areas

  • Environment
  • Social
  • Governance

Environmental Achievements

  • Reduced CO2 emissions by 45.2% compared to FY2013 (Scope 1 & 2)
  • Established the company group’s first ZEB branch
  • Introduced electric vehicles to promote the spread of clean energy
  • Sustainability-related investment and loans of 289.3 billion yen (+186.7 billion yen compared to last year)
  • Environment-related finance of 147.4 billion yen (+110.3 billion yen compared to last year)

Social Achievements

  • Launched Hokuhoku sustainable finance “positive impact finance”
  • Increased number of cases of support for M&A and business succession to 355
  • Increased number of trust and single premium insurance contracts to 11,481
  • Increased number of funded product contract holders to 127,586
  • Increased number of people who have taken financial, economic or SDGs-related educational courses to 18,810
  • Increased number of web accounts to 287,978
  • Increased number of users of SDGs and environment-related services to 1,762
  • Female manager ratio increased to 18.8%
  • Number of qualified employees increased to 1,541

Governance Achievements

  • Established SX Promotion Department and DX Promotion Department
  • Established Sustainability Promotion Committee
  • Established Fiduciary Duty Promotion Committee
  • Increased the number of outside directors to five, raising the ratio of outside directors to 41.7%
  • Implemented a system revision to allow employees to switch course flexibly regardless of gender

Climate Goals & Targets

Long-term Goals:
  • Sustainable growth together with local communities and customers through problem solving
Medium-term Goals:
  • Achieve carbon neutrality by FY2030
  • Increase sustainability-related loans to 1.5 trillion yen by FY2030
  • Increase environment-related finance to 700 billion yen by FY2030
  • Improve PBR to 1.0 times by FY2027
Short-term Goals:
  • Improve PBR to 0.5-0.6 times by FY2025

Environmental Challenges

  • Low PBR (0.2 times) compared to industry peers
  • Low loan-deposit ratio (70.1%)
  • Low investment yield due to high proportion of lending to local governments (over 30%)
  • Relatively low corporate solutions revenue level
  • Difficult management environment due to inflation, resource and supply chain confusion, and interest rate increases
Mitigation Strategies
  • Growth strategy focusing on improving profitability of main business and investing in high-expertise areas like structured finance
  • Capital strategy focusing on improving capital efficiency, reducing cross-shareholdings, acquiring treasury stock, and redeeming preferred stock
  • Strengthening consulting services to address customer management issues
  • Strengthening SX and DX initiatives
  • Human capital investment to secure expert human resources through external secondment and training
  • Positive disclosure of growth and capital strategies

Supply Chain Management

Responsible Procurement
  • Collaboration with various solution providers and invested companies to develop solutions for business partners

Climate-Related Risks & Opportunities

Physical Risks
  • Increase in large-scale disasters such as heavy rain and typhoons
Transition Risks
  • Strengthening of laws on the introduction of carbon taxes
  • Technological innovation that contributes to decarbonization
  • Changes in demand for products in association with market changes
  • Stronger environmental orientation of stakeholders
Opportunities
  • Stronger environmental orientation of stakeholders
  • Improvement of customer resilience

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation by the Ministry of Economy, Trade and Industry, TCFD

Certifications: Platinum Kurumin, Eruboshi (level 3)

Sustainable Products & Innovation

  • Hokuhoku sustainable finance products (SLL, GL, PIF, Hokuhoku Three Targets)
  • SaaS ERP package (Hokuhoku Biz-Management)