Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Community stimulation
• Corporate governance
• Social contribution
• Health management
• Sustainable finance

Environmental Achievements

• Planting a cumulative total of 1,530 seedlings (2010-2014) and continued forest improvement activities (2015-2019).
• Investment in green bonds.
• Announced support for TCFD recommendations.
• Building a new eco-friendly Head Office building incorporating various state-of-the-art environmental technologies.

Social Achievements

• Selected as a White 500 company for outstanding health and productivity management (2019, 2020).
• Support for community revitalization through investments in local firms (55 issues/approx. 6.5 billion yen).
• Participation in Setouchi DMO to stimulate tourism.
• Attracting Hilton Hotels to the region.
• Support for community sports and cultural activities (Hiroshima Symphony Orchestra, Hiroshima Toyo Carp, Sanfrecce Hiroshima).

Governance Achievements

• Migration to a holding-company structure with an audit and supervisory committee (October 2020).
• Establishment of Nominating & Compensation Advisory Committee.
• Establishment of an organizational structure for integrated risk management.
• MSCI ESG rating rose one tier to BBB.

Climate Goals & Targets

Environmental Challenges

• Ageing of society
• Climate change risks

Mitigation Strategies

• Providing financial services suited to an ageing society.
• Proactive support for projects that contribute to sustainable environments and society, including initiatives to mitigate climate change risks and protect biodiversity.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Awards & Recognition

• White 500 Companies (2019, 2020)

Environmental Metrics

ESG Focus Areas

• Environment (climate change, global warming)
• Social (regional community revitalization, aging society, human rights, diversity and inclusion)
• Governance (corporate governance, risk management)

Environmental Achievements

• Reduced electricity and gas consumption (CO2 emissions) through room temperature control and promoting energy-saving practices.
• Implemented various environment-friendly measures at the new Head Office building, achieving an S grade under CASBEE Hiroshima.
• Increased proportion of environment-conscious low-emission vehicles (aiming for 50% by 2030).
• Actively promotes eco-friendly finance through Hiroshima Bank's eco-friendly financing system.

Social Achievements

• Launched Hirogin SDGs support services to promote and support local companies' SDGs initiatives (263 cases handled from January 2020 to March 2021).
• Provided financial education programs for younger generations.
• Engaged in welfare activities, such as giving Christmas presents to children's homes and donating to children's welfare organizations.
• Supported three professional sports and cultural organizations in Hiroshima.

Governance Achievements

• Adopted the “company with an audit and supervisory committee” organizational format.
• Established Basic Policy for Corporate Governance.
• Established the Group Nomination and Compensation Advisory Committee to ensure transparency and objectivity in decision-making processes concerning the nomination and compensation of Directors.
• Introduced a risk appetite framework and worked to foster a sound risk culture.

Climate Goals & Targets

Environmental Challenges

• Climate change risks
• Need to adapt to the changing work environment due to the COVID-19 pandemic and digitalization.
• Balancing the need for daring and cautious approaches in IT-related changes.

Mitigation Strategies

• Formulating Policy on Investment and Financing for Environmental and Social Solutions, defining prohibited and proactively supported businesses.
• Responding to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
• Implementing a thorough business continuity plan (BCP) to ensure continued operation in the event of disasters.
• Adapting to online operations and virtual communication tools.

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Renewable energy projects

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001 (mentioned as eligibility for eco-friendly loans)

UN Sustainable Development Goals

• Various SDGs

The report mentions contributions to various SDGs through regional development projects, resolving local issues, supporting industry development, and providing financial services suited to an aging society.

Environmental Metrics

ESG Focus Areas

• Carbon Neutrality
• Diversity and Inclusion
• Digital Transformation (DX)
• Contribution to SDGs
• Regional Vitalization

Environmental Achievements

• CO2 emissions reduction of the Group (-32% compared to FY2013)
• New Head Office building with high environmental performance (S grade under CASBEE Hiroshima)

Social Achievements

• Increased number of companies for which Hiroshima Bank is the main bank (+230 year-on-year)
• Launched Hirogin SDGs Support Services (510 cases from January 2020 to March 2022)
• Established Hirogin Sustainable Loan
• Established Hirogin Sustainability Management Adoption Support Services
• Certified as a Health and Productivity Management Organization (White 500) for four consecutive years

Governance Achievements

• Transitioned to a holding company structure
• Established Group Sustainability Promotion Committee
• Established Group Comprehensive Risk Management Committee
• Announced agreement to the TCFD recommendations
• Established various basic policies on climate change responses (Basic Policy on Sustainability, Environmental Policy, Policy on Investment and Financing for Environmental and Social Solutions)

Climate Goals & Targets

Environmental Challenges

• Advancement of specializations of Group companies
• Raising awareness of Hirogin as a Regional Comprehensive Services Group
• Replacing the role of branches and ATMs in advertising presence to customers
• Evolving business model aimed at retail customers
• Achieving ambitious targets declared for the final year of the Mid-Term Management Plan 2020
• Responding to carbon neutrality in a region with high CO2 emissions
• Ensuring diversity of core personnel
• Improving efficiency and productivity of internal operations
• Advancing DX
• Maintaining independence of subsidiaries while achieving Group unity

Mitigation Strategies

• Strengthening intra-group cooperation
• Implementing awareness and behavior reform
• Optimizing allocation of group management resources
• Enhancing group governance
• Expanding business operation base
• Developing alternative sourcing strategies
• Proposing products and services to support carbon neutrality action
• Coordinating with various social functions
• Investing in human resources development
• Establishing an environment that makes work pleasant and rewarding
• Fostering a “culture of praise”
• Improving IT literacy
• Re-examining staff allocations, authority, and organizational structure
• Actively pursuing initiatives to improve the efficiency and productivity of internal operations
• Strengthening the holding company structure
• Integrating, streamlining, and digitalizing operations common to the Group

Supply Chain Management

Responsible Procurement

• Supporting sustainable growth of regional industries and companies

Climate-Related Risks & Opportunities

Physical Risks

• Increase in credit expenses and risk assets due to deterioration in local customers’ management caused by damage to equipment or disruption of the supply chain
• Deterioration of asset value due to damage to held assets

Transition Risks

• Increase in credit expenses and risk assets due to deterioration in management of greenhouse gas-emitting companies caused by increases in the costs of responding to the transition to a carbon-free society
• Decline in social reputation caused by criticism of trading involvement with greenhouse gas-emitting companies

Opportunities

• Increase in capital investment needs by corporate customers
• Creation of innovation through development of related technologies
• Increase in consulting opportunities for business conversions

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (METI), TCFD

Certifications: Health and Productivity Management Organization (White 500)

UN Sustainable Development Goals

• Goal 7
• Goal 8
• Goal 9
• Goal 10
• Goal 11
• Goal 13
• Goal 17

Initiatives contribute to these goals through regional vitalization, sustainable finance, diversity and inclusion, digital transformation, and carbon neutrality.

Sustainable Products & Innovation

• Hirogin Bill
• Online subsidy diagnosis
• Hirogin Business Portal
• Hirogin App
• COi Pay
• Hirogin Sustainable Loan
• Sustainability-Linked Derivative

Environmental Metrics

ESG Focus Areas

• Carbon Neutrality
• Diversity and Inclusion
• Digital Transformation

Environmental Achievements

• Achieved virtually zero greenhouse gas emissions from the Head Office building by introducing electricity from renewable energy sources and carbon-neutral city gas.
• Reduced greenhouse gas emissions by 41% from FY2013 to FY2022 (Scope 1 & 2).

Social Achievements

• Increased the ratio of women in managerial positions to 7% in FY2022 (targeting 15% by FY2025 and 25% by FY2030).
• Increased the ratio of women in managerial and supervisory positions to 17% in FY2022 (targeting 22% by FY2025 and 30% by FY2030).
• Launched initiatives to support the growth of Group employees, including work-life balance support and career development programs.
• Established a new “Heartful Business Division” in Hirogin Business Service Co., Ltd. to foster the growth of employees with disabilities.
• Implemented various measures to eliminate unconscious bias in employee development and promotion.

Governance Achievements

• Established the Group Sustainability Promotion Committee and the Carbon Neutrality Promotion Working Group to deliberate and consider responses to sustainability issues.
• Obtained DX Certification from the Ministry of Economy, Trade and Industry.
• Established a human rights policy in May 2023.
• Added “sustainability” to the required skills for Directors.

Climate Goals & Targets

Environmental Challenges

• Reducing greenhouse gas emissions (Scope 3) across the entire supply chain.
• Addressing climate change risks, including physical risks (extreme weather) and transition risks (regulatory changes).
• Maintaining a high level of employee engagement and satisfaction.

Mitigation Strategies

• Developed a roadmap to achieve carbon neutrality in the Group’s greenhouse gas emissions (Scope 1 and 2) by FY2030 and in the entire supply chain (Scope 1, 2, and 3) by FY2050.
• Conducted scenario analyses of physical and transition risks to inform credit portfolio analysis and engagement with corporate customers.
• Implemented various workstyle reforms, including electronic approval workflows, paperless meetings, and remote working.
• Introduced a new evaluation system that focuses on goal-setting based on employees’ intrinsic motivation.

Supply Chain Management

Responsible Procurement

• Support for business partners' carbon neutrality initiatives.

Climate-Related Risks & Opportunities

Physical Risks

• Increase in credit expenses and risk assets due to deterioration in local customers’ management caused by extreme weather conditions.

Transition Risks

• Increase in credit expenses and risk assets due to deterioration in local customers’ management caused by increases in the costs of responding to the transition to a carbon-free society.

Opportunities

• Increase in capital investment needs by business partners.
• Increase in consulting opportunities for business conversions.

Reporting Standards

Frameworks Used: TCFD

Certifications: DX Certification

UN Sustainable Development Goals

• Various SDGs

Hirogin Group established and announced the Hirogin Group SDGs Declaration and will continue to contribute to solving environmental and social issues of the region and achieving sustainable growth through provision of high value-added regional comprehensive services.

Awards & Recognition

• Chugoku New Office Promotion Award (Chugoku Bureau of Economy, Trade and Industry Director-General’s Award)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainability
• Regional Development

Environmental Achievements

• Reduced greenhouse gas emissions by approximately 53% from 2013 to 2023 (Scope 1 & 2)
• Achieved nearly zero emissions in Scope 2 at major business locations by switching to renewable energy
• Introduced renewable energy to head office building and other key facilities
• Purchased J-Blue Credits for a coastal ecosystem restoration project

Social Achievements

• Launched various sustainability management support services for clients (e.g., Sustainability Management Introduction Support Service, Sustainable Loan)
• Established collaboration agreements with local companies and government entities to support carbon neutrality initiatives
• Implemented Group SDGs Special Activity Awards and Sustainability Management Support Initiative Awards to promote employee engagement

Governance Achievements

• Established a Sustainability Department and appointed a dedicated executive officer
• Included external experts in the Group Sustainability Promotion Committee
• Revised the director's skill matrix to include sustainability
• Set an internal carbon price

Climate Goals & Targets

Environmental Challenges

• Low level of carbon neutrality awareness among regional SMEs
• Difficulty in accurately assessing greenhouse gas emissions from many clients due to reliance on estimated values
• Social (S) issues outweighing environmental (E) concerns among clients, hindering carbon neutrality initiatives

Mitigation Strategies

• Developed and implemented various financial and non-financial solutions to support client sustainability efforts
• Strengthened engagement with clients through dialogues, free CO2 emission calculation tools, and training programs
• Collaborated with local governments and key companies to promote regional carbon neutrality
• Promoting the acquisition of the “Decarbonization Advisor” certification by employees

Supply Chain Management

Responsible Procurement

• Supporting the development of biomass fuel supply chains for automobile part manufacturing

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events impacting clients' operations and assets
• Damage to assets

Transition Risks

• Increased costs associated with decarbonization efforts
• Changes in market demand and regulatory landscape

Opportunities

• Increased investment needs in renewable energy and decarbonization technologies
• Growth in sustainability-related consulting and financing opportunities

Reporting Standards

Frameworks Used: TCFD

Third-party Assurance: KPMG Azsa Sustainability