Climate Change Data

Environmental Metrics

ESG Focus Areas

• CSR
• Compliance
• Corporate Governance
• Regional Contributions
• SME Support
• Human Resources

Social Achievements

• Increased loan balance to individuals by ¥22.8 billion compared to the previous fiscal year, reaching ¥917.0 billion. This includes initiatives in housing loans, card loans, automobile loans, student loans, and loans for apartment construction.
• Engaged in wide-ranging social contribution activities including support for sports, culture, education, community events, AMDA, parenting support, and environmental conservation.

Governance Achievements

• Established a CSR Committee with the president as chairman.
• Enacted a Corporate Code of Conduct and Guidelines for the Conduct of Bank Clerks.
• Established a Compliance Committee and Legal Compliance Supervisors.
• Implemented a system for employees to report wrongdoing directly to top management.
• Strengthened the functions of the Board of Directors and the Audit & Supervisory Board, including the addition of an Outside Director.

Climate Goals & Targets

Environmental Challenges

• Managing credit risk, market risk, liquidity risk, and operational risk.
• Maintaining asset soundness and managing loan losses.

Mitigation Strategies

• Established a comprehensive risk management system with designated controllers and committees.
• Implemented rigorous asset assessment and provision for possible loan losses.
• Conducted stress tests to assess risk events.
• Monitored risk amounts within established limits for each risk category.
• Implemented credit risk management standards and detailed management methods.
• Established an auditing system for credit risks.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Regional Revitalization
• Sustainable Development Goals (SDGs)

Social Achievements

• Strengthened efforts in open innovation by aligning with industries, educational institutions, administrative bodies, financial institutions and press media in order to support fostering the local industry and start-ups.
• Engaged in a wide range of activities to contribute to the regional community. These activities include a think-tank run by the Group’s Okayama Economic Research Center, and support for sports, culture, education, and community events, as well as providing time deposits in aid of the Association of Medical Doctors of Asia (AMDA), parenting support, and environmental conservation activities.

Governance Achievements

• Adopted the form of a company with an Audit and Supervisory Committee as its organizational design pursuant to the Companies Act.
• Established “Board of Managing Directors,” which comprises eight Executive Directors, including the President, and discusses matters delegated by the Board of Directors.
• Implemented all principles stipulated in the corporate governance code as of June 2020.

Climate Goals & Targets

Environmental Challenges

• Deteriorating external environment and increased credit costs.
• Severe revenue environment is expected to continue.
• Decreasing net interest income on securities against the backdrop of prolonged negative interest rates.
• Credit card companies were affected by the slump in economic activities due to the spread of COVID-19, and the amount of credit card purchases, etc. decreased toward the end of the fiscal year ended March 31, 2020.
• The downturn in economic activities caused by the spread of COVID-19 is expected to have on market conditions and the financial conditions of our customers.

Mitigation Strategies

• Building a new business model toward growth under the new medium-term management plan “Stage II.”
• Strategic investment has been made especially to strengthen hardware, which resulted in the reduction of clerical work, and an increase in the number of sales staff.
• Strengthening partnerships in addition to in-house initiatives (TSUBASA Alliance).
• Securing revenues by strengthening the headquarters operation for Structured Finance (SF) and non-Japanese loans, and by building up service and non-financial revenues, all the while carrying out stringent reduction of non-personnel expenses and personnel expenses.
• Recorded a reserve for possible loan losses based on the information available as of the end of the current fiscal year.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Regional economies revitalization
• SDGs
• Decarbonization
• Digital Transformation (DX)
• Sustainability Transformation (SX)
• Climate Change
• ESG (Environment, Social, and Governance)

Environmental Achievements

• Support for renewable energy businesses
• Initiatives to help decarbonize Okayama Prefecture

Social Achievements

• Support for the 6th OKAYAMA INNOVATION SCHOOL
• Course targeted at junior and senior high school students
• In-house venture system called “Chugin Open Lab”
• Collaboration with local parties to hold a concert for high school brass bands
• Support for business succession type companies, start-ups, and regional revitalization companies
• Establishment of “Chugin Human Innovations Co., Ltd.” to focus on human-resource related issues

Governance Achievements

• Establishment of the “Group’s Corporate Principles”
• Establishment of a holding company called “Chugin Financial Group”
• Introduction of a Regional Headquarter System
• Major overhaul to human resource system
• Appointment of current executive officers of the Bank as presidents of its securities and leasing businesses

Climate Goals & Targets

Environmental Challenges

• Severe environment surrounding regional banks due to negative interest rates
• Management issues impacting corporate customers due to COVID-19
• Challenges of decarbonization and digital transformation (DX)
• Uncertainty in the business environment as regional economies continue to suffer
• Disconnect between linking “environmental, social, and regional development” with “improvement in corporate value” among some employees

Mitigation Strategies

• Building services that respond to diversifying customer issues
• Establishment of a holding company to maximize group synergy
• Establishment of “Chugin Capital Partners, Limited” for investment activities
• Establishment of “Chugin Human Innovations Co., Ltd.” for human-resource solutions
• Introduction of a Regional Headquarter System to focus on regional and customer issues
• Reforms on sales operations and over-the-counter transactions
• Accelerating digitalization of sales, administrative, and headquarters operations
• Implementation of the “Sustainable Finance” program
• Establishment of a wholly owned subsidiary for consulting services on DX and SX
• Efforts to ensure that the heads of regional headquarters, branch managers, and other senior staff display a sense of “all for one,” and that non-senior employees act in accordance with the spirit of “one for all”

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Move toward decarbonization and carbon neutrality

Opportunities

• Realization of carbon neutrality as a future business model

Reporting Standards

Frameworks Used: TCFD