Addressing Climate Change (Initiatives based on TCFD Recommendations)

The TCFD Recommendations call for disclosures on corporate governance, strategy, risk management, and indicators and targets relevant to climate change–related risks and opportunities.

At Mizuho, we have supported the intent and aims of the TCFD Recommendations since December 2017, and we are working to engage in initiatives and enhance disclosures in accordance with the recommendations. The current status of our response to the TCFD Recommendations is as follows.

Climate & Nature-related Report

Governance

  • Mizuho has established a supervisory and business execution governance framework, centered on the Board of Directors.
    • Supervisory: The Board of Directors and the Risk Committee conduct oversight on reported and deliberated matters discussed by business execution line.
    • Business execution: The Sustainability Promotion Committee, the Risk Management Committee, the Executive Management Committee, and other committees have deliberations and discussions, to be reported to the Board of Directors.
  • The Group Chief Sustainability Officer (CSuO) and the Group Chief Risk Officer (CRO) lead initiatives in their respective areas under the Group CEO's supervision.
  • Mizuho has adopted sustainability-related evaluating indicators for executive compensation, such as sustainable finance amount, climate change initiatives, and assessments by ESG rating agencies.

Strategy

  • Mizuho has developed the Net Zero Transition Plan (formulated in 2022, revised in 2023) to promote the Group's climate change responses in an integrated manner.
  • Recognition of opportunities and initiatives to capture opportunities:
    • We recognize transformations in industrial and clients' business structures toward the transition to a decarbonized society and investments and social implementation in practical applications of new technologies as opportunities.
    • Based on our sustainable business strategy, we actively support clients' transitions to a decarbonized society and their measures to address climate change.
      • Support for steady transitions toward 2030: We promote support for clients' business portfolio restructuring and social implementation of next-generation technologies. We have strengthened our financing capacity toward our sustainable finance target of JPY 100 trillion over the FY2019 to FY2030.
      • Promotion of client future-oriented actions: We promote actions focusing on hydrogen, carbon credits, and impact. We support the establishment of technologies and business models in the development, demonstration, and commercialization stages through the Transition Equity Investment Facility and Value Co-creation Investments.
  • Engagement: We actively approach clients from the perspective of clients' various strategies based on our analysis and ideas/concepts, constructive dialogue, and solution provision and co-creation. We have enhanced the communication to policy makers and our involvement in international rule making.
  • Capability building: We have promoted internal dissemination of sustainability recognition and strengthened training for sustainability transformation talents.
  • Risk recognition: We comprehensively perceive the risks associated with climate change by assessing the importance in each risk category. We recognize credit risk (deterioration of client business performance) and market risk (decline in the value of equity holdings) to be of particularly high consequence.
  • Scenario analyses:
  Transition risk Physical risk
Analysis method
  • We analyze the increases in credit costs caused by transition risks based on an outlook for the impact on clients' financial results under the scenarios.
    (Targeted sectors: Electric utilities, oil and gas, coal, steel, automotive (OEM and suppliers), maritime transportation, aviation, cement, and chemicals)
  • Acute risks: We analyze damage to assets and business stagnation associated with changes in natural disasters caused by temperature increases.
  • Chronic risks: We analyze asset deterioration and impact on labor force reductions associated with temperature increases.
Implications
  • While the cumulative increase in credit costs by 2050 is approximately JPY 1,910 billion under the Net Zero 2050 scenario and may have a certain level of financial impact in the medium to long term, the impact on Mizuho’s short-term financial soundness will be limited.
  • Although the likelihood of the disasters occurring simultaneously in calculation target sectors is low, the analysis confirmed the possibility of additional losses of approximately JPY 90 billion in a single year if the largest stress event (cyclones and floods) materializes.

 

Risk management

  • As part of our management of top risks, which are risks recognized by top management as having major potential impact on Mizuho, we designated the Worsening impact of climate change as a top risk and have strengthened our control for this risk.
  • Based on the Basic Policy for Climate-related Risk Management, we recognized and assessed risks related to materiality. For material risks, we identify and manage quantitative impact through scenario analysis, credit risk assessment.
  • Risk control in carbon-related sectors:
    • We have established a risk control framework to assess and monitor the degree of risks for each client along two axes — (1) the client's sector and (2) the status of the client's transition risk responses. (We are planning to add GHG emissions reduction performance, alignment of targets and results with the 1.5℃ pathway, and other assessment criteria to axis (2).)
    • We control exposure in high-risk areas by promoting transition through engagement and assistance.
  • We have established and operate the Environmental and Social Management Policy for Financing and Investment Activity. The following aspects of the Policy were revised in March 2024: Made revisions to some policies (human rights issues, weapons and arms, coal-fired power generation) and added specific sectors (woody biomass power generation, mining, fisheries and aquaculture).

Metrics and targets

Monitoring metrics Targets Recent results
Scope 1 and 2 emissions Carbon neutral by FY2030 FY2022: 106,750 tCO2
Scope 3 (emissions from financing and investment) Net zero by 2050 (Targets and results disclosed by sector)
– Electric power FY2030: 138 to 232 kgCO2e/MWh FY2022: 368 kgCO2e/MWh
– Oil and gas FY2030: Scope 1,2: 4.2 gCO2e/MJ
Scope 3: –12% to –29% (from  FY2019 levels)		 FY2022: Scope1 and 2: 5.6 gCO2e/MJ
Scope 3: –43% (34.8 MtCO2e)
– Coal mining
(thermal coal)		 OECD countries: Zero by FY2030
Non-OECD countries: Zero by FY2040		 FY2022: 0.6 MtCO2e
– Steel FY2030: –17% to –23% (from FY2021 levels) FY2022: –18% (14.1 MtCO2e)
– Automotive FY2030: 
Scope 1,2: –38% (from FY2021 levels)
Scope 3: –31% to –43% (from FY2021 levels)		 FY2022: 
Scope1 and 2: –11% (831 ktCO2e)
Scope 3: –7% (184 gCO2e/vkm)
– Maritime transportation FY2030: Portfolio climate alignment score 0% or less FY2022: -1.55%
– Real estate FY2030: 33 to 42 kgCO2e/m2 FY2022: 65 kgCO2e/m2
Sustainable finance amount Total for FY2019 to FY2030: JPY 100 trillion of which JPY 50 trillion is earmarked for environment and climate-related finance FY2019 to FY2023 Total: JPY 31.0 trillion
of which JPY 14.0 trillion on environment and climate-related finance
Outstanding credit balance of coal-fired power generation plants1 Reduce the outstanding credit balance to 50% of the FY2019 balance by FY2030, and achieve an outstanding credit balance of zero by FY2040 March 31, 2024: JPY 240.8 billion
(down 19.6% from March 31, 2020)
Exposure to high-risk areas in transition risk sectors2 Reduce over the medium to long term March 31, 2024: JPY 1.5 trillion
(down 0.3 trillion JPY from March 31, 2021)
Status of client transition risk responses ― March 31, 2024: Steady progress in the targeted sectors
SX talent
- Sustainability management experts
- Environment and energy sector consultants		 FY2025
- 1,600 experts
- 150 consultants		 As of March 2024:
- Approx. 1,650 experts
- Approx. 140 consultants

 

Data for disclosure aside from monitoring metrics:

  • Sector-by-sector credit exposure in line with the TCFD Recommendations
  • GHG emissions from financing and investment / capital market activities (financed emissions / facilitated emissions)
  1. Aggregation Targets: Credit cases where the funds are used for the construction or expansion of coal-fired power plants, which is prohibited under the ES policy
  2. See "Risk Control in Carbon-related Sectors" (PDF/5,920KB) for the definition of exposure to high-risk areas
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