Biodiversity conservation activities of Japanese financial sector

1. Biodiversity conservation activities of Japanese financial sector Rikiya Konishi Global Biodiversity Strategy Office, Ministry of the Environment, Japan

2. Outcomes from Quito II Dialogue Seminar (Private and financial sectors) • It is important to engage with private sector further in relation to sustainable production, and that financial sector should support such investments. • Private sector was recognized as source of revenue and voluntary contributions, however CSR can only play limited role for biodiversity financing. • Governments can improve business conduct by paying consultation to work with companies to develop schemes to include natural capital in their decision making. • Important role of "corporate champions " that set examples for others was highlighted.

3. Financial sector and Biodiversity Conservation • Global Warming Crisis Acceleration caused by GHGs emissions • Impacts in the Production phase (Electricity, Gas, etc.) • Other Inputs • Fuel • Energy • Impacts in the Production phase (Manufacturing) • Equipment Installation • Impact Chain links to Upstream • Info. on the Loan customer • Info. on the Project • Revision of the Project • Impact Chain links to Downstream • Output • Input • Terrestrial Ecosystem • Loan / Funding • Impacts at the Loan customer’s end • Funding • Funding • Land use • Habitat Alteration, etc. caused by Land use, etc. • The Loan / Funding supports the borrower’s enterprise activities or project, and thus may enhance the Impact on the Biodiversity by the third party (borrower) when the project has a strong impact. • Source: Ministry of the Environment 3

4. Financial sector and Biodiversity Conservation Table. Financial Sectors’ commitment for biodiversity conservation 4

5. Financial Sectors activities (Fund and rating, etc.). • Principles for Financial Action for 21st Century by Japanese Financial Institutions in 2011 • Expected benefits for environmentally excellent companies and project by financial institutions such as banks, securities companies, insurance Companies: • Expected Financial Products and services • ●　SRI Fund / Eco-Fund • ●　Interest rate discount • ●　Discount interest in environmental bond • ●　Discount price insurance • ●　Paperless TOR • ●　Eco-savings (some amount of interest is used for environmental conservation) • ※The secretariat published best practice cases of the principles in March 2014 • Source: http://www.env.go.jp/press/file_view.php?serial=18559&hou_id=14289

6. Best Practices in Japanese financial sector :SRI Fund / Eco-Fund • Source: Sumitomo mitsui trust holdings “CSR REPORT 2013 Natural Capital” 6

7. Best Practices in Japanese financial sector :Eco-savings • *More than 20 banks in Japan are providing Eco-savings services • Source: Ministry of the Environment, Japan “Best practice cases of the principles in March 2014”

8. Example : SEIBU SHINKIN BANK • Fixed deposit • Biodiversity conservation by Contribution • SEIBU SHINKIN BANK • Customer • Biodiversity conservation by Participation • Interest • Participation in the activities of NPOs • Contribution from bank • (same amount as contribution from customer) • Contribution of 20% of interest those customer received • Environmental NPOs • Source: SEIBU SHINKIN BANK

9. Financial sector and Biodiversity Conservation • Japanese financial sector is very active on Biodiversity Conservation • Understanding of customers is key for success for these activities • There are many successful practices in Japan however the information on best practices are disseminated only in Japanese (Most customers are Japanese) • Most of good practices are for domestic biodiversity conservation • Activities for international biodiversity conservation should be encouraged 9

10. Reference Material

11. Best Practices in Japanese financial sector : Interest rate discount

12. Best Practices in Japanese financial sector : Interest rate discount

13. Best Practices in Japanese financial sector : Interest rate discount • Shiga Bank introduced Biodiversity rating and interest rate discount system • The new system grade corporate consideration for biodiversity on a scale of 1 to 100 points divided into five ranks under the following criteria.

14. Best Practices in Japanese financial sector : Interest rate discount • (continued) • Based on the ranks, companies can borrow money with discount interest rate. *PLB: Principles for Lake Biwa

15. Best Practices in Japanese financial sector :Discount price insurance

16. Best Practices in Japanese financial sector : Contribution by Paperless TOR • “SAVE JAPAN Project” A joint project by Sompo Japan and Nipponkoa • When our customers purchase automobile insurance, selecting the “web-based insurance clause” option we will make donations to environmental NPOs/NGOs and other organizations according to the number of such contracts concluded. Environmental NPOs/NGOs will use the donations to implement community-based participatory environmental preservation activities, in partnership with Sompo Japan and Nipponkoa. • To ensure that the project is clear to community members and contributes to the protection of endangered species, it will be carried out in collaboration with environmental organizations very familiar with the local communities and the Japan NPO Center (JNPOC). • * Web-based insurance clause refers to the automobile insurance terms and conditions that may be viewed online on the official websites of Sompo Japan and Nipponkoa • Contribution • Discussion • Company • Coppaboration • Web-based • insurance clause • Customer • Collaboration • Environmental • NPOs • Participation • Participation 16

17. Financial Sectors activities (Fund and rating, etc.). • Principles for Financial Action for 21st Century by Japanese Financial Institutions in 2011 • 1. We will recognize our roles and responsibilities, taking into account the precautionary approach, and promote those actions • that contribute towards shaping a sustainable society. • 2. We will contribute to the formation of a sustainable global society through the development and provision of financial • products and services leading to the development and increased competitiveness of “industries contributing to a sustainable • society” as represented by the environmental technologies and services sector.

18. Financial Sectors activities (Fund and rating, etc.). • Principles for Financial Action for 21st Century by Japanese Financial Institutions in 2011 3. From the perspective of regional development and improvement in sustainability performance, we assist the environmental programmes of small and medium enterprises. We will also back activities that will raise environmental awareness amongst citizens and support disaster readiness and community activities. 4. In the formation of a sustainable society we will recognize the importance of cooperation with diverse stakeholders and will not only participate in its activities but will endeavor to take a proactive role.

19. Financial Sectors activities (Fund and rating, etc.). • Principles for Financial Action for 21st Century by Japanese Financial Institutions in 2011 • 5. We will not be limited to complying with environmental laws and regulations but will take active steps to reduce our own • environmental footprint through resource and energy savings as well as encouraging our suppliers to do likewise. • 6. We will recognize activities that will further profile sustainability as a business issue and will endeavor to disclose • information on our activities. • 7. In order to implement the above actions we will aim to raise the awareness of environmental and societal issues of our own • board and support them to take an active role through their normal duties.