Mizuho Launches Framework to Assess Credibility of Client Climate Transition Strategies
Tokyo-based banking and financial services company Mizuho announced a series of initiatives aimed at supporting its climate and sustainable finance goals, including the establishment of a new financing framework to help assess the credibility and transparency of clients’ transition plans, and new interim financed emissions reduction targets for the Oil & Gas and Thermal coal mining sectors.
The announcement forms part of a series of climate-focused moves by Mizuho, including the launch last year of the company’s net zero transition plan, with goals to achieve carbon neutrality in operations by 2030, and targets to reduce Scope 3 financed emissions. Mizuho was the first Japanese financial institution to join the Partnership for Carbon Accounting Financials (PCAF), committing to measure and disclose the greenhouse gas (GHG) emissions impact of its loans and investments.
Mizuho has also set a goal to facilitate 12 trillion yen ($85 billion) of environmental finance between 2019 – 2030.
According to a statement by Mizuho, the new framework is aimed at helping the company more proactively supply financing to support clients’ business structure transformation, once the firm confirms that a client’s transition strategy meets Mizuho’s internal verification process.
The criteria outlined for verification under the framework include strategy and materiality, disclosure, governance structure, and science-based targets. The verification process includes engagement with clients, review by specialist departments of the transition strategy, and monitoring by a risk management department.
The firm stated that it will provide financing for business structure transformation even for clients in high-risk areas, once the client’s strategy meets the standards. Mizuho said:
“This may result in a temporary increase in our exposure in high-risk areas. However, assisting our clients with their transition strategy design and execution enables us to manage our transition risk appropriately and mitigate our medium- to long-term transition risk.”
The framework is currently being implemented with clients in the electric power sector.
Mizuho’s new financed emissions goals include targets to reduce Oil & Gas upstream production Scope 1 and 2 emissions intensity by 36% and to reduce Scope 3 emissions by 12% – 29% by 2030, compared to 2019.
In the thermal coal mining sector Mizuho’s targets, covering Scope 1, 2, and 3 emissions, are to achieve absolute zero GHG emissions by 2030 in OECD economies, and by 2040 for non-OECD economies.
According to the company, the new targets form part of its long-term goal to achieve net zero emissions from financing and investment by 2050, and add to its existing targets for the electric power sector.