Designing an affluent future through
DBJ certification programs provide a groundbreaking financing menu. We evaluate companies’ non-financial information through which we select companies with outstanding initiatives and set lending conditions according to the evaluation. Through dialogue with companies we try to see that non-financial information is reflected in corporate value. In this way, firms conducting sustainable activities will be fairly evaluated by their stakeholders and the financial market. We want our multifaceted, objective assessments of environmental and CSR management, disaster prevention and business continuity management, and health management to promote effective PDCA (plan-do-check-act) cycles for our clients.
Shining light on the source of corporate value
For a mid-to-long-term evaluation of a company, we must consider not only the financial elements including sales and financial soundness, but also such questions as whether the firm can sustain its current profitability and whether there are reputational or other latent risks that could damage its value. The figure compares corporate performance to an iceberg Financial performance is but a small part of company’s value – no more than the iceberg’s tip. Under the water’s surface lie a variety of factors, including environmental initiatives, human resource development, innovation, and business continuity, which exert an influence on financial performance. These give rise to financial performance and form the source of corporate value.
Progress to date
ESG investment is a growing presence in stock investment, bond investment, and elsewhere in the world of direct finance. But in Japan, where a relatively large proportion of financial transactions are indirect, the banks must play a significant role if they are to support firms in their practice of sustainability management.
Based on expertise acquired from more than forty years’ investment of over three trillion yen in environmental projects, DBJ launched the Environmentally Rated Loan Program in 2004, the Enterprise Disaster Resilience Rated Loan Program in 2006; renamed the BCM Rated Loan Program in 2011, and the Employees’ Health Management Rated Loan Program in 2012. Each was designed to make non-financial information visible and to give it its proper place as an element of corporate value.
Dialogue as the road to growth
The most important feature of evaluation- and certification-based lending is the evaluation process, which emphasizes direct dialogue between DBJ and the client.
The process to which we attach greatest importance is the client interview. During the interview, we discuss more than the issues identified by means of the screening sheet. We also verify, through direct dialogue with the client, subjects that could not be fully assessed using public information alone – for example, the degree to which the thinking and initiatives behind a firm’s activities have penetrated throughout the organization. DBJ also focuses on dialogue after ratings are made. Upon client’s request, we provide objective feedback on the evaluation results, helping the firm to understand which issues require future attention and offering suggestions for better management. During the loan period, rated companies may use the program’s logo mark for purposes such as investor relations and sustainability reports – an excellent way of publicizing one’s good practices to customers and other stakeholders.
Based on the idea that companies practicing sustainability management have lower risk and greater mid-to-long-term growth potential than those that do not, we offer rated companies preferential interest rates according to their ratings.
Ensuring that good companies
are fairly appraised
The business world is changing rapidly. The conversation about climate change in particular is at such a turning point as to indicate a paradigm shift. Since its effects extend far beyond listed companies, firms must be proactive and strategic in their response. For instance, in addition to disclosing the costs entailed in policies taken to discharge their social responsibilities, firms are expected to proactively disclose information focusing on how they create social value. Companies should also identify societal issues which fit well with their own activities and address them after setting appropriate goals and guidelines. By publicizing these measures, they would be sending out a vital message on the importance of value creation story.
Through dialogue based on our evaluation- and certification-based lending programs, DBJ will be supporting such initiatives. And by throwing light on companies putting serious effort into the practice of sustainability management, we will be working to ensure that such firms are duly evaluated in the financial markets.