Designing a sustainable society through a balance of
corporate growth and environmental awareness
The DBJ Environmentally Rated Loan Program is the world’s first financing menu to incorporate environmental ratings. Using a proprietary screening system, DBJ rates enterprises on the quality of their environmental management.
DBJ has been deeply involved with the environment since its days as the government-affiliated Japan Development Bank and Hokkaido Tohoku Development Corporation. Starting with pollution control measures in the 1960s, we have invested and financed more than 3 trillion yen in environmental projects over the past 40 years. In October 2003, we co-hosted Asia's first International Conference on Finance and the Environment in Tokyo.
While the costs of a company's environmental measures, such as capital investment and countermeasure costs, are relatively easy to grasp, the benefits are harder to identify. When environmental risks arise, there is inevitable damage to a company's brand and a decline in its corporate value, and recovery requires significant time and cost. From a long-term perspective, companies regarded as having growth potential are those that strive to develop environmentally friendly products and services while reducing their environmental impact. On the other hand, information on environmental management has not always been adequately reflected in the financial markets.
DBJ has committed itself to using its financial technology to support companies that promote outstanding environmental management initiatives or are considering doing so in the future. The DBJ Environmentally Rated Loan Program was launched in 2004 as a product of this commitment.
Changes in the evaluation system
Since its launch in 2004, the system and items for environmental rating have been revised each year in light of what we have learned through dialogue with companies and experts, as well as international trends in environmental policy and CSR.
In 2014, the evaluation system was substantially revised after the release of the International Integrated Reporting Framework, which calls for the integrated disclosure of financial and non-financial information, and the revision of the GRI Guidelines, the main guidelines for sustainability reporting. We have introduced concepts such as materiality and KPI, and instead of evaluating on a uniform, company-wide basis, we engage the company in dialogue to identify important environmental aspects (materiality) with a close connection to major businesses and corporate value enhancement. Our aim is to make a comprehensive assessment of environmental management contributing to sustainable growth.
A new section on sustainability was created in FY 2018 in view of the increasing impact of climate change and other environmental challenges on corporate activities and the management strategies of firms over the mid-to-long term. With these revisions to our evaluation system, we hope to promote dialogue with our customers on the opportunities and risks presented by environmental challenges, as well as longer-term environmental strategies for realizing their corporate philosophy and long-term vision.
Assessment scheme for environmental ratings
The scheme is twofold: one part covers environmental management, the other sustainability.
For Environmental Management, we ask not only about environmental risk management initiatives, but also about upside efforts that serve to resolve environmental issues and achieve business growth at the same time. We focus on general management matters, such as environmentally conscious management systems and the identification of environmental issues; business issues, such as operational improvement initiatives and the company’s contributions to the environment through its products and services; and the performance data on key environmental aspects that result from these efforts.
For Sustainability, we ask about long-term value creation initiatives with an environmental focus. In addition to questions on management systems and the identification of materialities, this section asks about value creation strategies in light of climate change and other key environmental issues, as well as the setting of indicators (KPIs) to evaluate progress in achieving these strategies.
We make annual reviews of the evaluation system, enlisting the help of the outside experts on the Advisory Committee in adding and subtracting questions in light of international policy trends and newly emerging topics.
Environmental issues have been at the forefront of debate in FY 2023, along with a movement towards the disclosure of sustainability information. In keeping with this trend, we expanded our questions to include such matters as a company’s response to climate change (including the use of primary data for Scope 3 calculations, disclosure of the impact of scenario analysis results based on TCFD recommendations, etc.) and its grasp of the relationship of natural capital and biological diversity to corporate activities (through analyses employing the LEAP approach and SBTN).
|Area||Assessment items and sub-items|
* Target clients
Clients who are located in Japan and meet the requirements established by DBJ.
* Use of funds
Same conditions as for ordinary loans; no special restrictions.
Operational system for Environmental Ratings
A team led by the Environmental Ratings Lead Manager engages in dialogue with companies and outside experts to improve the quality of Environmental Ratings.