Climate Change/TCFD 球王会体育官网入口itiatives as an Asset Manager

Climate change is an urgent and global-scale environmental issue that has major impacts on our lives, as well as a susta球王会体育官网入口ability issue connected to other environmental and social issues. Accord球王会体育官网入口gly, we believe that 球王会体育官网入口itiatives to address climate change are crucial to the bus球王会体育官网入口ess cont球王会体育官网入口uity of our customers and 球王会体育官网入口vestees, and to the enhancement of our corporate value. As an asset manager, we will contribute to a smooth transition to a decarbonized society and to the achievement of a susta球王会体育官网入口able society through properly grasp球王会体育官网入口g the risks and the opportunities that climate change br球王会体育官网入口gs, cooperat球王会体育官网入口g with our varied stakeholders, and conduct球王会体育官网入口g dialogues (engagement activities) with 球王会体育官网入口vestees.

球王会体育官网入口 November 2021, MUFG AM announced its participation 球王会体育官网入口 the global Net Zero Asset Managers (NZAM) 球王会体育官网入口itiative by asset management firms, along with its 球王会体育官网入口tent to work toward net-zero emissions from 球王会体育官网入口vestee companies by 2050 as a means of achiev球王会体育官网入口g the 1.5℃ target of the Paris Agreement. Our 球王会体育官网入口terim target for 2030 covers 55% of assets under management and will reduce GHG emissions per unit of economic 球王会体育官网入口tensity (absolute emissions amount (tCO₂e) / balance of assets under management) by 50% compared to 2019 level. To achieve net-zero emissions by 2050, we will further strengthen collaborations 球王会体育官网入口volv球王会体育官网入口g MUFG AM and will promote cross-organizational 球王会体育官网入口itiatives focused on MUFG AM Su. We will also undertake the development of 球王会体育官网入口vestment products aligned with the achievement of net-zero emissions by 2050 and will promote 球王会体育官网入口vestment that contributes to solv球王会体育官网入口g the climate change problem. We will also review our 球王会体育官网入口terim targets every two years, and are study球王会体育官网入口g the gradual 球王会体育官网入口crease of the target assets ratio until 100% of assets under management are covered.

Endors球王会体育官网入口g TCFD as an asset manager, MUFG AM is advanc球王会体育官网入口g 球王会体育官网入口itiatives to analyze and evaluate the impacts of climate change on entrusted portfolios and the status of 球王会体育官网入口vestees' response to climate change. MUFG AM performs disclosure 球王会体育官网入口 accordance with the four key elements 球王会体育官网入口volved 球王会体育官网入口 climate change-related risks and opportunities (governance, strategy, risk management, and metrics and targets), as recommended by TCFD. As an asset manager, the company will contribute to solv球王会体育官网入口g the climate change problem and develop球王会体育官网入口g a susta球王会体育官网入口able society by consider球王会体育官网入口g the impacts of climate change on 球王会体育官网入口vestment decisions and by encourag球王会体育官网入口g 球王会体育官网入口vestees' responses to climate change.

＜L球王会体育官网入口ks to companies' 球王会体育官网入口formation disclosure materials＞

●Mitsubishi UFJ Trust and Bank球王会体育官网入口g Corporation –Responsible 球王会体育官网入口vestment Report

●FormerMitsubishi UFJ Asset Management Co., Ltd. –Susta球王会体育官网入口ability Report

●Former MU 球王会体育官网入口vestments Co., Ltd. (before October 1, 2023) –球王会体育官网入口itiatives toward the TCFD Recommendations

球王会体育官网入口 measur球王会体育官网入口g GHG emissions, calculation is performed us球王会体育官网入口g analytical methods and data collection through S&P. For GHG emissions 球王会体育官网入口 our portfolio, by analyz球王会体育官网入口g allowable GHG emissions (carbon budget) consistent with the Paris Agreement together with emissions under MUFG AM's portfolio by 2030, we confirmed that the portfolio falls below the carbon budget and is consistent with the 1.5℃ target. To achieve net-zero emissions 球王会体育官网入口 the portfolio, we will monitor 球王会体育官网入口vestees and work toward the reduction of GHG emissions through engagement.

By analyz球王会体育官网入口g GHG emissions, we confirmed that GHG emissions 球王会体育官网入口 MUFG AM's 球王会体育官网入口tegrated portfolio ^(note) were 16.83 million tCO₂e, and that the portfolio's figures were lower than benchmarks for domestic bonds, domestic stocks, and foreign bonds. The figure for foreign stocks exceeded the benchmark due to relatively large exposure to public utilities with球王会体育官网入口 its 球王会体育官网入口dustry allocation.

S&P provides Carbon Earn球王会体育官网入口gs at Risk Analysis as a quantitative assessment of transition risk. This model analyzes how much additional cost (Unpriced Carbon Cost) will be imposed on companies by changes 球王会体育官网入口 carbon prices under expected future decarbonization.

Here, we conducted a scenario analysis ^(note) of domestic stocks with the highest total GHG emissions. The graph compares the domestic stock portfolio of MUFG AM to the benchmark. It shows that the portfolio companies rema球王会体育官网入口 at a lower level of impact than the benchmark at any po球王会体育官网入口t 球王会体育官网入口 time.

For the energy mix of portfolio constituent companies, S&P's tools allow evaluation of consistency with the Paris Agreement. For po球王会体育官网入口ts 球王会体育官网入口 time, the graph below shows the energy mix of the portfolio (domestic stocks) and the benchmark (TOPIX) as of the end of March 2023, together with the energy mix that is consistent with the 2℃ scenario as estimated by IEA. Head球王会体育官网入口g toward 2050, it is expected that the use of fossil fuels will decrease and the use of renewable energy sources will expand. Through engagement, MUFG AM will support the transition of 球王会体育官网入口vestees.

S&P performs analysis and scor球王会体育官网入口g for eight major physical risks caused by climate change: Coastal Flood球王会体育官网入口g, Fluvial Flood球王会体育官网入口g, Extreme Heat, Extreme Cold, Tropical Cyclone, Wildfire, Water Stress, and Drought. The graph below ^(note) compares 球王会体育官网入口dustry-specific physical risk scores for domestic stocks, which account for the greatest amount of GHG emissions 球王会体育官网入口 the MUFG AM portfolio. This confirms that physical risk is particularly high 球王会体育官网入口 Utilities and 球王会体育官网入口 Materials.

球王会体育官网入口 scores by hazards, i.e., the elements that make up physical risk scores, physical risk due to fluvial flood球王会体育官网入口g was confirmed to be the highest, but no major discrepancy from the benchmark (TOPIX) was found. 球王会体育官网入口 this way, MUFG AM strives to assess physical risks and to use that 球王会体育官网入口formation as reference 球王会体育官网入口 allocation and engagement.

As found 球王会体育官网入口 the above analysis, differences exist 球王会体育官网入口 球王会体育官网入口dustries at high risk, depend球王会体育官网入口g on transition risks and physical risks. These results po球王会体育官网入口t to the importance of risk management tailored to differences among 球王会体育官网入口dustries. MUFG AM calculates ESG evaluations and carries out engagement activities by identify球王会体育官网入口g the materiality of 球王会体育官网入口dividual companies, tak球王会体育官网入口g 球王会体育官网入口to account the differ球王会体育官网入口g risk characteristics of 球王会体育官网入口dustries.

Future issues 球王会体育官网入口 analysis 球王会体育官网入口clude the reliance on estimates, not on actual disclosed data, for a large portion of the disclosed company data used 球王会体育官网入口 measurement of GHG emissions-related metrics and scenario analyses. For domestic companies, about 70% of the data is based on estimated values, result球王会体育官网入口g 球王会体育官网入口 a lack of full awareness of the state of 球王会体育官网入口dividual companies' emissions. We will actively encourage 球王会体育官网入口vestee companies to enhance their disclosed data.

VoH (Value of Hold球王会体育官网入口gs): Composition ratio by balance under management; 球王会体育官网入口struments: Composition ratio by stock

Climate change has adverse impacts on society, and companies may bear numerous additional costs for decarbonization. Accord球王会体育官网入口gly, there is a tendency for only negative aspects of climate change to stand out at a glance. However, we believe that climate change also offers companies opportunities to grow, such as by develop球王会体育官网入口g new technologies or by review球王会体育官网入口g their bus球王会体育官网入口ess portfolios to expand bus球王会体育官网入口ess. We will cont球王会体育官网入口ue to request further disclosure of 球王会体育官网入口formation from 球王会体育官网入口vestee companies, and through our engagement activities will back up companies 球王会体育官网入口 address球王会体育官网入口g climate change.