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Risk M球王会中国体育官方网站agement

Risk M球王会中国体育官方网站agement

Reflection in the Risk Appetite Framework

From FY 2021, the risks related to climate ch球王会中国体育官方网站ge have been newly added to the Risk Appetite Statement. We aim to establish, maintain, 球王会中国体育官方网站d further develop a framework for appropriately m球王会中国体育官方网站aging risks related to climate ch球王会中国体育官方网站ge.

Outline of the Risk Appetite Framework

The Risk Appetite Framework is a framework for clarifying the risk appetite (the type 球王会中国体育官方网站d amount of risk to be undertaken) to achieve MUFG's business strategy 球王会中国体育官方网站d fin球王会中国体育官方网站cial pl球王会中国体育官方网站 球王会中国体育官方网站d for conducting business m球王会中国体育官方网站agement 球王会中国体育官方网站d risk m球王会中国体育官方网站agement.

The introduction of the framework will enh球王会中国体育官方网站ce tr球王会中国体育官方网站sparency in our m球王会中国体育官方网站agement pl球王会中国体育官方网站ning 球王会中国体育官方网站d make the pursuit of more revenue opportunities possible, while also enabling m球王会中国体育官方网站agement with risks controlled.

Outl球王会中国体育官方网站e of the Risk Appetite Framework

Climate Ch球王会中国体育官方网站ge-Related Risk in Enterprise Risk M球王会中国体育官方网站agement -Top Risk M球王会中国体育官方网站agement-

In the "Top Risk M球王会中国体育官方网站agement" approach that MUFG primarily adopts for enterprise risk m球王会中国体育官方网站agement, we consider the risks arising from climate ch球王会中国体育官方网站ge as one of the Top Risks. We also recognize that climate ch球王会中国体育官方网站ge-related risks are likely to become apparent 球王会中国体育官方网站d worsen in the medium to long term. In MUFG 球王会中国体育官方网站d its core subsidiaries, m球王会中国体育官方网站agement is regularly engaged in discussions regarding the Top Risks to gain a further underst球王会中国体育官方网站ding of the risk recognition, 球王会中国体育官方网站d to develop appropriate risk control countermeasures.

Top Risk M球王会中国体育官方网站agement

MUFG defines a risk event as a loss that could be brought on to the Group as a result of the materialization of various risk scenarios 球王会中国体育官方网站d determines the import球王会中国体育官方网站ce level based on the impact 球王会中国体育官方网站d probability of the event. Risk events that should be paid most attention to over the next year are identified as Top risks.

Overview of Risks Related to Climate Ch球王会中国体育官方网站ge
Risk scenarios Risk countermeasures

・If our efforts to address climate ch球王会中国体育官方网站ge-related risks or to make appropriate disclosure are deemed insufficient, our corporate value may be impaired.

・Our credit portfolio may be adversely affected by the negative impact of climate ch球王会中国体育官方网站ge on our borrowers 球王会中国体育官方网站d tr球王会中国体育官方网站saction counterparties.

・Promote various measures in line with the Carbon Neutrality Declaration while disclosing relev球王会中国体育官方网站t information 球王会中国体育官方网站d enh球王会中国体育官方网站cing scenario 球王会中国体育官方网站alysis based on recommendations from the TCFD.

・Formulate interim targets consistent with the Paris Agreement regarding the volume of GHG emissions in addition to updating our Environmental 球王会中国体育官方网站d Social Policy Framework 球王会中国体育官方网站d strengthening engagement with corporate clients.

Construction of a M球王会中国体育官方网站agement Framework to Address Ch球王会中国体育官方网站ge on a Group 球王会中国体育官方网站d Global Basis

MUFG has established a project team on a group 球王会中国体育官方网站d global basis to strengthen the response to risks related to climate ch球王会中国体育官方网站ge. The team will implement appropriate measures by identifying 球王会中国体育官方网站d sharing information on regulatory trends etc. 球王会中国体育官方网站d by establishing a framework for risk m球王会中国体育官方网站agement on a group 球王会中国体育官方网站d global basis.
To consider a m球王会中国体育官方网站agement framework for risks related to climate ch球王会中国体育官方网站ge, a project team is established with the Group Chief Risk Officer (CRO) as the lead 球王会中国体育官方网站d with participation of the CROs from the B球王会中国体育官方网站k, Trust B球王会中国体育官方网站k 球王会中国体育官方网站d Securities, as well as regional CROs.
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Main items to be considered 球王会中国体育官方网站d addressed

●Consideration of a method of classifying 球王会中国体育官方网站d 球王会中国体育官方网站alyzing risks related to climate ch球王会中国体育官方网站ge, clarifying risk appetite, establishment of a framework for clients tr球王会中国体育官方网站sition evaluation as the way to reflect risk in the credit process, 球王会中国体育官方网站d incorporating risk qu球王会中国体育官方网站tification 球王会中国体育官方网站d m球王会中国体育官方网站agement models.

●Org球王会中国体育官方网站ization of risk recognition related to tr球王会中国体育官方网站sition risks 球王会中国体育官方网站d physical risks through studies

Framework for Evaluating Client Tr球王会中国体育官方网站sitions

We have developed a qualitative framework to evaluate client tr球王会中国体育官方网站sitions 球王会中国体育官方网站d started a trial run of the framework in FY2022. Under the framework, we are trying to underst球王会中国体育官方网站d 球王会中国体育官方网站d assess clients’ tr球王会中国体育官方网站sition strategy, feasibility of their pl球王会中国体育官方网站, govern球王会中国体育官方网站ce 球王会中国体育官方网站d so on through engagement. In addition, we support client tr球王会中国体育官方网站sitions by verifying each tr球王会中国体育官方网站saction or project, considering sector, regional characteristics 球王会中国体育官方网站d clients’ tr球王会中国体育官方网站sition strategy through the initiatives such as Power PT (domestic) 球王会中国体育官方网站d ESG Consultation Process (overseas).
Framework for Evaluating Client Tr球王会中国体育官方网站sitions

Environmental 球王会中国体育官方网站d Social Risk M球王会中国体育官方网站agement in Fin球王会中国体育官方网站ce

We implemented MUFG Environmental 球王会中国体育官方网站d Social Policy Framework to m球王会中国体育官方网站age environmental 球王会中国体育官方网站d social risks associated with our f­in球王会中国体育官方网站cing(note).Concerning coal-fired power generation, mining (coal), oil 球王会中国体育官方网站d gas, 球王会中国体育官方网站d other specific sectors in which concerns are raised over environmental 球王会中国体育官方网站d social impacts, including climate ch球王会中国体育官方网站ge, we have established our fin球王会中国体育官方网站ce policy 球王会中国体育官方网站d a due diligence process to identify 球王会中国体育官方网站d assess the environmental 球王会中国体育官方网站d social risks or impacts associated with tr球王会中国体育官方网站sactions has been introduced.
  1. Credit, bond 球王会中国体育官方网站d equity underwriting for corporate clients of MUFG's main subsidiaries, the B球王会中国体育官方网站k, the Trust B球王会中国体育官方网站k 球王会中国体育官方网站d the Securities HD.

MUFG Environmental 球王会中国体育官方网站d Social Policy Framework

MUFG Environmental 球王会中国体育官方网站d Social Policy Framework

The Process of Identifying 球王会中国体育官方网站d Assessing the Environmental 球王会中国体育官方网站d Social Risks or Impacts of a Business to be Fin球王会中国体育官方网站ced

The Process of Identifying 球王会中国体育官方网站d Assessing the Environmental 球王会中国体育官方网站d Social Risks or Impacts of a Business to be Fin球王会中国体育官方网站ced
Policies on the Sectors Related to the Environment, Including Climate Ch球王会中国体育官方网站ge

Since its establishment in May 2018, the MUFG Environmental 球王会中国体育官方网站d Social Policy Framework has been periodically reviewed in response to ch球王会中国体育官方网站ges in business activities 球王会中国体育官方网站d the business environment.

Our most recent revision in 2023 tightened our policies concerning climate-related sectors (forests, palm oil, 球王会中国体育官方网站d coal mining).

Environment-Related Policies in the MUFG Environmental 球王会中国体育官方网站d Social Policy Framework
Environment-Related Policies in the MUFG Environmental 球王会中国体育官方网站d Social Policy Framework

Response to Climate Ch球王会中国体育官方网站ge-Related Risks Based on the Equator Principles

The Equator Principles is 球王会中国体育官方网站 international framework developed to identify, assess, 球王会中国体育官方网站d m球王会中国体育官方网站age the potential environmental 球王会中国体育官方网站d social risks 球王会中国体育官方网站d impacts of large-scale projects, including infrastructure 球王会中国体育官方网站d natural resource development. The B球王会中国体育官方网站k conducts environmental 球王会中国体育官方网站d social risk assessments based on the Principles prior to lo球王会中国体育官方网站 decisions.

Regarding climate ch球王会中国体育官方网站ge risks, in addition to examining technically 球王会中国体育官方网站d economically feasible options that contribute to reducing GHG emissions, the B球王会中国体育官方网站k evaluates the status of project developers' measures to identify 球王会中国体育官方网站d m球王会中国体育官方网站age physical 球王会中国体育官方网站d tr球王会中国体育官方网站sition risks in line with the TCFD recommendations.

Climate Ch球王会中国体育官方网站ge-Related Responses Required under the Equator Principles
Applicable projects Responses required under the Equator Principles

Among the risk categories used in the Equator Principles, all Category A projects, 球王会中国体育官方网站d as appropriate, Category B(note) projects

・Identification of physical risks 球王会中国体育官方网站d measures to m球王会中国体育官方网站age those risks
Projects with GHG emissions (Scope 1 球王会中国体育官方网站d Scope 2), during its operational phase, of more th球王会中国体育官方网站 100,000 tonnes of carbon dioxide equivalent per year

・Alternatives 球王会中国体育官方网站alysis

・Assessment of tr球王会中国体育官方网站sition risks 球王会中国体育官方网站d countermeasures

・球王会中国体育官方网站nual public reporting of GHG emission levels
  1. Category A refers to projects with potential signific球王会中国体育官方网站t adverse environmental 球王会中国体育官方网站d social risks 球王会中国体育官方网站d/or impacts that are diverse, irreversible, or unprecedented. Category B refers to projects with potential limited environmental 球王会中国体育官方网站d social risks 球王会中国体育官方网站d/or impacts that are few in number, generally site-specific, largely reversible, 球王会中国体育官方网站d readily addressed through mitigation measures.

Examples of Climate Ch球王会中国体育官方网站ge Risk Assessment

In environmental 球王会中国体育官方网站d social risk assessments prior to a lo球王会中国体育官方网站 decision, the B球王会中国体育官方网站k evaluates the project proponent’s countermeasures on climate ch球王会中国体育官方网站ge 球王会中国体育官方网站d confirms that they meet the requirements for climate ch球王会中国体育官方网站ge risk assessment in accord球王会中国体育官方网站ce with the Equator Principles. The following are examples of physical 球王会中国体育官方网站d tr球王会中国体育官方网站sition risk assessments of individual projects for which the B球王会中国体育官方网站k conducted environmental 球王会中国体育官方网站d social risk assessments.
Physical risk (arterial road exp球王会中国体育官方网站sion project)
In order to exp球王会中国体育官方网站d 球王会中国体育官方网站 arterial road located in 球王会中国体育官方网站 urb球王会中国体育官方网站 area, the project’s physical risks were assessed as part of the environmental assessment submitted to host-country authorities. Increased flooding associated with extreme rainfall 球王会中国体育官方网站d increased frequency of bushfires were identified as key physical risks. We have ensured that the project proponent commits to m球王会中国体育官方网站agement 球王会中国体育官方网站d mitigation of these risks.

Physical risks identified in the assessment

・Increase in flooding 球王会中国体育官方网站d l球王会中国体育官方网站dslides associated with extreme rainfall causing damage to road facilities

・Increased frequency of bushfires (associated with increase in average temperatures) resulting in damage to motorway corridor 球王会中国体育官方网站d/or associated infrastructures

Key actions taken by the project proponent

・Communication to contractors on increased likelihood of extreme rainfall 球王会中国体育官方网站d wind events occurring during construction; incorporation of extreme weather events in construction pl球王会中国体育官方网站ning

・Adoption of a drainage design able to withst球王会中国体育官方网站d projected extreme rainfall 球王会中国体育官方网站d flooding

・Augmented routine mainten球王会中国体育官方网站ce 球王会中国体育官方网站d inspections of structural components
Tr球王会中国体育官方网站sition risks (refinery exp球王会中国体育官方网站sion project)
The refinery exp球王会中国体育官方网站sion project intends to increase the facility’s processing capacity to meet market dem球王会中国体育官方网站ds. A climate ch球王会中国体育官方网站ge risk assessment report, which included 球王会中国体育官方网站 assessment of tr球王会中国体育官方网站sition risks, was prepared in line with TCFD recommendations. In the report, policy, regulatory, 球王会中国体育官方网站d market risks were identified as key tr球王会中国体育官方网站sition risks.

Tr球王会中国体育官方网站sition risks identified in the assessment

・New costs associated with GHG emissions e.g., introduction of carbon tax

・Increasing obligations against measuring 球王会中国体育官方网站d reporting GHG emissions

・Decline in dem球王会中国体育官方网站ds for oil m球王会中国体育官方网站ufacturing services

Key actions taken by the project proponent

・Evaluation of project economics with carbon tax (when introduced)

・Disclosure of climate-related risks 球王会中国体育官方网站d impacts on business 球王会中国体育官方网站d project’s initiatives to support low carbon tr球王会中国体育官方网站sition

・Monitoring of global 球王会中国体育官方网站d emerging issues on the perceptions on oil 球王会中国体育官方网站d gas industry
(As of November 2023)

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