Group ESG Management Policy

1. Objectives

The Shinsei Bank Group (hereinafter “the Group”) has established the Charter of Shinsei Bank Group Corporate Behavior which articulates our commitment to earning the unwavering trust of society and providing solutions to societal issues in a sincere manner, in order to live up to our management principles. Based on this Charter, the Group has carried out management with environmental and societal issues in mind, and is aiming to pursue revenue-making opportunities that are predicated on a sustainable society, in accordance with the Group’s social responsibilities.

The aim of this “Group ESG Management Policy” is to clearly stipulate the basic views and future direction of the Group’s initiatives pertaining to environmental and societal issues, and present them to all of the Group’s stakeholders, including members of the general public, shareholders, and employees, and to work on further enhancing our management through dialogue with these stakeholders.

2. Positioning

For the purpose of realizing our management principles, we have established “The Charter of Shinsei Bank Group Corporate Behavior,” to set forth the conduct expected of us as a corporate group, and have also enacted “The Shinsei Bank Group Code of Conduct,” to stipulate the minimum standards of conduct expected of all of the employees of the Group.

The “Group ESG Management Policy” has been positioned as a basic policy and the starting point for the formulation of our management strategies. We are aware that, in order to pursue the kinds of sustainable growth opportunities that are required for the realization of our management principles, it is essential, as part of our social responsibility as a corporate group, that we contribute to the building of a sustainable society.

3. Corporate Governance Framework

  • i) Establishment, Amendment, and Abolishment
  • Establishment, amendment, and abolishment of the “Group ESG Management Policy” shall be subject to approval by the Group Executive Committee, as it is a basic policy that provides the starting point for the formulation of our management strategies.

  • ii) Reporting and Deliberation
  • The status of business execution related to the ESG management of the Shinsei Bank Group and the status of ESG risk management, including corruption prevention, are regularly reported to and discussed by the Group Executive Committee. We summarize and regularly report the details based on discussions by the Group Executive Committee to the Board of Directors, revise our policies when needed, and make continuous efforts to enhance ESG management.

  • iii) Disclosure of Information
  • Among the matters deliberated on by the Board of Directors and the Group Executive Committee, those matters materially important to outside stakeholders shall be, as far as possible, disclosed in the Group’s Integrated Report.

4. G: Basic views on corporate governance

  • i) Basic views of Shinsei Bank, Limited (hereinafter “the Bank”), as a listed company
  • Shinsei Bank, Limited (hereinafter “the Bank”) recognizes that enhancing corporate governance is one of the highest priorities to achieve our management principles, and has established a corporate governance framework as a “Company with an Audit & Supervisory Board”. This model aims to ensure appropriate managerial decision-making and business implementation in order to establish a corporate governance framework with sufficient organizational checking functions. We aim to achieve this through the following two key actions:
    1)Setting the broad direction of corporate strategy and establishing an environment where appropriate risk-taking by the senior management is supported through decision-making by Board of Directors, the highest managerial decision-making body, on important corporate business execution matters, such as basic management policies including mid-term management plans and annual plans; and 2) Assigning Audit & Supervisory Board Members and an Audit & Supervisory Board those are independent of the Board of Directors auditing duties that include auditing of the Board of Directors.

  • The Bank approves of the “Corporate Governance Code” applicable to listed companies in Japan which came into effect in June 2015, in that we seek to adequately practice the Code for effective corporate governance in pursuit of sustainable growth and increasing corporate value over the mid- to long-term, and thereby contribute to the development and success of stakeholders and the Japanese economy as a whole. The Bank intends to enhance corporate governance in line with the basic policies outlined below for the respective general principles.

  • ii) The Bank’s guidelines on corporate governance as a listed company
  • (1) Shinsei Bank fully recognizes that without an appropriate cooperation with stakeholders including shareholders and investors, it would be difficult to achieve sustainable growth and shareholders are the primary starting point for corporate governance discipline. Shinsei Bank takes appropriate measures to fully secure shareholder rights and develop an environment in which shareholders can exercise their rights appropriately and effectively. In addition, Shinsei Bank enhances to secure effective equal treatment of shareholders.
  • (2) Shinsei Bank fully recognizes that our sustainable growth and the creation of mid- to long-term corporate value are brought about a result of the provision of resources and contributions made by a range of shareholders, including employees, customers and local communities. As such, Shinsei Bank endeavors to appropriately cooperate with these stakeholders.
  • (3) Shinsei Bank seeks actively disclose various information regarding its management in order to increase in transparency of management, to obtain accurate understanding on our management status and policies from customers, investors and stakeholders, and to widely receive an appropriate evaluation from society. Shinsei Bank aims to provide voluntary, timely and continuous disclosure in fair and effective manner in terms of information not only those in compliance with the relevant laws and regulations but also additional information that does not fall under the Timely Disclosure Rules in order to meet needs from customers, stakeholders and investors. Shinsei Bank endeavors to engage in constructive dialogue with shareholders even outside the general shareholder meeting and to work for developing a balanced understanding of the positions of shareholders and other stakeholders and acting accordingly.

  • iii) Internal Control
  • In addition to establishing a framework for business execution oversight and decision-making chiefly involving the board of directors, a basic policy, the “Internal Control Rules,” has been enacted by cthe board of directors to ensure an effective internal control system, for the sake of ensuring the appropriate functioning of corporate governance. That is to say, we have clearly stipulated in the “Internal Control Rules,” that we shall create an organizational framework consisting of the independent control function of the business execution line (the “First Line”); the oversight function independent from the on-site business execution line (the “Second Line”); and the internal audit function independent from these other two functions (the “Third Line”), and that the Board of Directors shall receive timely and appropriate reports from each of these functions, and thereby ascertain material risks and issues in an appropriate manner while issuing necessary instructions and scrutinizing important policies and control-related matters on a regular basis.
  • In addition, the “Shinsei Bank Group Code of Conduct”, which was established based on the Group ESG Management Policy as a basic framework for ensuring that the performance of work duties and responsibilities by board members and employees of each member company of the Group shall be in compliance with relevant laws and regulations and the articles of incorporation, includes stipulations concerning the prevention of money laundering, terrorist financing and other financial crimes, and prohibition of any relations with antisocial forces, as well as anti-corruption and anti-bribery clauses. All directors, officers, and employees shall comply with this Code of Conduct. The board of directors shall confirm the status of enhancement and performance of these frameworks annually.

5. S: Basic views on Societal Issues

  • i) Basic views
  • We believe that human resources are the most important element for the Group as we engage in financial businesses. The Group’s human resources are the source of our innovation and the competitiveness we require to achieve sustainable growth amidst fiercely competitive market conditions. We provide our employees with our all-out support, fostering a working environment that facilitates flexible working styles in order to provide appealing workplaces and enable people of diversified backgrounds from gender, age, nationalities and all other aspects to fully demonstrate their potential and achieve sustainable Group growth.
    We have established the “Group Human Rights Policy” in order to clarify the Group’s respect to the human rights of all people.
    The Group is now able to meet the financial needs in society that conventional financial services have been unable to satisfy, by creating new opportunities for people to access financial services.
    The Group shall strive to provide easy-to-understand information to enable customers to ascertain their own financial needs in an appropriate manner.
    When providing information, we vow to prioritize customers’ needs first and foremost and provide them with optimal financial products and services.

  • ii) Corporate Philanthropy
  • In order to act as a responsible corporate citizen in accordance with our “Policy for Corporate Philanthropic Initiatives,” the Group is actively committed to contributing to society and is aiming to become a banking group that earns the trust of society. Also, through societal contribution, the Group aims to nurture human resources able to contribute to the sustainable development of society through strengthening teamwork among employees that transcends the boundaries of Group companies and creating networks connecting the Group with communities.

6. E: Basic views on Environmental Issues

Global environmental issues such as climate change are very critical issues relating to the realization of a sustainable society, and we are aware that such issues are also important management issues for us in our pursuit of ESG management.From the perspective of ESG management, environmental issues represent business risks, while at the same time also provide significant business opportunities. The Group will therefore mobilize all of our capabilities as a financial services provider to help tackle environmental issues.

Furthermore, we will actively pursue investment and lending opportunities contributing to the expansion of renewable energy use.

7. Promotion of ESG Investment and Lending

When making investment and loans, the Group will actively involve itself in transactions where the recipients of our investments or loans, or the projects operated by these recipients, contribute to the solution of societal and environmental issues.

In pursuing ESG investment and lending, we aim to enhance the sustainability of the Group’s revenue-growth opportunities through contributing to the creation of a sustainable society.

8. Views on Investment and Lending to Specific Segments

Based on our awareness that tackling environmental and social issues in a sincere manner will lead to the realization of our management principles, we deem it to be a managerial risk for Group companies to, in the course of their business activities, engage in business transactions with companies that do not respond to environmental and societal issues in an appropriate manner. Consequently, when conducting our business, we will assess cases based on considerations relating to environmental and societal issues as well as economic rationality in an appropriate manner.

The Group has identified transactions with businesses such as those listed below as representing serious environmental and societal risks and any further investment or lending transactions involving such businesses shall, in principle, be banned:

Types of transactions which shall be banned in principle:

  • i) Investment and lending transactions connected with anti-social forces;
  • ii) Investment and lending transactions connected with the violation of laws and regulations or aimed at illegal acts or evasion or circumvention of laws;
  • iii) Investment and lending contrary to public order or morals;
  • iv) Investment and lending to companies producing cluster bombs;
  • v) Investment and lending to coal-fired thermal power plants

Note: Although further investment and lending to coal-fired thermal power plants shall not be made in principle, in the case of ultra-supercritical pressure coal-fired thermal power plants* or power plants with the same or higher levels of efficiency, a careful assessment shall be made of the power generation efficiency of the power plant concerned. In addition to technologies used to reduce greenhouse gas emissions, and other considerations pertaining to each individual power plant, with reference to guidelines such as OECD Arrangement on Officially Supported Export Credits and in full consideration of the situations in each country and international conditions relating to coal-fired thermal power plants.

(*) An ultra-supercritical pressure coal-fired thermal power plant is defined as falling into either of following power plant groups:

  • 1. A power plant with a steam pressure of 240 bars or higher and a steam temperature of 593°C or higher.
  • 2. A power plant with a CO2 emission volume of below 750g per kWh.