In June 2017, the Financial Stability Board announced Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) (Final Report). The announcement was made in response to concerns over adverse effects on the financial system that could be caused by physical and transition risks in the course of a shift to a lower-carbon society. Daiwa Securities Group Inc. expressed its support to the TCFD in April 2018.

Impact on Daiwa Securities Group in the Course of a Transition to a Lower-Carbon Economy

The table below describes what Daiwa Securities Group currently recognizes, based on the TCFD recommendations, as major events that may adversely affect the Group's businesses in the course of transition to a lower-carbon economy, measures that are expected to reduce such effects, and developments and opportunities anticipated to occur in the future, as well as effects that could remain, according to the four thematic areas below.
Daiwa Securities Group will continuously conduct verification going forward, based on scientific knowledge and expectations about climate change, and respond appropriately as an important management issue.

Disclosures in Accordance with the TCFD Recommendations

Items Recommended disclosures Initiatives
Governance The organization's governance around climate-related risks and opportunities
a) Oversight by the Board of Directors
b) Management's role
  1. 1.Formulation of Environmental Vision, Environmental Principles, and Basic Environmental Policies
  2. 2.Establishment of the SDGs Promotion Committee, chaired by the president and CEO, to discuss the Group's response to various social issues, including climate change
Strategy Impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning
a) Climate-related risks and opportunities
b) Impacts of climate-related risks and opportunities
c) Potential impacts under different climate-related scenarios
  • Opportunities
    1. (1)Increase in demand for funds to prepare for a lower-carbon society (financing for the renewable energy business, issuance of Green Bonds, etc.)
    2. (2)Increase in deals underwritten in association with (1)
    3. (3)Increase in opportunities for investing in new industries and companies that contribute to the transition to a lower-carbon society
    4. (4)Increase in business opportunities for providing solutions to assist in the transition to a lower-carbon society
    5. (5)Improvement of evaluations from stakeholders through appropriate implementation of aforementioned initiatives.
  • Risks
    1. (1)Decrease in business from companies and others significantly affected in the course of the transition
    2. (2)Increase in reputational risk associated with investment and underwriting related to businesses with a heavy environmental load
    3. (3)Decrease in assets under management resulting from a decline in the value of assets held by funds
    4. (4)Decline in the value of assets held by the Group and decrease in selling opportunities
    5. (5)Increase in costs associated with the tightening of environmental regulations and countermeasures against disaster risk
Risk Management Methods for identifying, assessing, and managing climate-related risks
a) Processes for identifying and assessing climate-related risks
b) Processes for managing climate-related risks
c) Integration of processes for identifying, assessing, and managing climate-related risks into overall risk management
  1. (1)Consideration of analysis of the impact of climate change risks on financial and capital markets
  2. (2)Consideration of execution of due diligence from the perspective of ESG and other non-financial information for deals underwritten
  3. (3)The holding of dialogue on the environment and society by the asset management division with investee companies. Discussion on environmental management policy, promotion systems, information disclosure, approach to external evaluations, etc., especially with companies with a large environmental load
Metrics and Targets Metrics and targets used to assess and manage climate-related risks and opportunities
a) Metrics for assessing climate-related risks and opportunities
b) Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions
c) Targets used to manage climate-related risks and opportunities
  1. (1)Disclosure of the company's GHG emissions (refer to this)
  2. (2)Establishment of the company's environmental load reduction target (refer to this)