Nomura Principles for Responsible Banking Report FY2023/24

Progress on the Implementation of the UN Principles for Responsible Banking

Nomura became a signatory to the UN Principles for Responsible Banking framework in May 2020 and is committed to contributing to the UN Sustainable Development Goals and the Paris Climate Agreement of 2015.

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Principle 1:

Alignment

We will align our business strategy to be consistent with and contribute to individuals' needs and society's goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks.

Business model

Describe (high-level) your bank's business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities across the main geographies in which your bank operates or provides products and services. Please also quantify the information by disclosing e.g., the distribution of your bank's portfolio (%) in terms of geographies, segments (i.e., bybalance sheet and/or off-balancesheet) or by disclosing the number of customers and clients served.

Response:

As a global financial services group with an integrated network that spans Europe, Americas and Asia, Nomura Holdings Inc. ("Nomura" / "Nomura Group" / "The Group") bridges the gap between investors and issuers by playing an active role in the global capital markets.[1] We provide liquidity by facilitating the flow of capital, an essential component of ensuring a sound economy that contributes to business development and improving society.

Links and references:

  1. Nomura Holdings Website, "About Nomura Group"
  2. Nomura Holdings Website, "Retail"
  3. Nomura Holdings Website, "Wholesale"

Nomura services the needs of a diverse set of customer segments, including institutional investors, financial institutions, governments, corporations, various organizations and individual investors, and serves as their most trusted partner.

Nomura provides a wide range of products and services through its Retail Division, Investment Management Division, and Wholesale Division (Global Markets, Investment Banking and International Wealth Management).

Our product offerings across our different divisions include:

  1. Nomura Holdings Website, "Investment Management Division"
  2. Nomura Annual Report 2023, "Financial Review", p.077-082
  3. Nomura Annual Report 2023, "Business Strategy to Create Economic Value", p.024-033
  • Retail[2]
    • Global Equities and Bonds
    • Mutual Funds / Investment Trusts
    • Insurance Products
    • Discretionary Investments
    • Advisory Services for Mergers and Acquisitions
    • Real Estate Referrals
    • Inheritance and Business Succession Services
  • Wholesale (Global Markets/Investment Banking/International Wealth Management)[3]
    • Underwriting of Equities and Debts
    • Advisory Services for Mergers and Acquisitions
    • Risk Solutions
    • Sales in Trading in Equities Rates, Credit, Foreign Exchange and Derivatives
  1. Investor Day Presentation, "Head of Retail", p.003
  2. Investor Day Presentation, " Head of Wholesale", p.004
  3. Investor Day Presentation, "Head of Investment
    Management", p.003
  4. Nomura TCFD Report 2023, "Breakdown of Carbon Related Assets", p. 020

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    • Investment Advisory and Portfolio Solutions
    • Wealth Planning and Trust Solutions
    • Discretionary Portfolio Management
    • Managed Products and Alternative Investments
  • Investment Management (Nomura Asset Management):[4]
    • Investment Trust
    • Investment Corporation
    • Investment Partnership
    • Discretionary Investments, Advisory

The Financial Review Section of the Nomura Report 2023 provides the business outline, revenue split by business segment and income (before taxes) split by region.[5]

Detailed information on Nomura's management vision up to FY2024/25 1 including performance of business segments, strategic themes, KPI and KGI business targets can be found in the Nomura Report within the section on Business Strategy to create economic value.[6] The Investor Day presentation of the Head of Retail[7] contains disclosures on the client types serviced. The Investor Day presentation of the Head of Wholesale[8] contains a breakdown of the Wholesale risk-weighted assets by region and that of the Head of Investment Management[9] contains a breakdown of the assets under management by investor type.

The Risk Management section of the Nomura TCFD Report 2023 provides a breakdown of our carbon related assets by industry.[10]

Strategy alignment

Does your corporate strategy identify and reflect sustainability as strategic priority/ies for your bank?

  • Yes
    ☐ No

Please describe how your bank has aligned and/or is planning to align its strategy to be consistent with the Sustainable Development Goals (SDGs), the Paris Climate Agreement, and relevant national and regionalframeworks.

Does your bank also reference any of the following frameworks or sustainability regulatory reporting requirements in its strategic priorities or policies to implement these?

  • UN Guiding Principles on Business and Human Rights
  • International Labour Organization fundamental conventions
  • UN Global Compact
  • UN Declaration on the Rights of Indigenous Peoples
  • Any applicable regulatory reporting requirements on environmental risk assessments, e.g. on climate risk - please specify which ones: We publish a Nomura TCFD Report annually.

1 Fiscal year or "FY" in this document means a twelve-month period starting from Apr 1. e.g., the fiscal year 2022 or FY2022/23 represents a period starting from Apr 1, 2022, and ending on Mar 31, 2023

2

  • Any applicable regulatory reporting requirements on social risk assessments, e.g. on modern slavery - please specify which ones: We publish our Modern Slavery Act Statement annually in accordance with the requirements of the UK Modern Slavery Act. We have taken similar actions in Australia based on theAustralian Modern Slavery Act 2018. We also publish a UK Gender Pay Gap report annually.[1]
  • None of the above

Response:

Nomura's Founder's Principles, Corporate Philosophy, Code of Conduct, the Nomura Group Sustainability Statement and Nomura Group Human Rights Policy outline the Group's endeavor to be a responsible corporate citizen.[2]

Nomura's management vision is to "Achieve sustainable growth by solving social issues."[3] We are pursuing various initiatives based on the two goals of "Supporting the sustainability initiatives of clients and diverse stakeholders through our business activities" and "Promoting activities such as reducing environmental impact and improving governance in order to ensure that Nomura itself is a sustainable organization."[4]

Links and references

  1. Nomura Holdings Website, "Modern Slavery
    Act Statements, UK
    Gender Pay Gap Report"
  2. Nomura Holdings Website, "Our Commitment to
    Sustainability"
  3. Nomura Annual Report 2023, "CEO Message", p.004

Nomura's Group Sustainability Statement[5] promotes the realization of a sustainable environment and society by informing stakeholders about our approach to sustainability-related activities and our envisaged response to environmental and social risks. As a more detail annex to this statement, we have established the Wholesale Division: ESG Sectoral Appetite Statement[6] and the Investment Management Division: Policy regarding Sustainable Lending and Investing[7]. The former sets forth the Wholesale Division's sector- specific approach and policy on ESG screening and due diligence, while the latter sets out Investment Management Division's policy for the approach that incorporates considerations of ESG factors into relevant investment processes when managing client assets. We review the statements and annex on regular basis.[8]

The Group contributes to international goals by participating in the following major domestic and international initiatives and signing guidelines:[2][5][6][9]

  • Net-ZeroBanking Alliance (NZBA)
  • Partnership for Carbon Accounting Financials (PCAF)
  • UN Global Compact (The United Nations Global Compact)
  • UNEP Financial Initiative (The United Nations Environment Programme Finance Initiative)
  • UN PRB (The United Nations Principles for Responsible Banking)
  • TCFD (Task Force on Climate-related Financial Disclosures)
  • CDP (formerly Carbon Disclosure Project)
  • GX League
  • TNFD (Taskforce on Nature-related Financial Disclosures) Forum
  • The Principles for Financial Action towards a Sustainable Society
  • 30% Club Japan
  • Keidanren Initiative for Biodiversity Conservation
  • Net Zero Asset Managers Initiative (NZAM)*
  • UN PRI (The United Nations Principles for Responsible Investment)*

* Initiatives which only Nomura Asset Management participates in.

  1. Nomura Annual Report 2023, "Sustainability", p.039
  2. Nomura Holdings Website, "Nomura Group Sustainability Statement"
  3. Wholesale ESG Sectoral Appetite Statement, "Our Sector Approach", p.002
  4. Investment Management Division: Policy regarding Sustainable Lending and Investing, "Annex to Nomura Group
    Sustainability Statement", p.001-002
  5. Nomura TCFD Report 2023, "Sustainability Statement", p.002
  6. Nomura Holdings Website, "Participation in
    Initiatives for
    Sustainability"
  7. Nomura TCFD Report 2023, "CEO Message,
    Views on Climate
    Change", p. 001
    "Nomura's Position on Climate Change", p.002
  8. Nomura Holdings Website, " Risk Management"
  9. Nomura Annual Report 2023, "Sustainable Finance", p.040
  10. Nomura TCFD Report 2023, "Major

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In September 2021, Nomura announced our commitment to align our commercial activities with the objectives of the Paris Agreement. We committed to three objectives: achieving net zero GHG emissions from our own operations by 2030; achieving net zero GHG emissions from our lending and investment portfolios by 2050; and aiming to deploy $125 billion in sustainable financing in the five years to March 2026.[10]

Nomura defines risk appetite as the types and level of risk that we are willing to assume in pursuit of its strategic objectives and business plans. The statement is approved by the Executive Management Board and has the consent of the Board Risk Committee.[11]

In October 2022, we established the Sustainable Finance Department to consolidate our internal functions related to sustainable finance, and this department has been providing value-added advice to clients based on our high level of expertise.[12] We have been strengthening our Infrastructure & Power Finance (IPF) business, one of our core businesses overseeing sustainable finance globally. Additionally, in April 2020, Nomura acquired Greentech Capital Advisors. Nomura Greentech is now a fully integrated investment banking team within the Wholesale Division and provides M&A and strategic advisory services and fundraising in the areas of sustainable technology and infrastructure.

In the fiscal year 2022, Nomura has supported structuring and distribution of Transition Bonds under the Japanese government (METI) frameworks, through our Debt Capital Markets business.

In January 2023, we received the Sustainable Innovation Award at the 8th Sustainable Finance Awards, hosted by the Research Institute for Environmental Finance for developing the Green Digital Track Bond (security token bond). This was part of a green bond issuance project of the Japan Exchange Group, and the Green Digital Track Bond was highly regarded for making it possible to avoid greenwashing and visualizing the ESG impact by clarifying environmental data by sing blockchain and other digital technologies. The JPX Market Innovation & Research, Inc. and Nomura Securities jointly received the award for this project.[13]

Nomura Asset Management's Responsible Investment report contains its ESG Statement and Basic Policy for Responsible Investment demonstrating its commitment to Sustainability.[14]

We recognize that regular engagement with our stakeholders is necessary to achieve the goals established in these statements. To this effect we organize events and participate in working groups on the theme of sustainability, in addition to regular Investor Relations activities and shareholders' meetings.[5] In April 2023, a Chief Sustainability Officer was appointed to further accelerate our sustainability initiatives. The Chief Sustainability Officer is responsible for implementing sustainability related strategies including gathering information on sustainability locally and globally, managing the progress of sustainability- related measures, and developing sustainability-related policies and frameworks.[15]

Nomura introduced their Green Transformation or GX initiatives at the Japan Pavilion of the 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) held in Dubai, United Arab Emirates. GX is a Japan-led initiative to achieve carbon neutrality by 2050. We also took part in a seminar titled "Appropriate evaluation of avoided emissions towards net zero society" organized by Japan's Ministry of Economy, Trade and Industry (METI) and the World Business Council for Sustainable Development

achievements in recent years", p.011

  1. Responsible Investment Report 2022, "Basic Policy for Responsible Investment", p.019
  2. Nomura TCFD Report 2023, "Chief
    Sustainability Officer", p.007
  3. Nomura Holdings Website, "Nomura Introduces GX Initiatives at COP28 Japan Pavilion"
  4. Nomura Holdings Website, "Nomura to
    Partner with Stakeholders to Drive Sustainability"
  5. Nomura Holdings Website, "Nomura Sustainability Day"
  6. Nomura Holdings Website, "Nomura
    Sustainability Day, Global Head of Infrastructure and Power Finance Nomura Securities
    International"
  7. Nomura Holdings Website, "Nomura
    Sustainability Day, President and CEO, Nomura Asset Management Co., Ltd."
  8. Nomura Annual Report 2023, "Diversity, Equity and Inclusion", p.049-050

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(WBCSD), and a seminar on the role of sovereign bonds in expanding GX finance organized by METI, Ministry of Finance and the Ministry of the Environment.[16]

"Drive Sustainability" was created as a call to action to enhance communication of the firm's ESG and SDG initiatives to a wide range of stakeholders. Leveraging its strong relationships, Nomura also aims to combine the knowledge and expertise gained through its business with the strengths of various stakeholders to build a more sustainable world.[17]

At the Nomura Sustainability Day held on 28th September 2023, the Head of Group Sustainability and Chief Sustainability Officer jointly presented our sustainability initiatives across different business divisions to a wide range of stakeholders.[18]

At the same event, details on Nomura's sustainability focused Infrastructure and Power Finance businesses were covered by its Global Head. Nomura Asset Management sustainability initiatives can be found in their Presentation.[19][20]

Pages 39 to 46 of Nomura Report 2023 details our sustainability initiatives across themes such as sustainable finance, M&A Advisory in sustainability, support for impact start-ups, net zero initiatives, financial education, human rights commitment, and social contribution activities among others.[3]

On Page 49-50 details on Diversity, Equity and Inclusion initiatives can be found.[21]

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Principle 2:

Impact and Target Setting

We will continuously increase our positive impacts while reducing the negative impacts on, and managing the risks to, people and environment resulting from our activities, products and services. To this end, we will set and publish targets where we can have the most significant impacts.

2.1 Impact Analysis (Key Step 1)

Show that your bank has performed an impact analysis of its portfolio/s to identify its most significant impact areas and determine priority areas for target-setting. The impact analysis shall be updated regularly andfulfil the following requirements/elements (a-d):

  1. Scope:What is the scope of your bank's impact analysis? Please describe which parts of the bank's core business areas, products/services across the main geographies that the bank operates in (as described under 1.1) have been considered in the impact analysis. Please also describe which areas have not yet been included, and why.

Response:

As a diversified financial institution, we recognize the challenges of conducting firm-wide analyses. Our approach is to focus on high priority areas where impacts can be directly addressed.

UNEP FI Tool

In Year 1 of the assessment, Nomura conducted Impact Analysis for part of its Wholesale Business using the UNEP FI Portfolio Impact Analysis tool. Following the methodology, the tool was applicable only for the Investment Banking and Global Markets' advisory, financing and origination businesses. In Year 2, we have expanded scope of the Impact Analysis to include our Retail business using the UNEP Investment Impact Analysis Tool. The business lines in-scope for the impact analysis constituted approximately 35% of Nomura Group revenue in the periods of assessment. This aligns with the revenue split across business line for FY 2023/24 as well.

The International Wealth Management and Global Markets' Trading businesses have not yet been included in scope for the analysis using the UNEP FI tools.

The Asset Management Division has been excluded from scope due to coverage under UN Principles for Responsible Investing (UN PRI) framework.[1]

Materiality Assessment

Nomura's Materiality assessment identifies changes in the environment surrounding Nomura that will have a material impact on Nomura's value creation process, and themes that Nomura should focus on in each of these areas, in line with UN SDGs. We review the Materiality every year based on the environment and Nomura's business developments. Our material issues for 2023 include environmental issues, Japan's declining birthrate & ageing population and DEI & Human rights and are in line with the following nine Sustainable Development Goals:[2]

  • SDG 4 - Quality Education

Links and references

  1. Responsible Investment Report 2022
  2. Nomura Annual Report 2023, "Materiality", p.016
  3. Responsible Investment Report 2022,
    "Materiality", p.012

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  • SDG 5 - Gender Equality
  • SDG 7 - Affordable and Clean Energy
  • SDG 8 - Decent Work and Economic Growth
  • SDG 9 - Industry, Innovation and Infrastructure
  • SDG 10 - Reduced Inequalities
  • SDG 12 - Responsible Consumption and Production
  • SDG 13 - Climate Action
  • SDG 16 - Peace Justice and Strong Institutions.

Disclosures on the Materiality Selection Process, Nomura's understanding of the environment surrounding Nomura and risks/opportunities and Issues and details to work on can be found in the Nomura Report 2023.[2]

Nomura Asset Management, in line with its role as an institutional investor and operating company, also details its key material issues in its Responsible Investment Report 2022.[3]

The sustainability challenges of the geographies and the positive and negative impacts associated have been analyzed to determine the impact areas with respect to the business lines in scope.

  1. Portfolio composition:Has your bank considered the composition of its portfolio (in %) in the analysis? Please provide proportional composition of your portfolio globally and per geographical scope
    1. by sectors & industries for business, corporate and investment banking portfolios (i.e. sector exposure or industry breakdown in %), and/or
    2. by products & services and by types of customers for consumer and retail banking portfolios.

If your bank has taken another approach to determine the bank's scale of exposure, please elaborate, to show how you have considered where the bank's core business/major activities lie in terms of industries

or sectors.

Response:

Wholesale Impact Analysis

The revenue information for the selected business lines was considered from our entire global operations, however, we prioritized top fifteen client geographies for further research and analysis as per the tool. Key client sectors analysed include Financial Institutions, Technology, Media and Telecom, Real Estate, Gaming and Leisure, Industrials, Consumer/ Retail, Healthcare, Energy and Infrastructure and Public Sector.

We also considered the composition of our corporate lending and investment portfolio by GHG emissions for setting of our interim GHG emissions reduction target. The power generation sector was chosen because it accounts for the largest share of our lending and investment portfolio GHG emissions by sector.[1]

Retail Impact Analysis

The impact analysis for our retail business is based on asset classes, sectors and exposures of Retail Client Assets in them. Approximately 98% of our Retail Client Assets were analyzed across asset classes such as equities (listed) and fixed income (corporate bonds, government bonds and mortgages). Key

Links and references

  1. Nomura TCFD Report 2023, "Nomura's Net
    Zero Initiatives", p.015

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sectors analyzed were Automobiles and Components, Banks, Capital Goods, and Retailing among others.

  1. Context:What are the main challenges and priorities related to sustainable development in the maincountries/regions in which your bank and/or your clients operate? Please describe how these have been considered, including what stakeholders you have engaged to help inform this element of the impact analysis.
    This step aims to put your bank's portfolio impacts into the context of society's needs.

Response:

Country-Sector Analysis

For the businesses in-scope for the Impact Analysis, we analyzed the positive and negative impacts of our sectoral exposures in the key countries of operation during the impact identification process. Potential positive and negative impacts as well as the challenges and priorities at a country level were acknowledged during internal discussions.

Links and references:

  1. Nomura TCFD Report 2023, "Climate Change- related Strategies",
    p. 010-014
  2. Nomura Holdings Website, "Investor Day
    Presentation, Head of
    Retail"

Opportunities and Initiatives for Selected Impact Areas

Climate

Nomura recognizes the growth opportunities related to Climate as an Impact Area. Nomura seeks to support its customers in their efforts to decarbonize and resolve social issues in order to realize a carbon neutral, decarbonized and a sustainable society. As we transition to a decarbonized society, some of the growth opportunities lie in the form of:[1]

  • Expansion of sustainable finance:
    • Increasing underwriting opportunities in line with higher capital investment needs related to decarbonization (transition finance).
    • Origination of green projects for renewable energy such as solar and wind power.
  • Providing total solutions in the sustainability field
    • Increasing information-providing opportunities for formulation of decarbonization strategy.
    • Increasing consulting opportunities for sustainability strategy and ESG management.
  • Provision of M&A Advisory services in the sustainability field
    • Increasing M&A advisory opportunity by supporting clients' decarbonization through business portfolio reorganization.
  • Expansion of ESG investment opportunities
    • Developing ESG products.
    • Index development.
    • Assessing the performance of financial instruments against ESG standards.
    • Strengthening information provision to individual investors.

Further detailed information can be found in "Section 3.2 - Climate Change- related Strategies" of the Nomura TCFD Report 2023.

  1. Nomura Holdings Website, "Nomura Sustainability Day"
  2. Nomura Annual Report 2023, "Financial Education Initiatives", p.045
  3. Nomura Holdings Website, "Nomura
    Updates Group Diversity, Equity and Inclusion
    Statement"
  4. Nomura Holdings Website, " Diversity Equity and Inclusion"
  5. Nomura Holdings Website, "Form 6-K",p. 006

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Nomura is actively working to respond to climate change by aiming for net zero for our own operations and our investment portfolios. We are also actively working to enhance our climate-related financial disclosures.

Inclusive and Healthy Economies

The Nomura's management vision is to achieve sustainable growth by helping resolve social issues. The Group is committed to promoting sustainable circulation of capital by underwriting green bonds and social bonds, providing strategic advisory services such as M&A, developing ESG investment funds, and providing them to individual investors. Nomura seeks to support its customers in their efforts to decarbonize and resolve social issues in order to realize a carbon neutral, decarbonized and a sustainable society. We will contribute to the realization of a sustainable society by actively engaging in sustainable finance.

Nomura aims to promote securities investment across all of society to protect assets of more clients and contribute to expansion of capital markets. Nomura helps clients with extending assets in the age of 100-year lifespans and asset planning to counter inflation.

With the Japanese government's plan to double asset-based income, NISA small investment tax exemption system is being expanded and will become permanent from January 2024. Nomura Asset Management is preparing product lineups that will encourage a wide range of age groups to take advantage of the system, including the launch of a new series of low-cost index funds, "My First NISA".

Nomura is increasing contact points with working age generations and supporting improved financial literacy and asset building over the medium to long term. In this way Nomura is contributing to shift in Japan from savings to asset building via investment and also to human capital management at corporates. Nomura Securities has a KPI to increase the number of accessible accounts providing services to salaried employees from 3.49m in FY2022/23 to 3.66m by FY2024/25.[2]

Nomura also formed the Japan Search Fund Platform with Japan Search Fund Accelerator by investing Y5.8bn along with other LP investors. The fund will pick CEO candidates and help them identify companies where they could be installed as successor. When a new leader starts, the fund can inject capital in return for a stake. As of July 2023, 7 researchers were hired and 2 transactions were completed under this initiative.[3]

In addition, since the spread and improvement of financial literacy is essential to the creation of an Inclusive and Healthy Economy, we will promote financial and economic education.

In April 2022, Nomura Securities established the Financial Well-being Dept. in order to strengthen our financial education capabilities. All Nomura Securities branches have established a Financial Well-being Promotion Team, headed by the head of each branch, to provide financial education to a diverse range of students in accordance with the distinct profiles of each community and region.[4]

Diversity, equity and inclusion are also important factors in continuing to grow as an organization. Nomura's Diversity, Equity and Inclusion (DEI) Statement expresses Nomura's commitment to creating a diverse and inclusive workplace that offers fair and equitable opportunities to all employees.[5] The Diversity, Equity & Inclusion Working Group was established under the Sustainability

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Nomura Holdings Inc. published this content on 11 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 March 2024 06:31:00 UTC.