Shiga Bank : IMPLEMENTING THE PRINCIPLES FOR RESPONSIBLE BANKING

Reporting and Self-Assessment

High-level summary of bank's response

Reference(s)/Links to details

Requirements

of bank's full response/

relevant information

1.1 An overview of our banking

The Bank, as a regional bank in Japan, operates business mainly in

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business, including main customer

Shiga Prefecture. We provide products and services, with financial

(Strengths of Shiga

segments in key regions where it

intermediary at the core, primarily to customers in the region, including

Bank)

operates, the products and services

individuals, SMEs, and local governments. Of the loans outstanding

it offers, the sectors and projects

totaling about four trillion yen as of the end of March 2022, domestic

it finances, and in some cases,

borrowers account for approximately 99.4%. Of the loans extended to

technologies.

domestic borrowers, consumers account for approximately 26% and

corporate customers comprise the remaining 74%.

Breakdown of domestic loans outstanding by industry *"Other" includes loans to consumers.

Manufacturing 13.5% Agriculture and forestry 0.2%

Fisheries 0.0%

Mining and quarrying and gravel extraction 0.3%

Other 25.7%

Construction 3.2%

Electricity, gas, heat supply and water 2.3%

Information and communications 0.4%

Transport and postal activities 4.4%

Local government

Wholesale and retail trade 10.4%

services 13.0%

Finance and insurance 2.2%

Miscellaneous services 7.9%

Real estate and goods rental and leasing 16.6%

TOP MESSAGE

ABOUT SHIGA BANK

MEASURES FOR CLIMATE

IMPLEMENTING THE PRINCIPLES

CHALLENGES FOR

POWERS SUPPORTING

FINANCIAL SECTION

CHANGE/GLOBAL WARMING

FOR RESPONSIBLE BANKING

VALUE CREATION

VALUE CREATION

Reporting and Self-Assessment Requirements

High-level summary of bank's response

Reference(s)/Links to details

of bank's full response/

relevant information

1.2 Describe how your bank has aligned and/or is

In its Sustainability Vision, the Bank is committed

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planning to align its strategy to be consistent with

to creating "a society where everyone can define

(Sustainability Vision)

and contribute to society's goals, as expressed in

their future and live happily" as a goal for regional

communities, which is aligned with the goals

the Sustainable Development Goals (SDGs), the

expressed in SDGs and the Paris Agreement. To

Paris Agreement, and relevant national and regional

achieve the goal, we have set out specific benchmark

frameworks.

challenges in our Medium-Term Business Plan.

In addition, we have formulated the "Sustainability

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Policy," which sets out our basic policies for realizing

(Sustainability Policy)

a sustainable society, to improve our organizational

structure.

We are also aware that climate change is a priority

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issue (Materiality) that potentially has a material

(Measures for

impact on regional communities. In July 2018, we

Climate Change and

declared our support for the Task Force on Climate-

Information Disclosure

related Financial Disclosure (TCFD) and have since

in Line with TCFD

taken measures to meet its recommendations.

Recommendations)

2.1 Impact Analysis

We have identified 16 issues of Materiality (priority

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Show that your bank has identified the areas in which

issues) in view of the social needs as expressed

(Risks and

it has its most significant (potential) positive and

in SDGs and the Paris Agreement, as well as the

Opportunities)

negative impact through an impact analysis that fulfills

expectations and requests to regional financial

the following elements:

institutions from stakeholders, and have also defined

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a) Scope: The bank's core business areas, products/

the following three areas for priority action over the

(Materiality)

services across the main geographies that the bank

medium- to long-term based on our CSR Charter (our

operates in, as described under 1.1, have been

Management Principles):

considered in the scope of the analysis.

(1) Establishing the regional economy

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b) Scale of Exposure: In identifying its areas of most

(2) Ensuring sustainability of the global environment

(Sustainability Vision)

significant impact, the bank has considered where

(3) Training a diversified workforce

its core business/its major activities lie in terms of

industries, technologies and geographies.

To achieve SDGs and the goals of the Paris Agreement,

c) Context & Relevance: Your bank has taken into

people and companies from across all sectors need to

account the most relevant challenges and priorities

transform their behaviors.

related to sustainable development in the countries/

As the bank representing 48% or more of overall

regions in which it operates.

loans in Shiga Prefecture and thereby having a

d) Scale and Intensity/Salience of Impact: In identifying

certain degree of impact on the economy of the

its areas of most significant impact, the bank has

prefecture, we believe we can contribute to realizing

considered the scale and intensity/salience of the

a sustainable society by making continuous efforts

(potential) social, economic and environmental

to drive behavioral transformation in the regional

impacts resulting from the Bank's activities and

communities.

provision of products and services.

Engage relevant stakeholders in the analysis under

We are now studying impact analysis and intend to

elements c) and d).

announce its results as well as initiatives we have

Show that building on this analysis, the bank has

been working on by the next report (scheduled in July

• Identified and disclosed its areas of most significant

2023).

(potential) positive and negative impact

• Identified strategic business opportunities in relation

to the increase of positive impacts / reduction of

negative impacts

SHIGA BANK REPORT 2022

27

Reporting and Self-Assessment Requirements

High-level summary of bank's response

Reference(s)/Links to details

of bank's full response/

relevant information

2.2 Target Setting

In our Sustainability Vision, we have set three

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Show that the bank has set and published a minimum

milestones as benchmark challenges, which are

(Sustainability Vision)

of two Specific, Measurable (can be qualitative or

aligned with the areas for priority action, to realize the

quantitative), Achievable, Relevant and Time-bound

vision of the regional communities.

SMART targets, which address at least two of the

Of these milestones, we raised the targets for the

following two in June 2021 in view of our progress

identified "areas of most significant impact," resulting

against the benchmark and the growing need

from the bank's activities and provision of products and

to urgently address climate change: "Reduction

services.

in greenhouse gas emissions" and "Activities for

Show that these targets are linked to, drive alignment

promotion and improvement of SDGs and financial

with, and have made a great contribution to

literacy, and Training of next-generation workforce."

appropriate Sustainable Development Goals, the

goals of the Paris Agreement, and other relevant

international, national or regional frameworks. The

(1) Establishing the regional economy

bank should have identified a baseline (assessed

Investment and financing to promote Sustainable

against a particular year) and have set targets against

Development

this baseline.

New investment and financing for a cumulative

Show that the bank has analyzed and acknowledged

total of ¥1 trillion

significant (potential) negative impacts of the set

(2) Ensuring sustainability of the global environment

targets on other dimensions of the SDGs/climate

Reduction in greenhouse gas emissions by 75% or

change/society's goals and that it has set out relevant

more (vs. fiscal 2013)

(3) Training a diversified workforce

actions to mitigate those as far as feasible to maximize

Activities for promotion and improvement of SDGs

the net positive impact of the set targets.

and financial literacy; training of a next-generation

workforce

Aim to target at 30,000 persons

2.3 Plans for Target Implementation and Monitoring

We have been managing three milestones as our

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Show that your bank has defined actions and

benchmark challenges as part of the 7th Medium-

(The 7th Medium-

milestones to meet the set targets.

Term Business Plan of five years and have disclosed

Term Business Plan)

Show that your bank has put in place the means to

our progress against these milestones.

In addition, we have set annual targets, as the Group-

measure and monitor progress against the set targets.

wide targets for retaining the ISO 14001 certification,

Definitions of key performance indicators, any changes

which are incorporated into the activities of each

in these definitions, and any rebasing of baselines

department and affiliate, while each department and

should be transparent.

affiliate has set its own implementation plan. The

Sustainability Committee, which normally meets three

times a year, monitors progress as part of the PDCA

cycle we have developed over the years.

The Sustainability Committee also deliberates on

matters related to monitoring and revision of the

targets set and the status of initiatives implemented

by each department based on the Sustainability Policy,

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and reports these matters to the Board of Directors

(Corporate

and the Management Meeting on a regular basis.

Governance)

TOP MESSAGE

ABOUT SHIGA BANK

MEASURES FOR CLIMATE

IMPLEMENTING THE PRINCIPLES

CHALLENGES FOR

POWERS SUPPORTING

FINANCIAL SECTION

CHANGE/GLOBAL WARMING

FOR RESPONSIBLE BANKING

VALUE CREATION

VALUE CREATION

Reporting and Self-Assessment Requirements

High-level summary of bank's response

Reference(s)/Links to details

of bank's full response/

relevant information

2.4 Progress on Implementing Targets

We have disclosed our progress against the milestones

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For each target separately:

and the benchmark challenges in the 7th Medium-

(Sustainability Vision)

Indicate that the Bank has implemented what it should

Term Business Plan.

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have done to achieve the target set.

In June 2021, we raised the targets to strengthen our

(The 7th Medium-

Or explain why actions were not taken or had to be

sustainability efforts and have since been accelerating

Term Business Plan)

changed, and how your banks is changing its plans to

our efforts.

achieve its goals.

Report on your bank's progress over the last 12 months

(up to 18 months in your first reporting after becoming

a signatory) towards achieving each of the set targets.

(Disclose quantitative information if it is feasible and

appropriate to do so.)

3.1 Provide an overview of the policies and practices

We uphold our CSR Charter (Management Principles),

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your bank has in place and/or is planning to put in

the Bank's motto representing our unchanging spirit,

(Sustainability Policy)

place to promote responsible relationships with its

and established the Sustainability Policy.

To promote responsible relationships with customers,

customers. This should include high-level information

we have focused on constructive dialogues

on any programs and actions implemented (and/or

(engagement) with them through a range of programs

planned), their scale and, where possible, the results

such as Ratings Communication Service. In November

thereof.

2021, we developed an ESG assessment system as a

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tool for dialogue with our customers, through which

(ESG assessment

we seek to understand customers' management issues

system)

including on ESG, in addition to financial issues, and

work to bring initiatives for improving corporate value

out of such issues.

Based on our "Policy for customer-first business

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operation," we have sought to provide customer-

(Policy for customer-

centric goal-based support.

first business

operation)

3.2 Describe how your bank has worked with and/or

We have supported our customers in improving

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is planning to work with its clients and customers to

their corporate value with sustainability-oriented

(ESG Finance)

encourage sustainable practices and enable sustainable

management, primarily through the teams dedicated

economic activities. This should include information on

to ESG finance and carbon neutrality established

actions planned/implemented, products and services

under the Business Promotion Department.

developed, and, where possible, the impacts achieved.

• SDGs consulting

• Shigagin Sustainable Assessment Loan

• Carbon Neutral Loan, Mirai-Yoshi

SHIGA BANK REPORT 2022

29

Reporting and Self-Assessment Requirements

High-level summary of bank's response

Reference(s)/Links to details

of bank's full response/

relevant information

4.1 Describe which stakeholders (or groups/types

Our CSR Charter (Management Principles) states that

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of stakeholders) your bank has consulted, engaged,

we are committed to ensuring mutual prosperity

(Sustainability Vision)

collaborated or partnered with for the purpose of

with regional communities, all employees, and the

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implementing these Principles and improving your

environment, and have emphasized co-creation with

(Stakeholder

bank's impacts. This should include a high-level

all our stakeholders.

Communication)

overview of how your bank has identified relevant

Our Sustainability Vision reflects not only opinions

stakeholders and what issues were addressed/results

from inside the Bank but also the opinions of multiple

achieved.

outside experts obtained through stakeholder

dialogues.

5.1 Describe the relevant governance structures,

In our Sustainability Policy, we state that we are

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policies and procedures your bank has in place/is

determined to focus on increasing positive impacts

(Sustainability Policy)

planning to put in place to manage significant positive

and reducing negative impacts of our activities as a

and negative (potential) impacts and support effective

financial intermediary.

implementation of the Principles.

Within the governance structure of the Bank, the

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Group Sustainability Committee, chaired by the

(Corporate

President and CEO, reviews medium-tolong-term ESG

Governance)

issues and monitors the status of responses to them.

5.2 Describe the initiatives and measures your bank has

To foster the corporate culture of a responsible bank,

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implemented or is planning to implement to foster a

we have provided opportunities to learn about

(Mindset-Work

culture of responsible banking among its employees.

sustainability through job rank-based seminars, and

reforms)

This should include a high-level overview of capacity

also have held seminars related to the environment

building, inclusion in remuneration structures

based on ISO 14001, as well as semiannual seminars

and performance management and leadership

aimed at raising awareness of human rights, for all

communication, amongst others.

employees of the Group. Further, to encourage self-

study, we recommend our employees participate in

courses to learn about ESG finance and take relevant

examinations.

We also established the Diversity Promotion

Committee to create a work environment in which

diverse opinions are respected and everyone can fulfill

their potential.

We are also transforming our performance evaluation

system into one that assesses efforts made from a

medium- to long-term perspective to address social

issues in the regional communities.

5.3 Governance Structure for Implementation of the

We have been working towards setting and achieving

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Principles

targets under the governance structure described in

(The 7th Medium-

Show that your bank has a governance structure in

2.3.

Term Business Plan)

place for the implementation of the PRB, including:

We will also manage our progress against the targets

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a) target-setting and actions to achieve the targets set

set and will take remedial action, drawing on the same

(Corporate

b) remedial action in the event of targets or milestones

structure, should negative impacts be detected.

Governance)

not being achieved or unexpected negative impacts

being detected.