In 2023, Sumitomo Mitsui Financial Group (SMBC Group) became the first bank in Japan to publish a Transition Finance Playbook, setting out definitions and criteria for transition finance. The Playbook, revised in May 2024, serves as a framework to identify activities contributing to the decarbonisation of the real economy and engage with customers to establish appropriate transition plans and strategies.
The Playbook is designed to mobilise more finance for the transition and make SMBC’s portfolio sustainable. It aligns with key global guidelines and regulations, including the Basic Guidelines on Climate Transition Finance and Transition Finance Follow-up Guidance from Japan’s Ministry of Economy, Trade, and Industry (METI), NZBA recommendations, and the Transition Plan Taskforce (TPT) Sector Guidance.
From May 2023 to February 2024, SMBC assessed and chose 18 transition finance projects in accordance with the Playbook’s criteria. The bank then called upon Det Norske Veritas (DNV) to provide an independent second-party opinion on the project selection process. DNV confirmed that the projects were selected in compliance with the Playbook’s requirements. However, DNV noted that certain projects would necessitate continuous monitoring to ensure their ongoing alignment with the transition objectives.
SMBC plans to publish a progress report on the Playbook’s implementation in September to share lessons on engaging more effectively with policymakers and other stakeholders. Additionally, the report will further solidify SMBC’s commitment to supporting the transition to a low-carbon economy.
Read more on SMBC’s net-zero targets here.
This case study was originally published in the Net-Zero Banking Alliance 2024 Progress Report (October 2024).
Disclaimer: NZBA shares case studies to promote member banks’ awareness of new approaches, tools, products, services, and transactions related to financing the transition to net zero. Featuring a case study naming a particular bank does not represent an endorsement of all actions from that bank.