Investing in and building environmental assets: Japanese perspective Takejiro Sueyoshi CEO, Green Finance Organization Japan Special Advisor to UNEP FI 25th October, 2016

Natural Capital Round Table in Tokyo “What are the risks and opportunities of Natural Capital to Japanese Corporations and Financial Institutions?” (Photo credit: Secretariat at Principles for Financial Action for the 21st Century)

Satoyama landscape & Satoumi seascape Satoyama is a properly managed land by people. It has a mosaic feature of different land uses, woodland, grassland, paddy field, farmland, irrigation, and human settlements. People used to live in good harmony with nature.

Japan’s Import Dependent Economy About 50% of total material inputs into Japan’s Economy are imported from overseas. Heavily dependent on Energy and Food import. Yet, due to limited conservation activities in overseas countries, Japan is exposed to significant supply chain risks. (Source: http://www.cjc.or.jp/data/pdf/book2016.pdf )

What are the implications? Supply chain risk management Risk assessment tools - how, and how much impact? Risk map - where? New business opportunities Who to reveal hidden value of nature from multidimensional aspects? Who to finance, private and/or public? Any innovative financing solution? What are the existing Japanese Best Practices? Corporations - Oji Paper, AEON, and Suntory Financial Institutions - SMBC, DBJ, SMTB, and Green Finance Association

Manufacturing/Processing Case of Oji Paper Promoting biodiversity conservation and Supply of Eco-friendly Products Forest Management FM Certification Manufacturing/Processing COC ertification Sales COC ertification Oji Group’s Integrated Management (Source: https://www.aeon.info/export/sites/default/common/images/en/environment/report/e_2016pdf/16_eng.pdf) Case of Retail sector: AEON Case of Beverage sector: Suntory promoting sustainable fishing by certifications committing to “Water Sustainability” and reducing environmental impact They signed long-term contracts with forest owners and in 2003 began water resource cultivation and preserve biodiversity in their natural water sanctuary. (Source: https://www.aeon.info/export/sites/default/common/images/en/environment/report/e_2016pdf/16_eng.pdf) (Source: http://www.suntory.com/csr/environment/forest/index.html) (Source: http://www.ojiholdings.co.jp/content/files/english/ir/annual/e_2015_all.pdf)

Case of Financial sector: Development Bank of Japan (DBJ) Environmentally Rated Loan Program since 2004. Sustainability Bond issued in 2015 investing only into projects with a high value for the environment and society. Sumitomo Mitsui Banking Corporation Food and Agriculture Assessment Loans and Private Placement Bonds NADESHIKO Loan and Private Placement Bond Green Bond in 2015. Sumitomo Mitsui Trust Holdings Environmental Rating Loans with the Evaluation of Natural Capital Preservation (Source: http://smth.jp/en/csr/report/2015/NC-E-all.pdf)

Green Bank Congress 2016 Participants: UK Green Investment Bank plc (UK) Clean Energy Finance Corporation (Australia) Connecticut Green Bank (USA) Malaysian Green Technology Corporation (Malaysia) Green Finance Organisation (Japan) Energy Action Network, Vermont (USA) Organisation for Economic Co-operation and Development (OECD) The Coalition for Green Capital (USA) The Natural Resources Defense Council (USA) Korea Environmental Industry & Technology Institute (Korea) Green Climate Fund Bank of Japan (Japan) Government Pension Investment Fund (Japan) Climate Action Network International Climate Works

Green Fund of Japan Launched : May 2013 Mission: To accelerate green finance towards a low carbon society in Japan by supporting renewable energy projects Funding source: Climate Chang Mitigation Tax Fund Scale : 15.3b JPY (approx. 153 mil USD)

We aim to….. a low carbon society in Japan Support projects which reduce CO2 emissions and revitalize local communities Create a new stream of private green capitals create "success models" Spread the models nationally Equity Investment + with a part of ownership, we support projects as a whole a low carbon society in Japan

Climate Change Mitigation Tax Financial institutions A funding structure Low Carbon Project Climate Change Mitigation Tax Financial institutions etc Debt Loan Green Fund Green Fund Equity Invest * Sponsor Equity Invest ＜Financial Structure＞ * Our investment is limited to 1/2 of the total equity amount.

More Opportunities in Green SMEs for Regional Economy (re)vitalization Renewable energy Green infrastructure Mitigation bank A country of “Blessing Nature” Kikuchi Gorge, Kumamoto Relocation Eco tourism Biodiversity and genetic resource ..more room to build “environmental assets”

Thank you very much! شكرا جزيلا ご清聴、有難うございました。