SMBC supports certain corporate clients in their challenge toward environmental issues through extending an “SDGs Green Loan.” In the said transaction, uses of the proceeds are limited to business projects that could contribute to solving environmental and social issues, and the environmental impact of the loan (e.g. reduction in carbon emissions) will be confirmed through the report to be received from the borrowing client (i.e. the Impact Report).
“SDGs Green Loans” are extended for the following purposes: e.g. challenge for realizing a hydrogen society; efforts to reduce carbon emissions in the product manufacturing process. It is also intended to encourage the borrowing companies to effectively implement disclosure of non-financial information by setting certain KPIs to be covered in the Impact Report.

Uses of the proceeds of the SDGs Green Loan are limited to business projects that could contribute to solving environmental and social issues. Environmental impact of the Loan (e.g. reduction in carbon emissions) will be confirmed through the report to be received from the borrowing client (Impact Report).
In recent years, greater emphasis has been placed on the disclosure of non-financial information, centering on ESG investors. Amongst others, disclosure of social contributions through main business lines and on decent corporate treatment of the environment is quite important, so the outstanding balance of green bonds and social bonds (i.e. bonds for contribution to society) is rapidly growing globally, where projects and business impact are disclosed in great detail and in a manner that is easy to understand. The SDGs Green Loan represents an instrument that is being promoted on a trial basis to realize the said disclosure in indirect finance.
In the case of bonds, it is rather difficult to effectively use the loan in a plan for issuance of non-large amounts due to the higher cost of issuance and cumbersome procedures. However, in the case of loans, more flexible handling is possible compared to bonds.
If this opportunity could serve as a step that satisfies not only investor needs “to invest in financial instruments where the impact of a project or business is disclosed in a manner that is easy to understand” towards the realization of SDGs, and also ensures that the fund-seeking company “effectively discloses non-financial information,” then SMBC would be able to play a meaningful role for SDGs.
The following two cases show how the SDGs Green Loan supports challenges for environmental issues. SMBC will keep on supporting clients financially, running side by side, in their endeavor to achieve SDGs through providing this product as well as confirming the content of the Impact Report.

＜Partner 1: Challenge by ENOMOTO CO., LTD. to realize a hydrogen society＞
Headquartered in Uenohara City, Yamanashi Prefecture, ENOMOTO (a precision machinery component manufacturer) is pursuing R&D for popularization of low-cost and high-quality fuel cell products through an industry-government-academia alliance with Yamanashi Prefecture and Yamanashi University. The company raised funds necessary for R&D and production that enable the development of low-cost and high-quality fuel cells by integrating a gas separator and gas diffusion layer (high-cost parts in producing fuel cells) through an “SDGs Green Loan.”
The R&D activities of the company (i.e. an important part of the supply chain in the global automotive industry) and popularization of fuel cell products would greatly contribute to the realization of a hydrogen society, which is expected to provide the basic measures for solving the following environmental issues: e.g. reduction of environmental burden; ensuring energy security; creation of new industries. The progress situation will be confirmed regarding the challenge of realizing a hydrogen society through comprehension of the following reporting items agreed upon between the company and SMBC.

(Main items to be covered in the Impact Report)
・ Degree of expansion in the quantity of usable renewable energy through the prevalence of the improved fuel cell version
・ Assumed number of vehicles to be converted from a gasoline-based internal combustion engine to the improved fuel cell version; Reduction in the amount of carbon emissions in line with this number
・ Percentage reduction in production cost for the fuel cell version compared to the previous version
・ Progress situation regarding R&D (e.g. number of theses released; number of patents applied for; number of cases that led to successful commercialization)

＜Partner 2: Reduction of environmental burden in the production process, a challenge by Ryobi Limited＞
Headquartered in Fuchu City, Hiroshima Prefecture, Ryobi (a major aluminum diecast component manufacturer) raised the funds necessary for introducing highly environment-friendly equipment (i.e. die casting machines and processing facilities for making aluminum diecast products, etc.) through an “SDGs Green Loan.” This was the first domestic case of a green loan for the purpose of reducing environmental burden in the production process.
This project is noteworthy from the following viewpoints: i.e. There would be a reduction in carbon emissions in the production process thanks to the introduction of new production facilities that are effective in energy saving; and aluminum diecast products would contribute to weight reduction of transportation equipment, which is an important element in reducing greenhouse gas emissions in the transportation sector.
The progress situation will be confirmed with regard to the challenge of reducing environmental burden in the production process through comprehension of the following reporting items agreed upon between the company and SMBC.

(Main items to be covered in the Impact Report)
・ Amount of carbon emissions to be reduced for each of the plants introducing new equipment and devices
・ Realize 100% use of recycled alloys in making aluminum diecast products
・ Reduce carbon emissions per unit production by 13% by December 2020 compared to fiscal 2013
・ Reduce carbon emissions per unit production by 1% compared to the previous fiscal year

To be pursued through collaboration with each of the borrowing clients

・ SDGs Green Loan
https://www.smbc.co.jp/hojin/financing/sdgs_loan/
・ Reference page for case examples
(ENOMOTO CO., LTD.)
https://www.smbc.co.jp/hojin/financing/sdgs_loan/project_2019_02.html
(Ryobi Limited)
https://www.smbc.co.jp/hojin/financing/sdgs_loan/project_2020_01.html