Regional and Shinkin Banks' Recent Efforts to Address Climate Change
June 2, 2023
Financial System and Bank Examination Department
Bank of Japan
Abstract
Amid the growing recognition that addressing climate change is a global issue that could have a wide impact on society and the economy in the future, small and medium-sized enterprises (SMEs), which are the primary client firms of regional and shinkin banks, are increasingly taking steps to address climate change on their own accord. Against this background, regional banks are increasingly offering support to client firms in their efforts to address climate change by providing financial and non-financial services, and are also making efforts to comply with regulations and identify and manage climate-related financial risks they as financial institutions are required to address. Such efforts not only offer regional and shinkin banks new profit opportunities, but also reduce their own climate-related financial risks, allowing them to maintain their market competitiveness and differentiate their services as well as strengthen their business foundations by managing their medium- and long-term capital costs. Focusing in particular on regional banks, this paper introduces regional and shinkin banks' recent efforts to support their client firms, comply with regulations, and manage risks, and outlines expectations for progress in their efforts to address climate change. As such, this paper aims to serve as a reference for regional and shinkin banks in making further progress in their efforts to address climate change.
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