Banks creating units to back ecology-based operations
Banks are out to spruce up their images along with their assets by providing loans and other support for environmental operations. Major banks are setting up sections dedicated to nurturing green businesses, not only in Japan, but also worldwide through links with foreign banks.
They are also trying to bring smaller banks into the effort.
At the end of July, the Bank of Tokyo-Mitsubishi UFJ Ltd. conducted a seminar on environmental businesses for senior officials of about 30 regional banks.
A representative from the Tokyo-Mitsubishi UFJ environmental financing unit, who conducted the presentation, said, "The market for environmental businesses is spreading from major cities to local areas."
The unit was established in October 2005 with six people from the bank's loan screening and investment banking sections.
The section provides a range of support, from help with operational plans to financing, for customers in environmental businesses.
As of March this year, the section had provided funding for 23 projects. Including co-financing with regional banks and other institutions, lending came to 50 billion yen, about 1.5 times the section's target.
A senior official of the section said, "There is a shortage of facilities in regional areas to deal with waste materials from local industries, so there will probably be further expansion."
In October 2005, the bank also established an environment fund to support new sources of energy and energy conservation. The bank plans to provide 100 billion yen to the fund over three years.
It has already co-financed one of the largest wind-generated power operations in Hokkaido.
The Mizuho Financial Group is lending to foreign operations. Group member, Mizuho Corporate Bank Ltd., adopted in October 2003 the Equator Principles, which sets out a framework for financing environmental projects in developing countries.
The principles were developed under the leadership of European and American banks, but Mizuho Corporate was the first Japanese bank to adopt them.
In providing financing, priority is accorded to environmental considerations and follow-up surveys are made after loans are provided. In March this year, the bank established a global environmental unit.
Banks are also mediating in emission credit transactions. Mizuho Trust & Banking Co. and other entities developed a system of trusts to facilitate emission credit transactions.
In July, the Sumitomo Mitsui Banking Corp. established with Banco do Brasil, Brazil's largest bank, a cooperative agreement for emission credit transactions.
The two banks intend to use Banco do Brazil's customer base, such as many small businesses treating pig waste, to increase transactions.
