October 28, 2013


Japanese Bank Provides World's First Loan Product Reflecting Company Dependence on Natural Capital

Keywords: Money Non-manufacturing industry 

Sumitomo Mitsui Trust Bank, a major bank in Japan, announced on April 5, 2013, that it has started to make efforts to measure how much a company depends on natural capital by expanding observations upstream the supply chain, and including this evaluation in loan criteria, a first worldwide.

Corporate activities such as raw-material procurement significantly depend on natural capital including plants, animals and other necessities for life like soil, air, and water. On the other hand, economic development and population explosions in developing countries are quickly increasing the risks of natural capital depletion. Consequently, a company largely dependent on natural capital in the supply chain overall is at a greater risk continuing its business operations.

The newly developed product named Environmental Rating Loans with the Evaluation of Natural Capital Preservation uses an original measurement model to calculate water consumption, greenhouse gas emissions, and land-use area upstream the supply chain, on the basis of a company's purchase data, and quantitatively ascertains how much the company depends on natural capital. The result is reflected in the loan criteria. The Sanden Corporation, a major automobile parts manufacturer, became the first company to be financed with this product.

Sumitomo Mitsui Trust Holdings signed the Natural Capital Declaration by the United Nations Environment Programme Finance Initiative (UNEPFI) in June 2012, and is developing financial products and services which give consideration to the concept of preserving natural capital.