FinanceMap scores this financial institution in the following areas. Please navigate to the relevant tab for in-depth analysis
FinanceMap assesses these portfolios for this financial institution. Please navigate to the relevant tab for in-depth analysis.
The Sumitomo Mitsui Financial Group (SMFG) is the parent holding bank of Sumitomo Mitsui Banking Corporation (SMBC). TCFD reporting for the organization appears to be at the SMBC Group level, which is the focus of this analysis.
The board appears to monitor climate-related issues, but only describes how its board-level committees oversee sustainability issues, lacking detail on how committees consider climate specifically. Management-level committees and positions have some sustainability-related responsibilities, such as the enhancement of risk management and transition plans related to climate change, but it is unclear if there are controls and procedures to support the oversight of climate-related risks and opportunities.
SMBC has defined some climate related risks it considers to be relevant to its business operations, but does not appear to have disclosed the different time horizons over which risks and opportunities are considered. It has referenced some processes used to determine which risks could have a material financial impact on the organization, including a heatmap of risks and opportunities by sector, and is transparent about the climate-related risks and opportunities on its lending, advisory, and investment activities, providing credit exposure by sector and decarbonization solutions across different business areas. SMBC transparently discusses climate-related opportunities with the potential to have a financial or strategic impact on business, outlining how it is contributing to the decarbonization of the real economy, and the Group’s Net Zero Transition Plan.
In 2022, SMBC tested the resilience of its business strategy to climate-related risks and opportunities using various scenarios including a transition scenario focused on the energy, electricity, automobile and steel sectors and a physical scenario focused on the impact of water disasters on the group's customers. It did not update its scenario analysis in its 2023 TCFD Report, and its 2024 Sustainability Report only appears to have added chronic physical risk analysis, while acute physical and transition risks have not been updated. It has disclosed the implications of its scenario analysis on its strategy and business model, including the assumed credit-related costs for each risk type, but has not described how it plans to respond to the effects identified in its scenario analysis.
SMBC has clear risk management processes in place for identifying and prioritizing climate-related risks, including scenario analysis, its Top Risk framework selection method which evaluates the likelihood of risks and their impact, and a sector-specific heatmap which determines the relative significance of climate-related risks and opportunities. It also incorporates climate-related risks in its assessments of credit risk, market risk, liquidity risk, operational risk, and reputational risk.
SMBC has processes in place to manage climate related risks, including a Climate-related Risk Appetite Framework and environmental and social due diligence assessment, and has identified several climate-related risks as “Top Risks”, outlining its risk responses by category. The organization has clearly embedded climate-related risk management with its overall risk management approach, integrating climate-related risks in its overall Risk Appetite Framework and its Top Risks.
SMBC is transparent about various key metrics related to climate-related risks, disclosing its green and sustainable financing, credit exposure by sector, coal-related exposure, and its ESG-weighted executive compensation system. The organization discloses Scope 1 and Scope 2 emissions data, as well as some operational Scope 3 emissions. SMBC has also disclosed Scope 3 Category 15 emissions data, including absolute financed emissions metrics for 21 sectors, and includes client Scope 3 emissions measurements.
SMBC set a net-zero by 2050 target in 2021, which includes a fair share 2030 emission reduction commitment, for a range of material business segments including its loan and investment portfolio. The organization was previously a member of the Net-Zero Banking Alliance but withdrew from the initiative in March 2025, though it appears to maintain its commitment to net zero by 2050. The organization released 2030 interim targets for the oil and gas and coal sectors in its 2022 TCFD report, a 2030 interim target for the power sector in May 2022, and additional 2030 emissions intensity targets for the steel, automobile, and real estate sectors in August 2024.
SMBC has outlined a coal phase out policy which states that it will phase out lending to new or existing coal power generation by 2040, and will phase out lending to thermal coal mining by 2030 in OECD countries and 2040 in the rest of the world. This policy is partially aligned with IPCC guidance. It has also stated that it will not provide support for new or expansion of existing coal-fired power generation or thermal coal mining projects, or new clients whose ‘main business’ is thermal coal mining or associated infrastructure or coal-fired power generation. However, it has not set defined thresholds for revenue from coal and has no measures to address existing coal clients. The organization has set an interim financed emissions reduction target for the coal sector, however it is not consistent with a 1.5C scenario.
With regard to natural gas and oil, SMBC will continue to provide financing assuming clients meet due diligence. Additionally, it will provide financing given due diligence for unconventional gas and oil activities including oil sands, fracking, pipelines, and projects in the Arctic. The organization has set an interim financed emissions target for the oil and gas sector, however, the scenario used is not consistent with 1.5C.
The organization is increasing its financing of renewables, with the organization increasing its sustainable finance target from JPY 30 trillion to JPY 50 trillion by 2029 in May 2023, JPY 20 trillion of which is allocated to green finance. SMBC has also included its definition of sustainable financing, including what it considers green project categories.
FinanceMap’s Climate Governance and Policies analysis assesses statements financial institutions (FIs) are making on how they are incorporating climate issues into their decision-making and operations using FinanceMap’s matrix methodology. This methodology is adapted from the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and guidelines, Net-Zero Banking Alliance (NZBA) or equivalent Glasgow Financial Alliance for Net-Zero (GFANZ) initiative reporting, and IPCC and IEA technology statements. The TCFD provide guidance on 11 recommendations across four areas which are reflected in our matrix: Governance, Strategy, Risk Management, and Metrics and Targets. Additional benchmarks have been introduced to strengthen the ambition of scoring criteria in the assessment of targets, which are supplemented by guidance from the NZBA or equivalent GFANZ initiatives.
Additionally, Science-Based Policy (SBP) benchmarks are used to measure alignment of an FIs technology positions with the science of climate change. These benchmarks are applied to an FIs internal policies on technologies including coal, oil, gas, nuclear, and renewables and also assesses its engagement with broader climate and energy policy issues such as advocacy on the role and importance of different strategy types in the future energy mix.
For each TCFD recommendation and technology, FIs statements are applied to a five point scoring scale ranging from +2 to -2, measuring alignment with the relevant benchmarks. The detailed scores for this FI are displayed below within each matrix cell.
The following table outlines the key queries and data sources, which FinanceMap uses to assess financial institutions climate governance, targets and policies. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area assesses deals in 2020–2024.
Value Assessed: $475B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portfolio Paris Alignment analysis of this institution's activities in this portfolio area assesses deals in 2020–2024.
Value Assessed: $283B
Sector Paris Alignment scores for the sectors to which this portfolio has exposure. FinanceMap Paris Alignment analysis is limited to the automotive, upstream fossil fuel, and power sectors.
Fossil fuel companies are those whose primary sector falls within coal mining and services, or up-, mid-, and downstream oil and gas sectors. Green companies are defined as companies having over 75% revenue deriving from Substantial Contribution to Mitigation activities under the EU Taxonomy.
Portion of AUM Assessed: $29.3B
| Holding Name | Contribution to Sector Production |
|---|---|
| Electric Power Development Co Ltd | 19.2% |
| Tohoku Electric Power Co Inc | 14.4% |
| Kyushu Electric Power Co Inc | 6.9% |
| Iberdrola SA | 6.3% |
| Nextera Energy Inc | 5.1% |
| Kansai Electric Power Co Inc | 4.7% |
| First Solar Inc | 4.6% |
| Shikoku Electric Power Co Inc | 2.9% |
| Enel SpA | 2.6% |
| Duke Energy Corp | 2.4% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Toyota Motor Corp | 57.8% |
| Suzuki Motor Corp | 9.2% |
| Subaru Corp | 8.5% |
| Honda Motor Co Ltd | 8.0% |
| Mazda Motor Corp | 4.1% |
| BYD Co Ltd | 3.2% |
| Nissan Motor Co Ltd | 1.8% |
| Ford Motor Co | 1.4% |
| Tesla Inc | 1.4% |
| Volkswagen AG | 0.8% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Glencore PLC | 42.0% |
| Coal India Ltd | 27.1% |
| Yankuang Energy Group Co Ltd | 12.6% |
| China Coal Energy Co Ltd | 6.4% |
| Exxaro Resources Ltd | 4.4% |
| Alamtri Resources Indonesia Tbk PT | 3.2% |
| China Shenhua Energy Co Ltd | 2.2% |
| Inner Mongolia Yitai Coal Co Ltd | 1.2% |
| United Tractors Tbk PT | 0.7% |
| Adani Enterprises Ltd | 0.4% |
| Holding Name | Contribution to Sector Production |
|---|---|
| Civitas Resources Inc | 21.2% |
| Chevron Corp | 13.8% |
| Exxon Mobil Corp | 7.9% |
| TotalEnergies SE | 7.3% |
| Inpex Corp | 6.8% |
| BP PLC | 4.6% |
| ConocoPhillips | 3.7% |
| Shell PLC | 3.1% |
| PetroChina Co Ltd | 2.7% |
| Canadian Natural Resources Ltd | 2.1% |
Sumitomo Mitsui DS Asset Management (SMDAM) is majority owned by Sumitomo Mitsui Financial Group, and appears to be the main subsidiary offering asset management services.
SMDAM appears to be engaging companies on climate, however it is not robustly engaging on the topic. The asset manager has a climate engagement framework that focuses on net-zero targets and climate disclosures. It also appears to be encouraging companies to achieve net-zero by actions such as acquiring SBT certification for reduction targets. It uses clearly defined milestones to track engagement progress, however it does not outline a defined escalation response if engagements are unsuccessful.
SMDAM appears to be engaging companies on climate, in particular on net-zero targets and disclosure, although examples in its reporting lack details. The asset manager does appear to consider climate policy influence in its engagement strategy, but it is unclear if it is actively engaging on this and again lacks details on its approach. It is involved with several climate-related investor initiatives, such as TCFD and CA100+, although it is unclear how much SMDAM is engaging collaboratively through these initiatives.
SMDAM has described its stewardship governance structure and how it reviews and assesses stewardship policies and activities. It has limited transparency on engagements, only providing some anonymous case studies in its reporting. The asset manager is transparent about its voting record, providing all proxy voting data as well as rationale for decisions against management. SMDAM does not appear to use shareholder authority on climate to support its engagement approach.
Insightia data indicates that SMDAM did not meet the minimum threshold to assess support of AGM resolutions InfluenceMap categorizes as in line with the Paris Agreement. Therefore, the asset manager has not been scored on InfluenceMap's climate-relevant voting query.
FinanceMap's methodology to measure the engagement process on climate was developed in consultation with several of the world's leading asset managers and uses key aspects of the UK Financial Reporting Council's 2020 Stewardship Code . The Stewardship Code was chosen to benchmark engagement quality as it provides an ambitious framework and detailed definitions of what constitutes effective engagement. FinanceMap defines the term ‘engagement’ as referring to all investor actions undertaken to influence the management strategy of the companies they own including private communications with corporate management and appointed advisors; questions at AGMs/other company meetings; comments on the company in the media; escalation and the shareholder resolution process (filing, voting behavior). FinanceMap’s methodology breaks the engagement process down into a set of sub-activities and looks for evidence associated with these across publicly available data sources.
Climate-relevance categorization of shareholder resolutions is based on the IPCC’s Special Report on 1.5°C and its concluded need for “rapid and far-reaching transitions in land, energy, industry, buildings, transport, and cities.” FinanceMap scored voting on any resolution where the intent and likely outcome is consistent with this IPCC stated need. The voting data is drawn from asset managers' disclosures to the US Security Exchange Commission (SEC), asset manager websites (including third-party websites they link to), directly from the asset managers, and through specialist voting data provider Insightia. The full list of resolutions assessed is available here.
The following table outlines the key queries and data sources, which FinanceMap uses to assess asset managers' corporate engagement programs. Every evidence piece is assessed on a five-point scale of -2,-1,0,1,2 or NA (not applicable)/NS (not scored). All queries, data sources, and evidence pieces are weighted against one another in a matrix system to arrive at a final top-level score. Clicking on specific cells will load the underlying evidence and information on how it has been assessed.
