Nomura : TCFD Report 2021

Nomura TCFD Report 2021

Implementation of TCFD recommendations

To fulfill our responsibilities as a corporate citizen, Nomura Group recognizes the importance of disclosing climate-related financial information. Nomura supports the Task Force on Climate-related Financial Disclosures (TCFD) and we are committed to consistent and effective disclosures aligned with the TCFD recommendations.

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Index

1.	Message from CEO ..............................................................................................................................................	2
2.	Governance	..........................................................................................................................................................	3
3.	Strategy ................................................................................................................................................................	4
	3.1	Opportunity .................................................................................................................................................	4
		3.1.1 Sustainability Services and Initiatives in our company .................................................................	5
		3.1.2	Wholesale Division .......................................................................................................................	6
		3.1.3	Investment Management Division...............................................................................................	10
		3.1.4	Retail Division.............................................................................................................................	10
		3.1.5 Contents Company: Research & Consulting ..............................................................................	10
	3.2	Risks.........................................................................................................................................................	12
4.	Risk Management ..............................................................................................................................................	13
	4.1	Financial Risk Management .....................................................................................................................	13
		4.1.1	Risk Assessment ........................................................................................................................	13
		4.1.2	Market Risk Management...........................................................................................................	14
		4.1.3	Credit Risk Management ............................................................................................................	14
		4.1.4 New product and transactional review process ..........................................................................	14
		4.1.5	Credit Exposure Analysis ...........................................................................................................	15
		4.1.6	Scenario Analysis .......................................................................................................................	16
	4.2	2. Non-Financial Risk Management.........................................................................................................	18
		4.2.1	Operational Risk Management ...................................................................................................	18
		4.2.2 Crisis Management / Business Continuity Plan ..........................................................................	19
5.	Metrics and Targets ...........................................................................................................................................	19
	5.1	Capital directed to Sustainability...............................................................................................................	20
	5.2	Reducing CO2 emissions..........................................................................................................................	20

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1. Message from CEO

Nomura Group was founded in 1925 with a mission to contribute to the creation of a truly prosperous society through the financial and capital markets. We have a diverse team of 26,000 people from 90 different nationalities working in over 30 countries worldwide.

Global warming has affected the climate in various ways, posing a threat to our lives and ecosystems. Greenhouse gas emissions, if they continue unabated, could have further wide-ranging effects on the natural environment. Corporates, investors and the entire financial system also stand to suffer the negative impacts of climate change.

Under the December 2015 Paris Agreement, countries agreed to strengthen the global response to climate change by holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels. To achieve this goal, Japan, the United States, the United Kingdom and the European Union have pledged to become carbon neutral by 2050, and China by 2060. In addition, Japan announced that it will target a 46 percent reduction in greenhouse gas emissions for fiscal 2030 compared with fiscal 2013, and continue striving for an even higher reduction of 50 percent.

At Nomura, we are committed to reducing our own greenhouse gas emissions, and to leveraging our expertise in the capital markets to deliver financing and solutions to support clients in their efforts. We recognize the importance of disclosing climate-related financial information, and we will continue to support the Task Force on Climate-related Financial Information Disclosure (TCFD) and enhance disclosures based on the TCFD recommendations.

Nomura Group's management vision is to achieve sustainable growth by solving social issues. Our business is built on the trust of our clients and all stakeholders. We believe that the sustainable development of society as a whole will help enhance our corporate value. We will continue to serve our clients with pride and strive to achieve sustainable growth.

Kentaro Okuda

President and Group CEO

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2. Governance

In 2009, we published our Environmental Statement and Environmental Policy, which underpin our ongoing initiatives to protect the environment. In light of this, the Board of Directors of Nomura Holdings has stated in its Corporate Governance Guidelines that it will embed ESG considerations, including climate change, in its business activities in order to address social issues and achieve sustainable growth for our company. In the area of risk management, the Group Integrated Risk Management Committee established a Risk Appetite Statement and a Risk Management Policy, which both recognize that ESG factors, including climate change, have a significant impact on various risk categories.

Our Sustainability Committee, chaired by our Group CEO, approves the policies and activities that inform our approach to ESG risks and opportunities, including climate change. In April 2021, an executive officer in charge of sustainability development was appointed, and will work to raise awareness within the Group, enhance our efforts, and increase information disclosure and external communications.

To provide enhanced disclosures in line with TCFD recommendations, we set up a TCFD Working Group under the Sustainability Committee. The TCFD Working Group is focused on various themes including ESG business opportunities and risks, as well as initiatives to lower the impact of our business activities on the environment. The working groups under the Sustainability Committee collaborate with the TCFD Working Group on key initiatives. In April 2021, the D&I (Diversity & Inclusion) Working Group was established as the fifth working group to promote sustainability related initiatives. Matters discussed by the working groups are subject to deliberations by the Sustainability Committee. Reports are made periodically to the Executive Management Board, and, as necessary, to the Board of Directors, which oversees group-wide climate change initiatives.

Governance

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3. Strategy

3.1 Opportunity

To achieve a sustainable decarbonized society, multiple countries, enterprises, and international organizations have addressed their sustainability related commitment.

• Significant new greenhouse gas neutrality commitments have been made by Japan, China, Korea, EU and the US under the Biden administration
• In 2020, there was a surge of net-zero commitments from companies globally; at least one fifth (21%) of the world's 2,000 largest public companies, representing sales of nearly $14 trillion, now have net zero commitments1
• The movements are supported by regulatory frameworks - from United Nations driven initiatives such as SDGs2, UN PRB3, UN PRI4, introduction of taxonomy and labelling framework by EU and other government bodies, NGFS5 coordinated prudential focus across the financial sector

This in turn will create massive financing opportunities as sectors transition to a greener economy. There is an urgent need for climate finance to scale up in all asset classes.

• Major infrastructure investments; approximately $100-150 trillion investment will be needed over next 30 years to meet the targets of the Paris Agreement6
• Majority of investments and transition financing will be needed in Asia (55%) 7
• Accelerated transition will result in changes and opportunities towards 2030 NDC8
• Investors are accelerating asset allocation - Global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management9

Amid this global megatrend, our management vision is to achieve sustainable growth by solving social issues. Nomura Group companies will continue to work together across the board with their respective expertise to maximize the collective strengths of the Group to meet the needs of investors and clients and realize a sustainable society under our management vision.

This past year has been a turning point in terms of our sustainability efforts.

1. Report by Energy and Climate Intelligence Unit (ECIU) and Oxford Net Zero, Mar 2021
2. SDGs：Sustainable Development Goals
3. PRB：Principles for Responsible Banking
4. PRI：Principles for Responsible Investment
5. NGFS：Network for Greening the Financial System
6. GFMA Climate Finance Report Dec 2020
7. GFMA Climate Finance Report Dec 2020
8. NDC：Nationally Determined Contribution：
9. Bloomberg, 21 Feb 2021

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