San in Godo Bank : Sustainability Report 2023

A creative bank that fulfills the dreams of the region and customers we serve

Sustainability

Report 2023

San-in Godo Bank Sustainability Report 2023

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

San-in Godo Bank solves local issues locally and goes beyond the local community to disseminate specific initiatives and models from San-in to help resolve issues facing society.

Editorial Policy

San-in Godo Bank believes that sustainable local communities and the sustainable growth of the Bank are one and the same. We recognize that sustainability initiatives are important management issues, and we work to resolve these issues through our core business and community contribution activities. We have prepared the Sustainability Report 2023 to summarize these efforts. This report references the GRI Standards and TCFD Recommendations and provides ESG information such as sustainability policies and systems, specific initiatives, and case studies.

Scope of Reporting

Reporting Period

Reference Guidelines

Forecasts

In principle, we report information on San-in Godo Bank and consolidated subsidiaries (the San-in Godo Bank Group; the Group).

FY2022 (April 1, 2022-March 31, 2023)

Some contents include information for fiscal 2023.

GRI Standards

*Global Reporting Initiative (GRI): An international organization established in 1997 to pursue common guidelines for sustainability reporting worldwide.

TCFD Recommendations

*Task Force on Climate-related Financial Disclosures (TCFD): A task force established in 2015 by the Financial Stability Board (FSB) to encourage companies to disclose climate-related information. Members include central banks and financial supervisory authorities from major countries.

This report contains forward-looking statements.

Please note that such forward-looking statements may differ due to changes in the business environment and other factors.

Disclosure System

Value Creation Story

IR Information	ESG Information
Integrated Report
	Sustainability
Financial Statements	Report

Annual Securities

Report

Company Presentation

Materials

Mini Disclosure Magazine

Financial

Non-Financial

Website (https://www.gogin.co.jp/en/)

01

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Contents

Top Message	P03
Approach to Sustainability	P05
Policies

Gogin Sustainability

Value Creation Process

Policy on Sustainability Initiatives

Identify Materialities

Initiatives for Materialities

Stakeholder Engagement

Special Dialogue

P18

Achieving a Sustainable Regional Society

Initiatives in the Environmental Field

P22

Response to Climate Change

Aiming for Carbon-Neutral Communities

Reducing the Environmental Impact of Our Business Activities

Environmental Protection Activities in Collaboration With Local Communities

Benefiting the Environment Through Financial Products and Services

Social Initiatives

P36

Complete Support for Local Communities With Relationship Banking

Providing Stable Financial Infrastructure to All Customers Supporting Richer Lives for Our Customers

Improving Services for Customers Requiring Special Care Developing a Broad Range of Unique Social Initiatives

Supporting Local Community and Customer SDG Initiatives

Supporting Active Careers for Diverse Human Resources Respect for Human Rights Initiatives

Corporate Governance Initiatives

P75

Corporate Governance

Risk Management

Various Data

Participation in Initiatives

External Evaluations

ESG Data

GRI Standards Table

Financial Highlights

Corporate Highlights

P84

P85

P86

P93

P97

P98

02

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Top Message

Message From the President

Working as a unified group to practice sustainability management and develop sustainable local communities.

September 2023

President and Representative Director

Toru Yamasaki

Solving the environmental and social issues facing Japan and the world requires the focus of communities and individuals. As part of the financial infrastructure of the region we serve, San-in Godo Bank (the "Bank") aims to not only provide high-quality services, but also to continue having a positive impact on solutions to regional issues and sustainable development.

Response to Climate Change

Responding to climate change is a shared global challenge. In recent years, the importance and pervasiveness of this issue has only risen in urgency. In December 2021, the Bank established medium- to long-term reduction targets toward carbon neutrality. We strive to reduce greenhouse gas emissions throughout the San-in Godo Bank Group (the "Group"). To create decarbonized societies, however, requires region-wide efforts. In addition, the demand for products, services, and technologies leading toward decarbonization grows stronger by the day. This is true for both business activities and consumer behavior. Therefore, we share with our community and customers information about the current state and urgency related to decarbonizing societies, assisting to resolve the issues that differ from partner to partner.

Clean energy offering less environmental impact will be increasingly in demand in the future. Another issue we face is the lack of renewable energy generation facilities in San-in compared with other regions. Given our

03

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Top Message

understanding of these issues, last year, we established Gogin Energy Co., Ltd., the first subsidiary among financial institutions engaged in renewable energy generation. We expect Gogin Energy to accelerate progress toward decarbonization in the region by developing regional infrastructure supporting decarbonized societies. First, the Bank will set an example by taking the business risk to develop renewable energy facilities. Our intent is to assist in expanding local renewable energy businesses, encourage locally produced energy for local consumption, and attract companies seeking sources of renewable energy. We pursue stronger cooperation with local governments and businesses in the region. Three plans jointly proposed with local communities were selected as a Decarbonization Leading Area by the Ministry of the Environment. The Bank will continue to expand these efforts and work toward decarbonized societies together with our communities.

Solving Community Issues and Addressing New Social Problems

San-in, the Bank's home market, has a smaller economy, with a greater aging and declining population compared with other areas of Japan. From early on, we have been dealing with this problem through wisdom and ingenuity. We strive to maintain high-quality financial services to individuals and communities in hard-to-reach mountainous areas and remote islands experiencing declining birthrates and aging demographics. We endeavor to create channels more easily accessible to the elderly and expand services through digital technology.

Since 2006, we have been involved in forest conservation activities, a unique social contribution activity in which Bank employees go directly into the mountains to participate. We continue seeking deeper relationships and development with our communities. These efforts include Gogin Challenged, which supports the independence and social participation of people with disabilities, and Shofukan, a private school training the future leaders of our communities.

Leveraging Human Capital

Our management philosophy isthe creative bank that fulfills the dreams of the region and customers we serve. Under this philosophy, we aim to solve the issues faced by our communities and customers, achieve sustainable development, and grow together. One of the most important tasks in embodying this philosophy is to develop human resources who are useful to the community and our customers. We consider human resources to be one of the most important assets that create value for the Bank. We invest actively in and develop each employee to help them grow, and we create environments in which employees can work with enthusiasm. We introduced substantial revisions to our human resources and career development systems last year. We believe these changes are creating environments in which employees are motivated to grow independently and express their talents fully. Efficient staffing and the training of highly specialized personnel are also necessary for providing

high-value-added services to customers. To this end, we freed up staff through a major restructuring and increased the number of sales representatives for corporate clients significantly. The Bank seeks the sustainable growth of San-in through our management philosophy, which not only encompasses the development of professional human resources who contribute solutions to community and customer issues, but also policies to maximize the value of our human resources through training and improved internal environments.

We embrace employees with diverse values and careers. Their opinions provide valuable insight for us to respond flexibly to a business environment that changes at an unprecedented speed. The ratio of women in management positions (section chief and higher) has reached 25% (consolidated) owing to our active promotion of women according to their talents. We will continue to promote more women in the future.

Sustainability Management

We understand that without the sustainable growth of the region, there will be no sustainable growth for the Bank. Knowing this, we strive as a unified group for the development of sustainable local communities, viewing solutions to environmental and social issues as part of our management strategy and integral to our business. At the same time, we are committed to meeting the trust of our stakeholders through sustainable value creation. We sincerely appreciate your continued support and patronage.

04

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Gogin Sustainability

Management Policy

Continue to Work Together With the Community and our Customers

San-in has a weak economic base and has long faced diverse regional issues. For the region to sustain itself, it must grow by addressing issues through massive internal action. The Bank values our relationship with our communities, and our activities are based on the idea that local issues can be solved locally.

Our fundamental desire to help the community and our customers will remain unchanged as we stay committed to being deeply rooted in the community and endeavor in the sustainability of the region. We will work to pass on our strengths cultivated to date, further improve our problem-solving skills, and grow closer to our management philosophy. In this way, the Bank aims to create sustainable communities and mutual growth.

Management

Philosophy

A creative bank that fulfills the dreams of the region and customers we serve

Value Creation Process

Long-Term Vision

A regional bank leading in sustainable growth and solutions-oriented services

Values and Action Guidelines

Strong

Management

Base

San-in Godo Bank aims to respond to changes in the surrounding environment and customer needs, as well as meet expectations as a leading

Sustainable

Growth

Supporting Our

Communities

We contribute to regional development and the revitalization of local economies by solving community and customer issues through our

Developing

Relationships

With Local

Communities

We believe sustainability management and relationship banking are two sides of the same coin. For Gogin, relationship banking is a

Sustainability

Statement

Customer Satisfaction

(CS) Declaration

San-in Godo Bank Group endorses the United Nations Sustainable Development Goals (SDGs) and strives to make sustainable regional societies possible through initiatives that solve regional issues.

We will always be helpful to our customers.

We will always show gratitude to our customers. We will always serve our customers with a smile.

regional bank. To do so, we have historically sought to strengthen our management foundation, maintain financial soundness through enhancing profitability, and continue to provide cutting-edge financial services and expertise.

core businesses. To continue supporting our communities through core businesses, we aim to acquire more problem-solving capabilities to help our communities and customers, growing together in the process.

universal, unchanging business model that we pursue on a constant basis. We continue to develop deep ties with local communities through contribution activities for greater sustainability in all respects.

05

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Value Creation Process

Our Sustainable Cycle Leads to Regional Growth and Increased Corporate Value Through Contributing to Solving Social Issues

San-in Godo Bank views relationship banking as our universal business model and aims to achieve sustainable regional growth together with our regions. To do so, we will utilize the capital we built to date to solve social issues proactively. The Bank steadily supports our regions and customers by establishing deeper-than-ever ties with both through extensive relationship banking anchored in consulting and digitalization.

Achieve

1. Sustainable Regional Society

Contribute to SDGs

Input

Capital utilized

Human Capital

Hard-working human resources committed to the region

Intellectual Capital

Experts in quality relationship banking with an imaginative and creative corporate culture

Financial Capital

High capital adequacy ratio and high-quality loan assets

Social Capital

A high share of transactions in San-in and a wide-ranging network of branches

Natural Capital

A rich natural environment with abundant regional resources

Materiality

Environment

• Environmental business initiatives
• Response to climate change
• Reduction in environmental impact

Society

• Corporate growth and continuity of regional businesses
• Formation of a safe, secure community
• Contribution to regional society
• Support for regional and customer SDGs/ESG
• Diversity promotion

Governance

• Strengthening group governance
• Enhancing risk management

Management	A creative bank that fulfills
Philosophy	the dreams of the region and
		customers we serve
		2				3
	Build trust,			Propose and implement
1	understand issues		4
		solutions
and needs
			Development of
		Extensive Relationship
Train human resources		Banking	Improve added value
5	of the region and
					customers
			Grow and develop
			the Bank

Governance, Compliance,

Risk Management, and

Stakeholder Dialogues

Output

Value provided

Corporate Clients

Spectrum of consulting services for corporate clients

Individual Customers

Asset consulting services

Easy and convenient services

Regional Society

Environmental protection activities Regional revitalization

Regional contribution activities

Shareholders and

Investors

Profit return

Employees

Improvement of employees' pride and satisfaction in their work

Outcome

Impact delivered

Social Value

Succession of an abundant natural environment for future generations

Growth of regional industries and companies

Comfortable and highly convenient lifestyles

Regional revitalization and local regrowth

Economic Value

Target Management

Indicators

FY2023 Targets (Consolidated) Net profit: ¥16 billion

ROE: 4.5%

	•Declining and aging population	•Prolonged low economic growth and
External	•Changes in industrial structure	low interest rates
•Digital shift in society and the economy
Environment	and corporate behavior
•Diversification of work styles	•Growing awareness of environmental
	and values	and social issues

06

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Policy on Sustainability Initiatives

Under its Sustainability Declaration, the San-in Godo Bank Group is committed to resolving issues to realize sustainable local communities in all areas of its business activities.

Sustainability Declaration

San-in Godo Bank Group endorses the United Nations Sustainable Development Goals (SDGs) and strives to make sustainable regional societies possible through initiatives that solve regional issues.

Sustainability Declaration

https://www.gogin.co.jp/about/csr/sustainability/ (Japanese Only)

Social Initiatives

Corporate Governance Initiatives

Various Data

Sustainability Implementation Framework

The Bank established the Sustainability Committee to strengthen governance and pursue initiatives related to the SDGs and ESG. The Sustainability Promotion Office is solely responsible for planning and management related to sustainability at the Bank. The SDGs/ESG Promotion Working Group, consisting of representatives from each headquarters division, is responsible for cross-organizational initiatives. The Group Company Sustainability Liaison Committee holds meetings to communicate related policies and initiatives.

Board of Directors

Agenda-Setting and Reporting		Supervision

Sustainability Committee

Sustainability Policies

Environmental Policy	P22
Human Rights Policy	P74
Investment and Loan Policy	P25
Purchasing Activity Policy	P31

• Deliberate and make decisions on matters regarding critical medium- tolong-term issues (materialities) related to sustainability
• Deliberate and make decisions on matters regarding SDGs/ESG initiatives
• Report matters regarding the status of SDGs/ESG initiatives
• Report, deliberate, and make decisions regarding matters concerning responses to climate change and other natural disasters

Sustainability Committee Members

Chair	President and Chief Executive Officer
(Representative Director)
	Senior Managing Executive Officers
	Managing Executive Officers
Members	General Managers (Related Departments)
	Audit and Supervisory Committee Members
	(Observers)
Secretariat	Sustainability Promotion Office,
Management Planning Department

Sustainability Promotion Office, Management Planning Department

HQ	Group Company
SDGs/ESG Promotion Working	Group Company Sustainability
Group	Liaison Committee

07

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Policy on Sustainability Initiatives

Sustainability Committee Meetings (Since FY2022)

Meeting	Topic		Content	Major Issues and Items To Be Addressed
Date
FY2022	Future action in light of the	Discussion on future measures to be taken by the Bank based on the Supervisory Guidance on	•Development and implementation of specific action plans to support the decarbonization
1st Meeting	FSA discussion paper	Climate-related Risk Management and Client Engagement released by the Financial Services	of our clients
Agency	•Contribution to regional decarbonization by supplying renewable energy to the region with
May 23, 2022
	•Discussion paper abstract •Specific initiatives	Gogin Energy at the core
				•Disclosure and enhancement of disclosure based on the TCFD recommendations
	Actions related to	Report on the state of biodiversity conservation and discussion on initiative participation	•Endorsement of TNFD and information disclosure based on TNFD guidelines
	biodiversity conservation	•		•
			Trends in Japan and overseas related to biodiversity conservation	Ascertaining which sectors and clients are affected, engagement activities
		•Overview of the TNFD (Task Force on Nature-related Financial Disclosure)	•Incorporation into the Investment and Loan Policy
		•
		Joined Keidanren's Initiative based on the Declaration of Biodiversity
FY2022	Scenario analysis based on	Discussion of overview for scenario analysis based on TCFD recommendations to measure the	•Ongoing efforts to advance analytical methods
2nd Meeting	TCFD recommendations	impact of risks associated with physical damage due to climate change (physical risks) and risks
June 17, 2022		associated with increased regulation and transition to a decarbonized society (transition risks)
FY2022	Disclosure of climate change	Report on new initiatives and disclosures regarding climate change action based on TCFD	•Enhancing disclosure based on the TCFD recommendations
3rd Meeting	action in accord with the	recommendations
July 22, 2022	TCFD recommendations	◎New initiatives:
		(Governance) Holding meetings of the Group Company Sustainability Liaison Committee
		(Strategy) Entry into renewable energy power generation business, scenario analysis
FY2022	Publication of the	For production of the Sustainability Report 2022, discussion of report contents based on the	•Enhancing compliance with the referenced guidelines, e.g., GRI Standards, TCFD
4th Meeting	Sustainability Report 2022	current trends in sustainability information disclosure and external evaluations	recommendations
August 22, 2022		•Specification of path to materiality identification	•Expanding ESG data
		•
		Adding scenario analysis results, concentration of carbon-related exposures
		•Enhancing disclosure items related to human capital
		•
		Adding the director skill matrix
FY2022	Status of ESG-related	Discussion on the status of ESG-related initiatives in the business plan and future policies	•Strengthening collaboration with municipalities and stakeholders
5th Meeting	initiatives and future policies	•Local efforts to promote the spread of SDGs/ESG	•Support starting from the Gogin SDGs Management Support Service
September 12, 2022		•Strengthening support for client decarbonization management	•Establishing new institutional loans
		•Promoting sustainable finance	•Scope 3 measurements
		•Initiatives to achieve carbon neutrality target	•Expanding analysis of transition risk in scenario analysis
		•Enhancing disclosure based on the TCFD recommendations
FY2022	Initiative policies on financial	Discussion of proactive approach to financial and economic education, focusing on the areas of	•Informing and collaborate with each school and business partner
6th Meeting
and economic education	asset building and consumer contracts	•Finance and economics education collaboration with Nomura Securities Co., Ltd.
December 9, 2022

08

Top Message

Approach to Sustainability Policies

Initiatives in the Environmental Field

Social Initiatives

Corporate Governance Initiatives

Various Data

Policy on Sustainability Initiatives

Sustainability Committee Meetings (Since FY2022)

Meeting

Date

Topic

Content

Major Issues and Items To Be Addressed

FY2022	Specific initiatives to achieve	Discussion initiatives to achieve GHG emission reduction targets in the medium-term management	•Energy-saving measures
7th Meeting	GHG emission reduction	plan and toward carbon neutrality by 2030	•Further introduction of renewable energy to other sites
February 16, 2023	targets	•Switching all electricity used in the head office and Tottori Headquarters building to electricity derived	•Utilization of Gogin Energy Co., Ltd.
		from renewable energy sources
		•Upgrade of air conditioning systems at the head office, operations center, and Tottori Headquarters
		building
	Signing onto the Women's	Discussion on signing onto the Women's Empowerment Principles	•Spreading initiatives to local communities
	Empowerment Principles
FY2022	Formulation of ESG work	Discussion on the status of ESG-related initiatives in the business plan and future policies	•Strengthening collaboration with local public bodies and stakeholders
8th Meeting	plan for FY2023	•Local efforts to promote the spread of SDGs/ESG	•Support starting from the Gogin SDGs Management Support Service
March 10, 2023		•Strengthening support for business partners' decarbonization management	•Establishing new institutional loans
		•Promoting sustainable finance	•Expanding targets for Scope 3 measurement and streamlining data aggregation
		•Initiatives to achieve carbon neutrality target	•Enhancing scenario analysis
		•Enhancing disclosure based on the TCFD recommendations
FY2022	TCFD scenario analysis	Discussion of changes from FY2021 in scenario analysis of the impact of risks associated with	•Ongoing efforts to advance analytical methods
9th Meeting	action policy	physical damage due to climate change (physical risks) and risks associated with increased
March 20, 2023		regulation and transition to a decarbonized society (transition risks)
	◎Changes are as follows
		(Physical risk) Added business shutdown as an impact
		(Transition risk) Added some individual companies to scope of analysis after selecting high-risk sectors
		Added changes in raw material prices and assets to impacts after selecting high-risk sectors
FY2023	Establishment of human	Discussion on establishment of personnel development policy and internal environment	•Establishing measurable indicators and targets consistent with each policy
1st Meeting	resources development policy	improvement policy discussions
April 24, 2023	and internal environment	•Establishment of personnel development policy
	improvement policy	•Establishment of internal environment improvement policy
FY2023	Revision of Human Rights	Discussion on policy revisions in accordance with guidelines and practical guidelines provided by the	•Monitoring the supply chain
2nd Meeting	Policy	government and other organizations, and taking into account the requirements in international norms
June 12, 2023		and guidelines on human rights, in order to further strengthen efforts to respect human rights

09