Sumitomo Mitsui Financial Group
Corporate social responsibility still does not appear to be a big priority for Japanese financial institutions. On a recent trip to Japan, Asiamoney was struck by how many bankers shrugged when asked how much their institution was doing to promote CSR, or about the related priorities of environmental, social and governance (ESG) issues.
But Sumitomo Mitsui Financial Group has made CSR a priority over the last few years. The bank has set up a group CSR department with its corporate planning division, as well as putting together a CSR committee that it says meets periodically. Perhaps more importantly, it has actually given some clarity to those wondering quite just what CSR means – or should mean – for banks.
SMFG has split its CSR strategy into three areas: a push to help the environment; an attempt to support the next generation in Japan and elsewhere; and a commitment to helping build a sense of community, which includes helping non-profits fund social inclusion and supporting reconstruction in areas damaged by natural disasters.
The nature of banks means the most obvious success stories have come on the environmental side. The rise of green financing has given banks an opportunity to show off their ESG credentials at the same time as generating fee revenue, and SMFG has jumped at the chance.
Sumitomo Mitsui Banking Corp became the first Japanese bank to sell a dollar green bond, issuing a $500 million deal in October 2015. It returned to the offshore market this year, raising €500 million at holding company level. These deals have helped grow a market that is going to be crucial for ensuring capital markets can help, rather than hinder, environmental efforts in the years to come.
SMFG’s debt team has also helped a plethora of other Japanese investors tap the green bond investment. Perhaps the most prominent deal was a domestic green bond offering from the Tokyo Metropolitan Government in October, the first time a Japanese local government had tapped the market.
The ¥10 billion ($88 million) deal was split between five- and 30-year tranches, and was partly designed to help fund the development of Tokyo as a smart energy city. SMBC Nikko and Mitsubishi UFJ Morgan Stanley took the lead on the short-dated tranche, with the SMFG subsidiary underwriting ¥3 billion, according to Dealogic.
It is deals like Tokyo’s that will grab the headlines, and SMFG deserves a lot of respect for its role as an underwriter. But by making an internal commitment to CSR at the same time, the bank has shown that responsibility means more to it than just a sales pitch.