InterviewEVP Yano Explains JAPAN POST BANK’s Sustainability Initiatives and Targets

Basic Stance

What is the Bank’s focus in its promotion of sustainability?

Our focus is on aiming for the happiness of our customers and employees and contributing to the development of societies and local communities. This is JAPAN POST BANK’s purpose.

Ever since JAPAN POST BANK’s founding in 1875 as a postal money order service established by the government, we have continued to uphold the spirit of founder Hisoka Maejima and aimed to build financial infrastructure equally accessible for everyone. Even after the Bank was privatized in 2007, the Bank’s stance of providing "safe and secure" financial services to anyone and everyone throughout Japan has never changed. As a bank with 120 million accounts, a number roughly equal to the total population of Japan, we recognize that our purpose is to aim for the happiness of our customers and employees, and to contribute to the development of societies and local communities.

JAPAN POST BANK also places importance on contributing to the United Nations Sustainable Development Goals (SDGs) and strives to realize a sustainable society through its business activities. In FY2021/3, we established a Sustainability Management Office within the Corporate Planning Department, building a framework that advances both sustainability and the Bank’s management in unison. As Executive in Charge Of Sustainability, I serve as the Chairperson of the Sustainability Committee, which acts as an advisory body for the Executive Committee. The Sustainability Committee discusses various sustainability-related topics we should address through our business activities, such as ESG issues. The key measures formulated by the Sustainability Committee are then discussed by the Executive Committee, before being discussed and decided upon by the Board of Directors. The progress and results of initiatives are then monitored.

In FY2022/3, JAPAN POST BANK launched its new Medium-term Management Plan (FY2022/3 to FY2026/3). Under the plan, we have reaffirmed our purpose and clearly set out the Three Missions of JAPAN POST BANK, and we will strive to achieve ESG management that combines corporate value enhancement and solutions for issues facing society. These Three Missions are deeply connected to the basic principle of the SDGs, "leave no one behind." To achieve these missions, we have considered the issues facing society and have identified four priority issues (Materiality) that we should address based on the two perspectives of importance to stakeholders and the impact of our business activities. We have also clearly stated our strategies for solving these issues and the target KPIs that we must achieve. I believe that my role as Executive in Charge Of Sustainability is to fully instill an understanding throughout the company that the Bank’s promotion of ESG management relies on the daily efforts of each individual employee to address the priority issues in our Medium-term Management Plan. From this standpoint, in FY2023/3, we began an initiative under which all branches develop their own "SDGs declaration." The aim is to have each branch think about a SDGs declaration that is tied to the Bank’s four priority issues (Materiality), as well as specific initiatives for achieving it, and then put these ideas into practice in the branch’s daily work. In this way, all employees can feel a sense of solidarity with our sustainability management and advance it through initiatives that align with their daily work.

Three Missions

Four Priority Issues (Materiality)

JAPAN POST BANK Priority Issues

Initiatives and Targets

What progress has the Bank made in addressing each of the priority issues (Materiality)?

We are steadily implementing strategies for producing solutions for each of priority issues in ways that are unique to the Bank.

The first priority issue is "providing 'safe and secure' financial services to anyone and everyone throughout Japan." To achieve this, we will offer more digital services that can be used easily by all of our customers, while putting safety and security foremost. The key point is that we will do this by ensuring complementarity between the physical and digital in an approach that is unique to the Bank. Specifically, we will harness our nationwide post office network and have employees provide courteous and considerate support to help customers use our digital services. By doing so, we will ensure that all customers can use digital services safely, including customers who are not yet used to using them. For example, in our Medium-term Management Plan, we have set the target of increasing the number of registered Bankbook App accounts to 10 million by FY2026/3. As of March 31, 2022, we already had 4.81 million registered accounts.

The second priority issue, "contributing to regional economic expansions," is part of JAPAN POST BANK’s purpose. We are working to ensure fund flow to regional communities in a way that is unique to the Bank, where funds are provided not through loans (debt funding) but through fund investment (equity funding). For example, we are working with regional financial institutions throughout Japan by participating in regional revitalization funds. As of March 31, 2022, we had invested in a total of 39 funds, and we aim to have invested in a total of 50 funds by FY2026/3. In addition, through Japan Post Investment Corporation, our consolidated subsidiary established in 2018, we are making focused efforts to provide a flow of equity funding. This company has already formed three funds. In particular, "Japan Post Investment Regional Development and Impact Fund I, ILP," which was formed in April 2022, aims to achieve a sustainable society through investment in companies and businesses that create a positive social impact by contributing to regional revitalization and the SDGs.

The third priority issue is "reducing environmental impact." Here, we will strengthen initiatives that accord with the global standard of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Because the management of securities (internationally diversified investment) is a key pillar of operations in our business model, the greenhouse gas (GHG) emissions of our investees (scope 3) are considerably larger than our own direct emissions (scope 1 and 2). We have therefore set the target of a 46% reduction* in scope 1 and 2 emissions by FY2031/3 compared to FY2020/3, and a target of net zero emissions by 2050, which includes scope 3 (category 15: investments) GHG emissions. We are making steady progress toward these goals. In addition, from the viewpoint of contributing to the realization of a sustainable society through our securities management operations, we are expanding balances for ESG-themed investment such as green bonds. We have increased the target balance for the end of FY2026/3 from \2 trillion to \4 trillion, accelerating our initiatives for realizing a decarbonized society.

* Update: Subsequently raised from 46% reduction to 60% reduction in March 2023.

The fourth priority issue is the "advancement of work style reforms, and sophistication of governance*." We are addressing this issue from the perspective of enhancing the well-being of our employees, as stated in our basic purpose to "aim for the happiness of our customers and employees, and to contribute to the development of societies and local communities." I believe that diversity management is an important part of this. As our customers’ lifestyles diversify alongside changes in Japan’s social structure, their needs are also becoming more diverse, which means that we, as a provider of services, must also diversify our offering to meet their needs. Cognizant of this, I will strive to create an environment where all of the Bank’s employees, who have diverse backgrounds and perspectives, can work with autonomy and independence and build their careers while sharing in JAPAN POST BANK’s purpose. I hope that this makes the Bank a workplace that contributes to employees’ well-being. We are also making considerable efforts to promote women’s empowerment in the workplace, and as of March 31, 2022, the ratio of female employees was approximately 43%, which is comparatively high. As evidenced by our selection to be part of the Nadeshiko Brand and MSCI Japan Empowering Women Index programs, we have been highly evaluated by third parties as a business that excels in supporting women’s empowerment, and we are further strengthening our initiatives in this area. The ratio of women in managerial positions is currently 16.6%. However, given that there is currently a higher ratio of women than men among new graduate hires, I intend to firmly build on this base by increasing the target ratio of women in managerial positions to at least 20% by April 1, 2026.

* Update: The phrase "advancement of work style reforms, and sophistication of governance" was changed to "participation of diverse human resources, and sophistication of governance" in May 2024.

Future Outlook

What are the Bank’s medium- to long-term challenges and policies?

We will proactively communicate information and engage in dialogue with all of our stakeholders to deepen their understanding for and affinity with the Bank.

I believe a wide range of people, from children to adults, consider us the most accessible bank in Japan. I remember going to deposit my pocket money at the post office (JAPAN POST BANK) as a child. That we are somewhere even children feel at ease going to makes us, I believe, a truly unique bank. I also strongly feel that, while continuing to uphold this principle of "providing safe and secure financial services to anyone and everyone throughout Japan" as a bank that is intertwined with people’s lives, we must also transform our business model to align with Japan’s changing social structure.

As I mentioned, over the medium to long term, it is important that we change this model to be able to offer more digital services that all customers can readily use. With changes to Japan’s social structure due to factors such as accelerated demographic aging and an increase in one-person households, as well as clear demand for contactless services as a result of COVID-19, it is vital that we offer more digital services. In addition, "regional digitalization" is an issue across the country, and its promotion is one of the Government of Japan’s basic policies. The transformation of our business model through the achievement of complementarity between the physical and the digital will accelerate our various initiatives to digitalize financial services under the principle of "leave no one behind."

It will become even more important that all of our investors, both in Japan and overseas, including individual investors, understand our unique business model and our aim to increase corporate value while maintaining our public nature. Furthermore, the cooperation of various internal and external stakeholders is essential for promoting sustainability over the medium to long term and achieving our targets. Recognizing that, JAPAN POST BANK will work harder than ever to proactively communicate information in an easy-to-understand manner and engage in constructive dialogue with all stakeholders to deepen their understanding for and affinity with the Bank.

November 2022