JAPAN POST BANK Priority Issues

Positioning of Priority Issues (Materiality) in Management
Priority Issues (Materiality)

Positioning of Priority Issues (Materiality) in Management

Japan Post Bank is engaging in the advancement of Sustainability management, which combines both corporate value enhancement and the solving of social issues. At the basis of this is a "cycle of value creation" – an approach that involves working to solve social issues and provide value to our various stakeholders through our business activities, which in turn is linked to the enhancement of our corporate value.

Related Information

Management Strategy

Priority Issues (Materiality)

In our Medium-term Management Plan that commenced in FY2022/3, we established priority issues (Materiality) that our company should focus on.
These have been selected from the issues that we, as a "chosen bank that continues to grow with society," must focus on in our processes that deliver value to our stakeholders such as our customers, regional communities, the environment, and our employees. By returning to the fundamentals of our business and specifying these priority issues, we can realize the importance of growing in harmony with society, and our employees can strive to achieve this goal.
Furthermore, for each of these priority issues we have established target KPIs to manage our progress.

Relevance to Materiality

For each of the four materiality issues, we are working to minimize risks and maximize opportunities by sorting out risks and opportunities.

Risks and Opportunities		Specific Initiatives	Target KPIs(FY2026/3)
Risks	Decrease in transactions due to the declining birthrate, aging population, and inadequate response to changes in DX and customer needs Loss of social credibility due to such factors as cyber-attacks and system failures	Provide services through the post office network and support the use of digital services (address the digital divide) Expand offerings of digital/remote ervices that are accessible and easy to use by all customers, with top priority placed on safety and security Support asset-building such as with the new NISA investment program,etc. focusing on retail customers	Number of accounts registered in the Yucho Bankbook App: 16mn (10.4 mn accounts as of March 31, 2024) Number of NISA accounts: 940,000 (730,000 accounts as of March 31, 2024)
Opportunities	Enhancing the Bank’s image through differentiation from other banks Increase in the number of users by providing services that are easy for everyone to use Increase in financial needs through financial literacy education
Risks	Downturn in the market due to a decrease in the local population Reduced opportunities due to inadequate engagement with local communities	Realization of "co-creation platform" with regional financial institutions, etc. The challenge to revitalize local economies and create new corporate value through "Japan Post Bank’s unique GP business" Fund flows to regional areas through various frameworks	GP business-related investments: Approx. ¥400 bn (based on investment commitments) (¥48.9 bn as of March 31, 2024)
Opportunities	Market expansion through revitalization of the local economy Upswing in opportunities through collaboration with diverse partners and efforts to address local equity needs
Risks	Damage to the Bank’s assets such as ATMs due to natural disasters, etc., and an increase in the credit risk of investee companies. Decrease in the value of marketable securities of companies held in market operations that have been significantly affected by stricter environmental regulations Decrease in corporate value in the event the response to environmental issues is assessed as inadequate	Strengthen efforts in accordance with TCFD recommendations^*1 Reduce GHG (greenhouse gas) emissions, promote shift to paperless operations Promote ESG investments and financing	GHG emissions reduction rate: -60% (target by FY2031/3, compared to FY2020/3) (50.8% reduction in FY2023/3) Business forms usage reduction rate: -20% (compared to FY2021/3) Balance of ESG-themed investments and financing: ¥7tn (¥4.6 trillion as of March 31, 2024)
Opportunities	Enhancement of evaluations of JAPAN POST BANK in capital markets and society through appropriate initiatives and disclosures on environmental issues More opportunities to invest in renewable energy projects and green bonds, etc.
Risks	Inability to execute management strategies due to lack of human resources, etc. Low morale due to poor employee engagement Loss of social credibility due to such factors as misconduct, compliance violations, and inadequate measures against money laundering/financing of terrorism	Promote human capital management based on the principles of "Encourage growth" + "Discover abilities" + "Effectively utilize diversity" Further improve the effectiveness of the Board of Directors	Overall employee satisfaction rate: 70% or higher (67.3% in FY2024/3) Ratio of women in managerial positions: 20% (18.4% as of April 2024) Rate of employees taking childcare leave (regardless of gender): 100% (100% in FY2024/3) Rates of employee with disabilities: 3.0% or higher (2.94% as of June 2023)
Opportunities	Creation of innovation by diverse human resources Organizational revitalization and an increase in corporate value through human capital investment and human capital strategies linked to management strategies Increased productivity through diverse work styles

Abbreviation of Task Force on Climate-related Financial Disclosures. An organization established at the proposal of the Financial Stability Board for the purpose of thoroughly realizing corporate information disclosure pertaining to climate change, in which the representatives of the central banks and financial supervisory authorities, etc. of key nations participate.

Abbreviation of Sustainable Development Goals. International goals for the period between 2016 to 2030, stated in "The 2030 Agenda for Sustainable Development" adopted at a United Nations summit in 2015.

The Process of Identifying Materiality

Step 1: Identifying social issues to be considered
Through the methods below, social issues were identified as comprehensively as possible. Analysis of international situation (various types of international frameworks, standards, and external assessments, such as SDGs^2). Analysis of Japan’s situation (administrative bodies, the finance industry). Support of international initiatives (SDGs, TCFD, CDP^3, the United Nations Global Compact^4, and GRI^5). 3 Abbreviation for the Carbon Disclosure Project. An international NPO that manages the disclosure of information regarding the environmental impact of corporations, etc. 4 An international framework that supports the achievement of sustainable growth, proposed by the Secretary-General of the United Nations at the 1999 World Economic Forum. *5 Abbreviation for the Global Reporting Initiative. An international NPO that establishes guidelines for sustainability reports.

Step 1: Identifying social issues to be considered

Through the methods below, social issues were identified as comprehensively as possible.

Analysis of international situation (various types of international frameworks, standards, and external assessments, such as SDGs^*2).
Analysis of Japan’s situation (administrative bodies, the finance industry).
Support of international initiatives (SDGs, TCFD, CDP^*3, the United Nations Global Compact^*4, and GRI^*5).

Abbreviation for the Carbon Disclosure Project. An international NPO that manages the disclosure of information regarding the environmental impact of corporations, etc.

An international framework that supports the achievement of sustainable growth, proposed by the Secretary-General of the United Nations at the 1999 World Economic Forum.

Abbreviation for the Global Reporting Initiative. An international NPO that establishes guidelines for sustainability reports.

Step 2: Narrowing down social issues to be addressed
From among the social issues identified, the Bank narrowed down the social issues to be targeted by the Bank, based on the Bank's perpasses, management philosophy, and business activities, and also reflecting the evaluation results of external research organizations and the opinions of external experts.
Relevancy to Japan Post Bank’s business activities.	Social issues are examined based on Japan Post Bank’s management philosophy, policies, services, and business details, and those with low relevancy to our business activities are removed.
Discussion with stakeholders	In consideration of information such as assessment results from external research agencies and external expert opinions, it is determined whether the issues selected are based on what society demands of the bank.

Step 3: Creating a "Materiality Map"
We created a "Materiality Map" –outlining and sorting priority issues using the two criteria of "importance to our stakeholders" and "the impact of Japan Post Bank business activities" For "Impact of Japan Post Bank's Business Activities", based on the impact of Japan Post Bank's business activities on society and the environment, social issues that have a significant impact on Japan Post Bank are mapped as those that are highly relevant to its business activities.

Step 3: Creating a "Materiality Map"

We created a "Materiality Map" –outlining and sorting priority issues using the two criteria of "importance to our stakeholders" and "the impact of Japan Post Bank business activities" For "Impact of Japan Post Bank's Business Activities", based on the impact of Japan Post Bank's business activities on society and the environment, social issues that have a significant impact on Japan Post Bank are mapped as those that are highly relevant to its business activities.

Step 4: Identifying Priority Issues (Materiality)
The Management Committee and the Board of Directors review the appropriateness and identify four materiality issues. The Management Committee and the Board of Directors confirm the status of progress at their meetings once a quarter. The materiality issues will be periodically reviewed in light of changes in the social environment.The identification, evaluation, review, etc. of materiality issues will be decided by the Board of Directors upon discussion. In FY2020, the Bank identified its first materiality issues in the formulation of its medium-term management plan (FY2021-FY2025). Thereafter, the materiality will be reviewed at least once every two to three years, taking into account changes in the social environment and the Bank's initiatives.

Step 4: Identifying Priority Issues (Materiality)

The Management Committee and the Board of Directors review the appropriateness and identify four materiality issues. The Management Committee and the Board of Directors confirm the status of progress at their meetings once a quarter.
The materiality issues will be periodically reviewed in light of changes in the social environment*.The identification, evaluation, review, etc. of materiality issues will be decided by the Board of Directors upon discussion.

In FY2020, the Bank identified its first materiality issues in the formulation of its medium-term management plan (FY2021-FY2025). Thereafter, the materiality will be reviewed at least once every two to three years, taking into account changes in the social environment and the Bank's initiatives.

identified four priority issues (Materiality)