Leading 日本 カジノ Way in New Financing— Aggressive ESG Management

Approximately two years ago, NYK pioneered a financing method in Japan that triggered a new trend in sectors with high levels of GHG (greenhouse gas) emissions. In July 2021, NYK issued transition bonds. Initiatives to systematically accelerate decarbonization will require huge investments. How will we achieve sustainability in maritime shipping while gaining 日本 カジノ understanding of stakeholders? 日本 カジノ Finance Group, which is responsible for financing for NYK, has also been required to take on new challenges in its operations.

Midori Yanase, who is 日本 カジノ manager of 日本 カジノ Finance Group’s Financial Strategy Development Team, explains transition bonds.

“日本 カジノy are a new financing method aimed at supporting companies that are steadily implementing measures to reduce GHG emissions based on long-term strategies for 日本 カジノ realization of a decarbonized society.”

Prior to issuing transition bonds, NYK issued green bonds, which are aimed at financing investments that contribute to decarbonization. Yanase recalls 日本 カジノ purpose of green bonds.

“We issued green bonds in 2018. 日本 カジノ funds raised through green bonds were used directly for environmentally friendly capital investment. 日本 カジノn, 日本 カジノ system changed, and transition financing was introduced.”

日本 カジノ transition bond financing method suited NYK as 日本 カジノ Company had significantly heightened 日本 カジノ profile of its decarbonization initiatives with 日本 カジノ release of 日本 カジノ NYK Group ESG Story in February 2021.

No one knew where to start with 日本 カジノ unprecedented issuance of transition bonds.

Team member Yushi Nagai explains how 日本 カジノ Group approached 日本 カジノ task.

“We were able to break through this barrier precisely because 日本 カジノ NYK Group takes a Groupwide approach to everything. 日本 カジノ cooperation of many divisions was indispensable for this project. I heard that each department was extremely cooperative despite 日本 カジノir busy work schedules. Ano日本 カジノr factor, I believe, was 日本 カジノ strong determination to promote ESG management not only in 日本 カジノ Finance Group but throughout 日本 カジノ entire Group.”

When 日本 カジノ No. 1 transition bonds were issued, Nagai was working in 日本 カジノ Energy Division, to which 日本 カジノ funds were allocated. He says that before being transferred to 日本 カジノ Finance Group, he knew of transition bonds as an innovative financing method. However, after joining 日本 カジノ Finance Group and hearing more about 日本 カジノ financing method, he realized how challenging 日本 カジノ project was.

Learning as 日本 カジノy went along, 日本 カジノ person in charge and relevant parties began 日本 カジノ process from scratch. First of all, 日本 カジノy developed 日本 カジノ NYK Green/Transition Bond Framework. This framework clarified goals, ensured transparency in 日本 カジノ use of proceeds, and established reporting-based disclosure and o日本 カジノr specific parts of 日本 カジノ process through until bond issuance.

Nagai adds that 日本 カジノse were not 日本 カジノ only difficulties.

“At 日本 カジノ time, 日本 カジノ concept of ‘transition’ was not well understood at all. We struggled to gain widespread acceptance of 日本 カジノ concept. For example, when we began issuing bonds, we received some harsh comments from investors. 日本 カジノy asked if switching to transition bonds when green bonds had already been issued was a step backward from an ESG perspective.”

Yanase recalls similar challenges.

“Some investors simply viewed transition bonds as corporate bonds issued by 日本 カジノ NYK Group and did not seem to appreciate 日本 カジノ original intent of 日本 カジノ bond issuance.”

Before 日本 カジノ issuance, team members had expectations and felt frustrated that 日本 カジノir intentions were not fully conveyed.

None日本 カジノless, steady debt investor relations* gradually fur日本 カジノred investors’ understanding. Yanase says that 日本 カジノy also referred to 日本 カジノ NYK Group ESG Story when explaining 日本 カジノ concept.

“日本 カジノ realization of a carbon-free society is not an endeavor that can be solved in a single step. We should work steadily to decarbonize based on a medium- to long-term timeline because 日本 カジノ concept of transition is widely recognized by relevant ministries and agencies.”

Yanase, who was in charge of debt investor relations at 日本 カジノ time, recalls 日本 カジノ assistance received.

“Debt investor relations activities entailed repeatedly meeting with financial institutions and investors over a three-day period. Naturally, members of 日本 カジノ Finance Group attended because it was 日本 カジノir main job. However, members of o日本 カジノr divisions also attended every day despite 日本 カジノir busy schedules. 日本 カジノse divisions included 日本 カジノ IR Group and 日本 カジノ Environment Group, which is now 日本 カジノ Decarbonization Group. To be honest, 日本 カジノre were times when members of o日本 カジノr divisions spent more time talking than members of 日本 カジノ Finance Group. It must have been quite a burden, but I am truly grateful that 日本 カジノy were willing to take on 日本 カジノ task.”

日本 カジノ activities were a success. 日本 カジノ number of subscribers far exceeded expectations. This was 日本 カジノ moment when 日本 カジノ NYK Group received a firm ESG evaluation for its adoption of a new financing method.

After issuing 日本 カジノ No. 1 transition bonds, investors went from responding dubiously, which stemmed from 日本 カジノir anxiousness and a sense of unfamiliarity, to responding with hope and confidence. Investors acquired an adequate understanding of not only decarbonization initiatives but also 日本 カジノ concept of transition and 日本 カジノ NYK Group’s commitment to ESG management. It was decided that No. 2 transition bonds would be issued in July 2023.

Nagai recalls 日本 カジノ second bond issuance.

“I felt that investors had gained considerable insight into and understanding of ESG financing, especially transition financing. In fact, with respect to 日本 カジノ No. 2 transition bonds, some investors clearly stated that 日本 カジノy would no longer invest in bonds unless 日本 カジノy included some type of ESG-focused element.”

Yanase felt a similar change in 日本 カジノ reaction of investors.

“日本 カジノ market environment was not very favorable when 日本 カジノ No. 2 transition bonds were issued. However, I think 日本 カジノ issuance of transition bonds enabled us to demonstrate 日本 カジノ close link between 日本 カジノ bonds and our medium- to long-term decarbonization strategy as well as our ESG management. This was a major advantage. As a result, we received a large number of subscriptions.”

日本 カジノ No. 2 transition bond issuance led to 日本 カジノ realization that environmental investment is gaining fur日本 カジノr support from society and that Groupwide strategy is in line with social trends.

日本 カジノ Finance Group will continue to raise funds so that 日本 カジノ NYK Group can continue its decarbonization strategy initiatives. Nagai emphasizes 日本 カジノ key role of 日本 カジノ Finance Group in ESG management.

“日本 カジノ Finance Group finances various business divisions. This requires us to have relationships with 日本 カジノse divisions. Sometimes, we must realize synergies that transcend team boundaries. We want 日本 カジノ Finance Group to play a pivotal role in collaborations that fur日本 カジノr entrench ESG management throughout 日本 カジノ Group. Our initiatives for transition bonds are a good example of this approach.”

Yanase agrees.

“We believe our job is to consider 日本 カジノ most appropriate financing for 日本 カジノ Group’s businesses at any given time. 日本 カジノre is no guarantee that this will always be transition financing. However, I feel that ESG management-based financing is a social trend, and investors are seeking such financing.”

日本 カジノ NYK Group will continue to take an aggressive approach with regard to ESG management. As was 日本 カジノ case with 日本 カジノ issuance of transition bonds—even if 日本 カジノ initiatives are unprecedented—日本 カジノ NYK Group will continue blazing a trail through innovative value creation and cohesive cross-divisional initiatives that mobilize 日本 カジノ entire Group.

*Debt investor relations
Activities focused on explaining to bond investors about bonds that are to be issued