Having introduced ESG integration for all assets under management, we comprehensively evaluate and use financial information as well as ESG factors. In making investments and loans, we integrate a method that takes each asset's characteristics into account so as to comprehensively evaluate the ESG initiatives of the investee and incorporate these into our decision-making process.
We have also measured and analyzed the greenhouse gas emissions of our entire portfolio and for each investees, and use the findings to engage with (have constructive dialogue with) carbon intensive sectors and investees to reduce emissions and, finally, to make investment decisions.
In addition, we have established criteria for negative screening in order to resolve ESG issues and realize a sustainable society.

In-House Management

Sovereign Bonds

• We incorporate ESG factors into investee credit evaluation processes.
• When making investment decisions and during monitoring, we consider investments after an evaluation of the investee's ESG factors with reference to scores of external ESG ratings.
• When making ESG-themed investments, we invest in projects that can broadly contribute to the achievement of the SDGs and the resolution of issues, after checking how funds will be used and project feasibility.
• We conduct impact assessments for ESG bonds in which we have invested with the intention of contributing to the resolution of environmental and social issues.

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Our approach to impact assessment is described in the Responsible Investment Report.

Corporate Bonds

• We incorporate ESG factors into investee credit evaluation processes.
• When making investment decisions and during monitoring, we consider investments after an evaluation of the investee's ESG factors with reference to scores of external ESG ratings.
• When making investment decisions, we assess and consider investee companies' responses to climate change, including their efforts to reduce greenhouse gas emissions.
• We evaluate the status of investee company ESG initiatives through dialogues with them and by utilizing the information obtained therein.
• When making ESG-themed investments, we invest in projects that can broadly contribute to the achievement of the SDGs and the resolution of issues, after checking how funds will be used and project feasibility.

Japanese Municipal Bonds/Loans

• We consider ESG factors when selecting municipalities for investment, loans, or dialogue.
• Specifically, when selecting municipalities for investment, loans, or dialogue, we regularly check their ESG initiatives, such as certification under the Zero Carbon City (*1) and SDGs Future City (*2) programs.
• We evaluate the ESG initiatives of municipalities for investment or loans through regular dialogues with them and by utilizing the information obtained therein.
• We invest in SDG bonds with the aim of contributing to the sustainable growth of local communities.

(*1)

As announced by the Ministry of the Environment, a "zero carbon city" is one where the municipality or its chief executive has announced that the municipality aims to reduce greenhouse gas emissions or CO₂ emissions to net zero by 2050.

(*2)

The Cabinet Office selects municipalities proposing outstanding initiatives for the achievement of the SDGs as "SDGs Future Cities."

Project Finance

• We incorporate ESG factors into the credit evaluation processes for investees and loan recipients.
• We check environmental impact and other factors when assessing potential investments or loans before making decisions on each.
• We do not invest additionally in coal-fired power generation projects regardless of location because those emit a large amount of CO₂, and we are concerned about an impact on climate change.

Listed Equities

• We use our unique ESG scoring approach to evaluate equity portfolios.
• ESG scoring method:
  Items that affect future cash flow and cost of capital are extracted and evaluated for each of the three ESG elements of environment (E), social(S), and governance (G).
• The following two types of funds are managed with consideration of this ESG score:
  Dividend funds: Investment in high-dividend companies expected to increase their corporate value over the medium to long term, based on a comprehensive evaluation of the company's ESG initiatives in addition to its financial information
  Growth funds: Investment in companies using ESG as a growth opportunity, evaluating their contribution to business performance and growth potential with regard to technological capabilities and business infrastructure contributing to achieving the SDGs and solving issues, while considering financial information

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Our efforts toward ESG integration in equities are described in the Responsible Investment Report.

Externally Managed Assets

• When selecting and monitoring investment managers, we check their ESG investment initiatives (policies and attitudes toward ESG, specific ESG investment approaches, etc.) and take these into consideration when making investment decisions.
• When deciding whether to invest in externally managed funds, we consider the specifications of the eligible funds and check whether their negative screening and other efforts to exclude specific businesses are appropriate in light of Japan Post Insurance's negative screening criteria.