The document discusses green banking and socially responsible investing. It provides background on the speaker's experience screening companies for environmental and social factors since the 1990s. It also outlines the role of banks in reducing information asymmetry regarding environmental and financial risks through lending practices. Socially responsible investing funds that consider ecological and social impacts are growing significantly. The Principles for Responsible Investment were established in 2006 as a framework for investors to achieve sustainable markets and returns through environmental, social and governance analysis.

1. Green Money & Social Entrepreneurs
he Green Leaders Forum #4
Monday May 10, 2010

2. My background;
 1992 Encountered the article on “Eco Banking”.
 1995 Proposed “Eco Banking Strategy” to Sumitomo Bank and
launched “SAFE project”.
 1999 Started screening service for “UBS Japanese Eco fund”.
 2003 Started screening service for Japanese corporate pension
funds.
 2003 Started screening service for “STAM Good Company fund”.
 2008 Made JRI as a rating argency for "SMBC loan evaluating
environment-friendliness"
 2009 Started screening service for Japanese public pension fund.
 2010 Started screening service for “STAM China Good Company
fund”.
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3.  Banks are the most important intermediaries in an economy.
 This intermediary function centres on bringing together and
coordinating savings and investments.
 As a financial intermediary between entities the market, a bank has
four functions: transforming money by size, duration, place and/or
time, and risk.
 It is particularly this last function (the distribution and management
of risks) that will probably be the most important one for attaining a
sustainable society.
 Between borrowers and lenders of money what develops is
information asymmetry, including that which concerns
environmental aspects.
 By in principle having a solid view of environmental and financial
risks, banks fulfil a key role in reducing information asymmetry
between entities in the market.
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4.  For example, a bank can attach a value or price to reduce that
uncertainty.
 Interest rate differentiation among sustainability aspects is justified
from this risk perspectives.
 The scope for interest rate differentiation increases if banks can
raise funds more cheaply because they have a relatively ‘well
qualified’ credit portfolio.
 Banks can go a critical step further by applying interest rate
differentiation on the basis of the will to stimulate sustainable
development.
 By means of their financing policy, banks can then take specific
measures to contribute to sustainable society.
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5.  nvesting as commissioned by clients (in which the same risks as
previously described are generally applicable) are becoming
increasingly more important activities for s.
 In cases where clients are interested not only in financial rewards but
also in ecological and social rewards, an interesting market
develops.
 The market for funds that invest exclusively in companies
demonstrating progressive environmental care, for example, is
growing dramatically.
 Also available are funds specialising in solar energy, wind energy
and environmental technology.
 It is no longer pure idealism, however, that is driving the success of
these funds since the financial yields of several of the more
‘sustainable’ funds are above the market average.
 his is linked to a sweeping monitoring, sometimes conducted by
external agencies, of the financial and environmental aspects of
companies that are usually listed on the stock exchange.
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6.  Number of rated companies: about 2,000 companies (listed companies at
Tokyo Stock Exchange Market and other large companies by market value
 Information source
 Feedback to our annual questionnaires “Research of CSR management trend
in Japan”
 Sustainability report, Environmental Report
 Press release information, information released at web site, information from
media
 Information based on interview
 Select about 300 companies that are best in each of 33 industry sectors.
 Provide the company list, detailed company profiles covering company’s
advantages and disadvantages)
 Providing the information to The Sumitomo Trust and Banking Co, Ltd.,
Sumitomo Trust Banking Asset Management Co., Daiwa Asset Management
Co. Ltd.
 Support customers by holding regular meetings with analysts and fund
managers
 Update positive information on company’s action and CSR trends
 Update negative information on companies
 Annually updates of universes (October) and continuous enlargement of
research universe due to client specific requirements
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7.  Research on 2 dimensions and 14 categories (200 )
 Questionnaires have 6 categories on environmental aspect and 8 categories on
social and governance aspects
 Questionnaires are revised every year to reflect trends of companies
measurements and changes of social issues.
1.Environmental performance
2.Environmental measurement for supply chain management
3.Environmental management
4.Environmental communication
5.Biodiverisity
6.Environmental measurement as business opportunities
1.Corporate governance
2.Fair economic transactions
3.Customer services
4.Labor practices
5.Work and life balance
6.Appropriate corresponding to global market
7.Social contributions
8.Social contributions by products and services
Supporting 7 core issues of ISO26000 7

8. Electrical equipment sector in 2006 research result
Social and governance score
Environmental score
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9. rocedure
Approx. 2000 companies Listed companies at Tokyo Stock Exchange
Market the first section or other large companies by market value
“Environment”, “Social and Governance” Environmental/ Press Direct contacts
questionnaires Sustainable report information
JRI
Update whole universe once a year
Company list Company profiles monitoring through the year and
revising as needed)
Integrating “economic” aspect and
research information by asset management companies
Update whole universe once a year
monitoring through the year and
Decide universe 300 stocks revising as needed)
Updates universe reflecting new actions (positive)
and misconduct (negative)
Decide sector weight Select stocks & decide weight
Sector bias from viewpoint of SRI
e.g.) overweight environmental conscious sector Selection of stocks by best in class approach
Asset
Management Risk control
Companies
Portfolio (50 to 100 stocks)
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10. lobal SRI market
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11.  The Principles for Responsible Investment, convened by
UNEP FI and the UN Global Compact, was established as a
framework to help investors achieve better long-term
investment returns and sustainable markets through better
analysis of environmental, social and governance issues in
investment process and the exercise of responsible
ownership practices.
 In early 2005 the United Nations Secretary-General invited a
group of the world’s largest institutional investors to join a
process to develop the Principles for Responsible Investment
(PRI). Individuals representing 20 institutional investors from
12 countries agreed to participate in the Investor Group. The
Group accepted ownership of the Principles, and had the
freedom to develop them as they saw fit.
 27 April 2006, United Nations Secretary-General Kofi
Annan was joined by a group of the world’s largest
institutional investors at the international launch of the
Principles for Responsible Investment.
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12. ignatories
From 362 signatories and US$14.778 trillion in April 08 to 538 signatories
and US$18 087 trillion in May 09.
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13. ignatories
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14.  Triodos Bank is a European bank registered in The
Netherlands.
 The Bank has five branch offices: in the Netherlands
(www.triodos.nl), Belgium (www.triodos.be), the UK
(www.triodos.co.uk) Spain (www.triodos.es) and Germany
(www.triodos.de).
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16. ust for reference
 ―
“ ”
 60 ( )
 :
(2006/04)
 1,890
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17. More Information
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