Positive Impact Finance Agreement with Nippon Life Insurance Company

Mitsubishi Heavy Industries, Ltd. (MHI) has concluded a Nissay Positive Impact Finance (Note1) agreement with Nippon Life Insurance Company (Nippon Life) (contract amount: JPY 6.0 billion yen).
In concluding this agreement, the following Core Impacts were selected from MHI Group's materiality issues and other topics as activities that contribute to achieving the UN SDGs (Sustainable Development Goals). The qualitative and quantitative evaluation is conducted by Nippon Life, with a second opinion provided by Rating and Investment Information Inc. (R&I) (Note2) regarding compliance with the Principles for Positive Impact Finance, and the rationality of the evaluation indicators used.
The results of these measures will be disclosed on the MHI Group website, in the MHI Group SUSTAINABILITY DATABOOK, and in the MHI Group INTEGRATED REPORT, etc.

Core Impacts	Targets and KPIs	SDGs
Provide energy solutions to enable a carbon neutral world	[ Targets ] Reduce total CO2 emissions from business activities (Scope 1 and 2) by 50% by 2030 (compared to 2014 levels), and achieve net zero by 2040 Reduce CO2 emissions across the MHI Group’s entire value chain (Scope 3 + CCUS (Carbon dioxide Capture, Utilization and Storage) contribution for CO2 reduction) by 50% by 2030 (compared to 2019 levels), and achieve net zero by 2040 [ KPIs ] Total CO2 emissions from business activities (Scope 1 and 2) (consolidated basis) CO2 emissions across the entire value chain (Scope 3 + CCUS contribution for CO2 reduction) (consolidated basis)
Reduce environmental impacts	[ Targets ] Reduction in water usage per unit in FY2023 by 7% relative to FY2014. (Water: industrial water, tap water, groundwater, rivers, lakes; excludes seawater). Reduction in waste generation per unit in FY2023 by 7% relative to FY2014 (Excluding valuable materials; including hazardous waste.) [ KPIs ] Reduction in water usage per unit (consolidated basis) Reduction in waste generation per unit (consolidated basis)
Transform society through AI and digitalization	[ Target ] Steadily increase the number of newly developed advanced AI and digital solutions (services, products, R&D) that solve customer issues [ KPI ] Status of initiatives on the develop advanced AI and digital solutions to solve customer issues (consolidated basis)
Build a safer and more secure world	[ Target ] Promote the development and practical application of technologies that enable the remote operation and automatic inspection of products, businesses and infrastructure [ KPI ] Status of initiatives on the development and practical application of technologies that enable remote operation and automatic inspection of products, businesses and infrastructure (consolidated basis)
Promote diversity and improve employee engagement	[ Targets ] Increase the ratio of women on the Board of Directors to at least 30% by 2030 Double the ratio of women in management positions by 2030 (compared to FY2021) [ KPIs ] Ratio of women on the Board of Directors (non-consolidated basis) Ratio of women in management positions (consolidated basis)
Promote Health and Productivity Management® (Note3)	[ Targets ] Increase the regular medical examination rate to 100% every year Increase the comprehensive medical examination rate to 50% or higher every year. Reduce the smoking rate to less than 23% every year [ KPIs ] Regular medical examination rate (consolidated basis) Comprehensive medical examination rate (consolidated basis) Smoking rate (consolidated basis)

• News dated February 9, 2024
  MHI concludes Nissay Positive Impact Finance Agreement

• 1Nissay Positive Impact Finance is ESG-themed investment provided by Nippon Life. By identifying the impacts that a company’s overall business activities have in the areas of environment, society, and economy, and setting KPIs, the financing aims to increase positive impacts while reducing negative ones.
  Major ESG Investment and Finance Examples
  https://www.nissay.co.jp/global/sustainability/esg/example.html
  Positive Impact Finance
  Positive Impact Finance (PIF) is a loan intended to provide continuous support for corporate activities while comprehensively analyzing and evaluating the impacts (both positive and negative) that those activities have on the environment, society, and the economy, based on the Principles for Positive Impact Finance and implementation guidelines formulated by the United Nations Environment Programme Finance Initiative (UNEP FI). The key feature of PIF is the use as an evaluation indicator the degree of contribution to achieving the SDGs through corporate activities, products, and services, and monitoring based on disclosed information.
  United Nations Environment Programme Finance Initiative (UNEP FI)
  The UNEP FI is a broad-based, close partnership between the UNEP and more than 200 global financial institutions. Established in 1992, UNEP FI coordinates with financial institutions, policy agencies, and regulatory bodies to facilitate a shift to financial systems that integrate economic development with environmental, social, and governance (ESG) considerations.
  United Nations Environment Programme (UNEP)
  The UNEP is an auxiliary agency of the UN established in 1972 to implement the Human Environment Declaration and the International Environmental Action Programme.
  Principles for Positive Impact Finance
  The Principles for Positive Impact Finance, formulated by the UNEP FI in January 2017, is a financial framework for achieving SDGs. Companies disclose their contributions to achieving SDGs as KPIs. Banks then assess the positive impact of those contributions and provide funding to enhance the beneficial impacts of that company, and to encourage reduction of negative impacts. Banks provide funds as responsible financial institutions, monitoring the KPIs to confirm that the impacts are ongoing.
• 2For more information about Rating and Investment Information, Inc. (R&I), visit the following website:
  https://www.r-i.co.jp/en/index.html
• 3“Health and Productivity Management®” is a registered trademark of Nonprofit Organization Kenkokeiei.

Reference Links

• MHI Group Sustainability
• MHI Group SUSTAINABILITY DATABOOK 2023 (FYE March 31, 2023)
• MHI Group INTEGRATED REPORT 2023 (FYE March 31, 2023)