Yamaichi Metal Co., Ltd. (hereinafter referred to as “our company”) has concluded the first “Sustainability-Linked Loan (SLL)” contract in Shizuoka Prefecture with Shizuoka Bank, Ltd. (hereinafter referred to as “Shizuoka Bank”).
SLLs are loans where the loan terms, such as interest rates, are linked to the borrower’s performance in “Environment,” “Social,” and “Governance” areas. Incentives are given based on the achievement of these performance targets. SLLs are gaining attention as loans that support companies striving to achieve a sustainable society.
Sustainable Finance Contributing to the Environment, Resources, and the Community
Loans that Increase Corporate Value and Contribute to the Region and Environment
Prior to the conclusion of the SLL, our company set meaningful and ambitious goals aligned with SDGs and ESG strategies. We established the necessary “Key Performance Indicators (KPIs)” and “Sustainability Performance Targets (SPTs)” to evaluate our achievement status. The contribution of our business will be assessed by a third party based on these indicators, and the loan terms, such as interest rates, will vary accordingly. In this contract, Japan Credit Rating Agency, Ltd. (JCR) served as the third-party evaluator.
Shizuoka Bank Supporting Business Activities Contributing to the SDGs
On October 27 this year, Shizuoka Bank set a “Sustainable Finance Target” to execute a cumulative 2 trillion yen in investments and loans over 10 years by fiscal 2030 to actively support regional companies promoting SDGs.
In the first half of fiscal 2021, Shizuoka Bank’s sustainable finance lending amounted to 51.1 billion yen. The bank aims to increase the proportion of sustainable finance in its total loans from the current 15% to approximately 50%, promoting awareness activities such as reducing greenhouse gas emissions.
Reference：Shizuoka Bank’s “Sustainable Finance Target”
SLLs Penetrating Financial Institutions in Japan and Worldwide
SLLs have rapidly increased, especially in Europe since around 2017, and by around 2019, the global lending amount reached 130 billion dollars.
Reference: Environmental Finance (2021) database / Ministry of the Environment, Green Finance Portal
In Japan, the lending amount, which was 55 billion yen in 2019, reached about 260 billion yen in 2021.
Reference: Environmental Finance (2021) database / Ministry of the Environment, Green Finance Portal
Following the “Sustainability-Linked Loan Principles” formulated in 2019 by major financial institutions overseas as international guidelines for SLLs, the Ministry of the Environment published the “Green Loan and Sustainability-Linked Loan Guidelines 2020” to promote SLLs domestically. Consequently, the number of financial institutions participating in SLLs and the companies receiving loans is expected to increase significantly.
Reference：Sustainability-Linked Loan Guidelines
Yamaichi Metal’s Challenge Toward a Sustainable Society
30 Years of Aluminum Can Recycling Business, Holding About 15% of the Domestic Market Share
Our company has been engaged in the recycling business of aluminum cans and laminated aluminum foil since 1985. As of 2020, the demand for aluminum cans in Japan is 21.8 billion cans (331,178 tons), with 94% of these being recycled. The aluminum cans recycled through our “CAN TO CAN Recycling” account for about 10-15% of this total.
Technological Development Has Improved Recycling Energy Efficiency by Over 99%
Our company has contributed to environmental issues not only through recycling but also by significantly improving the energy efficiency of recycling through our proprietary technology.
Without melting the aluminum ingots, which was essential for manufacturing recycled aluminum blocks, we compress roasted pellets directly into tablets. This reduces power consumption to only about 10% compared to traditional recycled blocks and to approximately 0.4% compared to producing new ingots from the raw material “bauxite.” This contributes to reducing both power consumption and greenhouse gas emissions in the aluminum can manufacturing process.
In this SLL contract, the KPI is set as the sales ratio of tablets in the total sales volume, with the SPT aiming to maintain this ratio at 80% or higher.
SDGs Related to Yamaichi Metal’s Challenges
In the SLL contract with Shizuoka Bank, the business activities promoted by Yamaichi Metal and the related SDGs are as follows:
Goal 7: Affordable and Clean Energy
Target 7.3: By 2030, double the global rate of improvement in energy efficiency.
Goal 8: Decent Work and Economic Growth
Target 8.4: Improve progressively, through 2030, global resource efficiency in consumption and production and endeavor to decouple economic growth from environmental degradation, in accordance with the 10-year framework of programs on sustainable consumption and production, with developed countries taking the lead.
Goal 9: Industry, Innovation, and Infrastructure
Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities.
Goal 11: Sustainable Cities and Communities
Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management.
Goal 12: Responsible Consumption and Production
Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.
Target 12.4: By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water, and soil to minimize their adverse impacts on human health and the environment.
Target 12.5: By 2030, substantially reduce waste generation through prevention, reduction, recycling, and reuse.
Goal 13: Climate Action
Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
