DBJ a Winner at ADFIAP Awards 2022Recognition Given to Arrangement Syndicated Transition Loan for Mitsui O.S.K. Lines

2022/11/30

Development Bank of Japan Inc. (DBJ) has been adjudged a winner by the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP^*1) for outstanding work in the category of Environmental Development. In selecting DBJ for the award, ADFIAP cited the Arrangement Syndicated Transition Loan^*2 for Mitsui O.S.K. Lines, Ltd. (MOL). The 2022 awards were presented at the ADFIAP General Meeting held on the 26^th and 27^th of October 2022.

The ADFIAP Awards recognize the work of development finance institutions with distinguished achievements in the Asia Pacific region. The aim of the awards is to publicize deals and projects which are both outstanding and instructive, as well as to share financial methods and techniques.

MOL is one of the leading shipping companies in Japan, handling domestic shipping and ferries as well as all aspects of ocean shipping. In June 2021, the firm announced its MOL Group Environmental Vision 2.1, which set a goal of achieving net zero emissions for the entire MOL Group by 2050 by introducing about ninety LNG-fueled vessels by 2030.

For this project, a transition loan will be provided to MOL and one of its group companies, Ferry Sunflower Limited (head office: Oita City, Oita Prefecture; president: Mitsujiro Akasaka), to finance the introduction of Japan's first two LNG-fueled ferries (the vessels), scheduled to operate between Osaka and Beppu. DBJ, in collaboration with Sumitomo Mitsui Trust Bank, has arranged this loan with the principal participation of regional banks based in western Japan, close to where the vessels will be built and launched.

The vessels have received the highest rating of five stars from the Ministry of Land, Infrastructure, Transport and Tourism's Energy Saving Rating System for Domestic Vessels. Their introduction is expected to reduce sulfur oxide emissions to zero, and CO2 emissions by more than 20 percent, compared with heavy oil-fueled ships. In addition to contributing to the vital maritime infrastructure that supports the movement of people and goods in western Japan, the vessels are also expected to promote a more eco-friendly modal shift in Japanese transport.

This is the first transition loan in Japan to be selected by the Ministry of Economy, Trade and Industry (METI) as a Climate Transition Finance Model Project^*3. In regard to the loan's qualifications, the Japan Credit Rating Agency states that it complies with the International Capital Market Association's Climate Transition Finance Handbook and the Green Loan Principles established by the Loan Market Association and so on, among other third-party evaluations^*4.

This is the transition loan in which a business operator and financial institutions work together to achieve net-zero emissions, and it has been evaluated as an initiative that contributes to environmental development, leading to the ADFIAP award.

In our 5th Mid-Term Management Plan (see "About the 5th Mid-Term Management Plan" dated May 20, 2021), DBJ promotes the GRIT Strategy^*5 as a means of contributing to a sustainable society through investments and loans. The GRIT Strategy also informs our efforts in this project, and we will continue to work toward the sustainability of society and the revitalization of local communities.

^*1 ADFIAP

^*2 Transition loans are a financing framework intended to support companies working to reduce greenhouse gas emissions in accordance with a long-term transition strategy aimed at realizing a low-carbon society which is the goal of the Paris Agreement.

^*3 Please visit the METI website: https://www.meti.go.jp/shingikai/energy_environment/climate_transition/002.html

^*4 Please visit the website of the Japan Credit Rating Agency: https://www.jcr.co.jp/greenfinance/

^*5 G (Green): Realization of a green society; R (Resilience & Recovery): Construction of a flexible, strong, safe and secure regional, social and industrial infrastructure; I (Innovation): Initiatives for innovation that can be evaluated as feasible for commercialization; and T (Transition/Transformation): Strategic initiatives for transition based on current business fundamentals. These are the areas on which the DBJ Group will focus under the Fifth Medium-Term Management Plan.

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