Climate-Related Information Disclosure
(Disclosure Based on TCFD Recommendations)

The Group has identified "environmental preservation" as one of its material issues and is working to respond to climate change, and is disclosing information in line with the recommendations of the "TCFD (Task Force on Climate-related Financial Disclosures)". We are working on it strategies.

We have established a Sustainability Management Committee to discuss issues that require cross-sectoral and mid- to long-term efforts in order to put sustainability management into practice, including responding to climate change, and to consider specific efforts to resolve these issues. Matters discussed at the Sustainability Management Committee are reported to the Board of Directors on a regular basis (or whenever necessary), and this system complements and strengthens the functions of the Board of Directors.
In addition, we have established an Environmental Policy and an Investment and Loan Policy for the Realization of a Sustainable Society as policies for responding to climate change, and are working to resolve environmental issues and reduce the environmental impact.

Risks and opportunities

We believe that climate change will have a significant impact on social and economic activities and may have a significant impact on our group's business activities.
The Group has identified the impact on our customers’ assets and businesses and on the Group’s assets and businesses as a result of dividing climate change-initiated events into physical events (physical risks) and events related to economic and social transitions (transition risks) and analyzing the effects. On the other hand, we recognize that efforts to mitigate impact events that may occur to our customers’ assets and businesses represent a business opportunity for the Group. The recognized risks and opportunities are as follows.

Cause	Risk	Occurrence phenomena	Effects		Corresponding risks	Opportunity
Climate change	Physical risk	Natural disasters due to torrential rain, etc.	Damage to customer assets	Damage to collateral value and deterioration of customers' business performance	Credit risks	Increased consulting opportunities Increased financing opportunities
			Damage to the Group's assets	Suspension of the Group's business	Operational risks	―
	Transition risk	Legal system changes and strengthened regulations Changes in the supply-demand balance Technological conversion	Unable to respond to additional cost incurred	Deterioration of customers' business performance	Credit risks	Increased consulting opportunities Increased financing opportunities

Scenario analysis

The results of the physical and transition risk scenario analysis based on the TCFD Recommendations are as follows. For physical risks, the impact of flood damage was analyzed, taking into consideration the frequency of occurrence and the degree of impact. For transition risks, the power sector and the automotive sector were the subject of the analysis due to their high greenhouse gas emissions and the significant impact on business associated with the transition to a decarbonized society. In each analysis, the impact on the Group’s financials was limited. Scenario analysis is conducted under certain assumptions, and we will continue to work to expand the scope and sophistication of our analysis.

	Physical risk	Transition risk
Scenario	RCP 8.5 scenario (4°C scenario) according to the Intergovernmental Panel on Climate Change (IPCC)	NZE scenario (1.5°C scenario) according to the International Energy Agency (IEA)
Subject	Business loan recipients (excluding large companies)	Business loan recipients belonging to the electric power and automobile sectors
Analysis method	Estimate the financial impact and collateral value impact on the target customer in the event of flooding based on hazard map data, and calculate the increase in credit costs	Estimate the change to the financials of the target customer, taking into consideration the effect of the introduction of a carbon tax, etc. based on the transition scenario, and calculate the increase in credit costs from the transition in debtor classification
Analysis period	Until 2050
Analysis results	Additional credit costs that may be incurred: Up to ¥5.8 billion	Additional credit costs that may be incurred: ¥6.6 to ¥10.3 billion cumulative

Carbon related assets

We recognize the four industry groups that are considered vulnerable to climate change, namely “energy,” “transportation,” “materials and buildings,” and “agriculture, food, and forest products,” and have identified the loans to these industries.

	Energy	Transportation	Materials and buildings	Agriculture, food, and forest products
Percentage*	1.9%	5.8%	18.0%	3.4%

• *
  Balance of loans to the four industry groups as a percentage of the Bank of Kyoto’s total loans and bills discounted

Examples of subject industries

Energy	Transportation	Materials and buildings	Agriculture, food, and forest products
Coal, oil, and gas Electricity (excluding renewable energy)	Air transportation Martime transportation Land transportation Automotive	Metals and mining Chemicals Building materials and capital goods Real estate management and development	Beverages and food Agriculture Paper manufacturing and forestry

We recognize that if the physical risks and transition risks arising from climate change materialize, they could affect the Group’s performance and financial condition, and we are working to establish a system to manage these risks within the framework of integrated risk management by utilizing scenario analysis and other means.
In terms of investments and loans, we are working to reduce and avoid negative impacts by reducing investments and loans for coal-fired power generation projects, etc., and to increase and create positive impacts by proactively investing and lending to contribute to the reduction of climate change risks and the preservation of forest resources, etc., in accordance with the Policy on Loans and Investments for Achieving a Sustainable Society.

We have set “carbon neutrality by FY2050” as a long-term climate change-related target, and are working on the following two immediate targets for FY2030.

Execute ¥1 trillion in sustainable finance

We define “sustainable finance” as “finance that contributes to the resolution of environmental, social, and economic issues by increasing or creating positive impacts or reducing or avoiding negative impacts.”
In addition to green and sustainable finance in accordance with international frameworks, we have introduced loan programs and products such as the Sustainability Linked Loan (Kyoto Version) and Kyogin Sustainability Linked Loan — Seven Targets which are easy for SMEs to use, in order to support their efforts to realize a sustainable society from a financial perspective.

Reduce CO2 emissions from the Group’s business activities (Scope 1 and 2) by 50% from the FY2013 level by FY2030

In addition to continuing initiatives such as switching to energy-efficient equipment and conserving electricity, in February 2024 we switched the electricity used at five headquarter locations, including the Bank of Kyoto head office, to carbon-free electricity derived from renewable energy sources generated in Kyoto Prefecture, and we will continue to study specific initiatives to achieve our targets ahead of schedule and achieve a carbon-neutral society.

[Sustainable finance target]
Execute ¥1 trillion in financing by FY2030

[CO2 emission reduction target (Scope 1 and 2)]
Reduce by 50% compared to FY2013 by FY2030

The Group is working to expand the scope of measurement of greenhouse gas (GHG) emissions resulting from its business activities, and in April 2024 we introduced C-Turtle® FE, a GHG emissions calculation tool provided by NTT DATA Japan Corporation, to calculate GHG emissions based on the GHG Protocol*. We are working to further reduce the Group’s Scope 1 (direct emissions from fuel combustion and production processes) and Scope 2 (indirect emissions from electricity, heat, and steam use) associated with the Group’s energy use through further promotion of energy conservation and the introduction of renewable energy. For Category 1 (purchased goods and services) and Category 2 (capital goods) of Scope 3, which we have calculated for the first time, we used the total emissions allocation method based on emissions intensity by supplier, in order to perform a calculation that incorporates our suppliers’ reduction efforts. We will continue to promote decarbonization initiatives in cooperation with our suppliers and demonstrate high supplier engagement, thereby contributing to the achievement of net zero across society as a whole.

• *
  GHG Protocol: An international standard used to calculate and report GHG emissions

Group GHG Emissions

Calculation		Details		Calculation results (t-CO2)		Percentage(%)
Scope1		Emissions from gas and gasoline use		1,511		0.02
Scope2		Emissions from electricity use		6,207		0.07
Scope3				8,624,218		99.91
	Category 1		Purchased goods and services		13,061		0.15
	Category 2		Acquired capital goods		5,135		0.06
	Category 4		Upstream transportation and distribution		Included in Category 1		―
	Category 6		Business travel		941		0.01
	Category 7		Employee commuting		1,904		0.02
	Category 8		Upstream leased assets		Included in Scope 1 and 2		―
	Category 9		Downstream transportation and distribution		Included in Category 1		―
	Category 10,11,12		Processing, use, and end-of-life treatment of sold products		―		―
	Category 14		Franchises		―		―
	Category 15		Investments		8,603,177		99.67

• Notes:
  Scope 1 and 2 emissions are calculated for the entire Group.
  The calculations for Categories 1, 2, 6, 7, and 15 were performed for the Company and the Bank of Kyoto.
  For Category 15, calculations were performed for listed shares and corporate bonds, business loans, and project finance.
  The coverage ratio of the calculation results against the subjects is 94.1% on a balance basis.
  Categories 3, 5, and 13 are yet to be calculated.

Scope3 Category 15（Financed Emissions）

Based on the recognition that the calculation of Scope 3, Category 15 (GHG emissions of investees), which accounts for the majority of the total GHG emissions, is important for us to address the opportunities and risks associated with climate change, we have made it a priority initiative and performed calculations for investments and loans to domestic corporations based on the PCAF standard* measurement method.
There are two methods for calculating Scope 3, Category 15 emissions: the top-down method, in which emissions are estimated based on the investee’s financial and other data, and the bottom-up method, in which emissions are calculated based on the investee’s actual emissions. In order to improve data quality, which is considered important in the PCAF standard, we recognize that it is necessary to increase the proportion of data calculated using the bottom-up method. By using C-Turtle® FE on this occasion, we have performed a calculation of emissions that is more in line with actual conditions and also visualizes our customers’ reduction efforts, through the combined use of two methods. We recognize that regional financial institutions are expected to play a role in realizing decarbonization throughout the region by using the results of these calculations to help customers calculate and reduce their emissions, and we will continue to provide tools to help customers calculate their GHG emissions and provide post-calculation reduction support.

• *
  PCAF Standard: An international standard used by financial institutions to measure and report the GHG emissions of their investees.

Category 15 Calculation Results by Industry

Industry		Emissions (t-CO2)	Carbon intensity (t-CO2/JPY mn)	Data quality score (DS) weighted average
Energy	Oil and gas	147,193	2.08	2.34
	Coal	―	―	―
	Power utilities	585,997	17.7	2.51
Transportation	Air cargo	4,438	2.45	3.79
	Passenger air transportation	41,013	7.16	1.01
	Marine transportation	57,093	11.8	1.07
	Rail transportation	32,028	2.06	1.70
	Truck services	242,278	3.53	3.74
	Vehicles and parts	171,090	1.21	1.96
Materials and buildings	Metals and mining	476,527	6.19	2.75
	Chemicals	545,295	4.33	2.72
	Building materials	147,331	8.92	2.97
	Capital goods	2,422,466	2.65	2.51
	Real estate management and development	81,617	0.88	2.94
Agriculture, food, and forest products	Beverages	24,500	3.59	3.87
	Agriculture	44,879	5.02	3.84
	Processed foods and meats	314,358	3.92	3.62
	Paper and forest products	146,066	3.70	3.15
Other		3,119,008	1.98	2.76
Total		8,603,177	―	2.67

• Note:
  Calculated based on the balance of the Group’s investments and loans as of March 31, 2023.

Calculation formula

Emissions calculation methods

Data quality score (DS)

The PCAF standard, which was the calculations were based upon, defines the data quality scores as shown in the table below to evaluate the quality of estimated emissions.

DS	Emissions calculation method	Type of emissions
Score1	Emissions reported by target company/project (with third-party certification)	Reporting basis emissions
Score2	Emissions reported by target company/project (without third-party certification)
	Energy consumption of target company x Emissions intensity	Estimated emissions based on activity indicators
Score3	Production volume of target company x Emissions intensity
Score4	Revenue of target company x Emissions per revenue in the relevant sector	Estimated emissions based on financial indicators
Score5	Investment/loan balance x Emissions per asset in the relevant sector
	Investment/loan balance x Emissions per revenue in the relevant sector x Asset turnover ratios in the relevant sector