Sumitomo Chemical's Transition Loans for Reducing GHG Emissions Selected as First METI Climate Transition Finance Model Project in the Chemical Sector

Feb. 7, 2022

Sumitomo Chemical Co., Ltd. announced today that the transition loans arranged by the Company and its subsidiary, Sumitomo Joint Electric Power Co., Ltd., to finance the construction of their new LNG-fired power generation facilities, which are intended to reduce greenhouse gas emissions, have been selected by Japan’s Ministry of Economy, Trade and Industry (METI) as a “FY2021 Climate Transition Finance Model Project.” These loans have become the first climate transition finance model project conforming to the technology roadmap for the chemical sector.

In May of 2021, METI, alongside the Financial Services Agency and the Ministry of the Environment, published basic guidelines for companies financing through transition bonds and loans, as these authorities consider a sufficient supply of capital to be indispensable for the transitions needed to achieve carbon neutrality, including energy conservation and conversion to renewable energy sources. In addition, METI formulated a technology roadmap for the chemical sector in December of the same year, which shows the technologies expected to be necessary for achieving carbon neutrality in the chemical sector, as well as a timeline and background information. The roadmap was produced on a scientific basis, with reference to both various Japanese domestic policies and international scenarios for achieving carbon neutrality.

In December 2021, Sumitomo Chemical laid out its grand design for achieving carbon neutrality by 2050, setting out a direction and goals for its efforts. These transition loans, which have been selected as a model case of climate transition finance for the chemical sector, are an initiative following this grand design, implemented to finance the construction of LNG-fired power generation facilities being conducted by Sumitomo Chemical at its Chiba Works (Ichihara City, Chiba, Japan) and by Sumitomo Joint Electric Power within Sumitomo Chemical’s Ehime Works (Niihama City, Ehime, Japan). Independent evaluations by Japan Credit Rating Agency, Ltd. and DNV Business Assurance Japan K.K. have confirmed that these loans are eligible to be considered climate transition finance, conforming to the relevant guidelines and policies.

Committed to contributing to society through its business activities, as set out in its Business Philosophy, the Sumitomo Chemical Group will continue to strive as one to resolve climate change and other pressing social issues.

Outline of the Transition Loans (plan)

Borrower	Sumitomo Chemical Co., Ltd.	Sumitomo Joint Electric Power Co., Ltd.
Use of Funds	Construction of a high-efficiency gas turbine power generator at the Chiba Works	Construction of LNG-fired power generation facilities at the Ehime Works
Loan Amount	JPY 10 billion	JPY 8 billion
Loan Period	10 years	9 years
Receipt of Funds	Scheduled for the fall of 2022	Scheduled for the end of March 2022
Lender	Financial institutions participating in syndicated loans planned to be arranged
Arranger/Structuring Agent	Sumitomo Mitsui Banking Corporation

Reference

Press Release by Sumitomo Chemical Co., Ltd. as of December 10, 2021
“Sumitomo Chemical Formulates Grand Design to Achieve Carbon Neutrality by 2050”
https://www.sumitomo-chem.co.jp/english/news/detail/20211210e_2.html

Contact

Sumitomo Chemical Co., Ltd.
Corporate Communications Dept.
https://www.sumitomo-chem.co.jp/english/contact/public/