Since February 2001, Mitsubishi UFJ Morgan Stanley Securities has been promoting projects that contribute to the sustainable growth of developing countries through carbon credit generation*1consulting services. We also provide various information and assistance on overall climate change issues.
Consulting services related to overall climate change issues, climate finance, and ESG investment.
In 2005, the United Nations announced the Principles for Responsible Investment (PRI) which encourages incorporating environmental, social and governance (ESG) factors into investment decisions and the concept of ESG has been introduced mainly in Europe and the United States. In Japan, in September 2015, following the fact that the world largest institutional investor, Government Pension Investment Fund (GPIF), signed up to PRI, the flow to ESG investment is rapidly accelerating.
On environment (E) of ESG, response to global warming is an important evaluation axis and private sectors are expected to disclose information on their climate change related financial risks and opportunities.
Utilizing our networks with government agencies and experts in and outside Japan acquired through consulting works on climate change reated businesses, we provide advisory service on environment (E). These include provision of information and advice on public policy and industry trends, climate finance schemes, SDGs*2, etc. which contribute to development of environmental strategy of a company.
In addition, we also conduct studies commissioned by Japanese government agencies on institutional frameworks building on climate change measure, utilization of climate finance, promotion of climate change adaptation business by private sectors, and overseas business matching.
Consulting services related to carbon credit generation to support global low-carbon growth and development.
Joint Crediting Mechanism (JCM)
Following the first commitment period of the Kyoto Protocol which ended in 2012, the continuation of the Kyoto Protocol was agreed under the United Nations framework. The second commitment period began on 1st January 2013 and will end in 2020. In addition, the Paris Agreement, a new international climate change mitigation framework to include all countries was adopted by the United Nations Framework Convention on Climate Change (UNFCCC).
Though not facing a binding emission reduction target for the second commitment period of the Kyoto Protocol, Japan continues its voluntary efforts to mitigate oversea GHG emissions. As one of the new international climate change mitigation mechanism to complement the current UN mechanisms, the government of Japan has proposed and has been promoting Joint Crediting Mechanism (JCM*3), which accelerate the penetration of low carbon technologies to developing countries. As of 1st July 2018, the following seventeen countries have signed the JCM agreement with Japan: Mongolia, Bangladesh, Ethiopia, Kenya, Maldives, Vietnam, Laos, Indonesia, Costa Rica, Palau, Cambodia, Mexico, Saudi Arabia, Chile, Myanmar, Thailand, and the Philippines.
All countries wish to achieve the same goal by using the new scheme; that is "Low carbon growth and development". Mitsubishi UFJ Morgan Stanley Securities believes that appropriate quantitative evaluation of GHG mitigation measures and the financing scheme providing monetary value to the emission reduction are essential in promoting low carbon growth and development.
To promote JCM, the Japanese Government has financed JCM programs, including feasibility studies (FS), model projects program, and financial assistance program for equipment/product installation, for the projects involving low carbon technologies and equipment applicable to JCM. Drawing on its know-how in developing methodologies acquired through CDM consulting and on MUFG's extensive financing resources, Mitsubishi UFJ Morgan Stanley Securities assists JCM programs primarily by developing the methodologies that evaluate GHG mitigation of the JCM projects and proposed financing scheme.
Clean Development Mechanism (CDM)
Under the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol came into effect in 2005. As one of the emission mitigation mechanisms under the Protocol, the Clean Development Mechanism (CDM*4) was implemented. This mechanism allows the carbon credits derived from the emission mitigation activities in developing countries to be used as a means to fulfill the emission reduction targets of industrialized countries.
Mitsubishi UFJ Morgan Stanley Securities seeks to promote sustainable growth and further advance climate mitigation measures in developing countries by providing comprehensive advisory/consulting services for CDM, including developing methodologies for quantifying emission reduction*5, assisting through the UN's carbon credits acquisition procedures.
Mitsubishi UFJ Morgan Stanley Securities has developed 8 UN approved CDM methodologies; only surpassed by the World Bank which has developed 10 methodologies*6. As one of the leaders in CDM project consulting, Mitsubishi UFJ Morgan Stanley Securities has supported over 100 projects, holding a track record of over 80 UN registered projects. CERs were generated from 43 of the projects that Mitsubishi UFJ Morgan Stanley Securities has served.
- *1An attempt to generate carbon credit from emission reductions achieved through the use of low carbon technologies.
- *2SDGs is a set of international development goals from 2016 to 2030, which was adopted by the UN Sustainable Development Summit held in September 2015 building on the success of Millennium Development Goals.
- *3JCM (Joint Crediting Mechanism) is a mechanism which achieves emission reductions in the partner countries through the implementation of mitigation activities using leading low carbon technologies, system, services, and infrastructures in the partner countries. JCM provides the means to quantitatively evaluate the emission reductions generated by the projects, measuring Japan’s contribution to any emission reductions.
- *4In the CDM, developed countries with binding emission reduction targets under the Kyoto Protocol contribute to sustainable development by investing in emission reduction projects located in developing countries. When the additional emission reduction from the baseline emissions is verified, the project earns carbon credit called certified emission reduction (CERs) which can be used by industrialized countries to meet a part of their emission reduction targets under the Kyoto Protocol.
- *5In CDM project development, the baseline scenario representing the case where the project were not to be implemented as well as the quantity of the greenhouse gas (GHG) emissions will be documented in the Project Design Document (PDD), along with the monitoring plan for the projects after implementation. Calculation of additional emission reductions achieved by the project must be based on one of the UN approved methodologies. When there is no UN approved methodology readily available for the proposed project, the project developer needs to propose a new methodology to the UNFCCC.
- *6Based on the UN approved large scale CDM methodologies as of 1st July 2018 (AM0001 - AM0120)