Nomura Holdings, Inc. (8604) Earnings Call Transcript & Summary

Hello, everyone. I am Chie Toriumi, in charge of Group Sustainability and also the Head of the Content Company. Thank you for taking the time out of your busy schedules to view this video. Until last year, we had held 3 events named Sustainability Day. This year, we will hold a 2-week event called Sustainability Week. For your reference, the program or schedule is as follows. Apologies in advance, but this is an invitation-only event. So please contact our staff if you have any inquiries. Now let me get into my presentation. We are pleased to announce that Nomura has set a new purpose. We aspire to create a better world by harnessing the power of financial markets. In order to contribute to the realization of the better world we mentioned here, we ourselves need to be sustainable and grow sustainably as a company. In past IR presentations, we used to focus on business initiatives, which is the layer in the middle of this page and have explained our strategies to create financial value today. On the other hand, for our own sustainable growth, we need to create businesses that solve various social issues and generate economic value and to reduce business risks and lower the cost of shareholders' equity through initiatives that create social value. How can Nomura Group's sustainability initiatives contribute to such medium- and long-term value creation? That will be my perspective in today's presentation. In the integrated report that we published on the web at the end of August, which is the Nomura report, we described our value creation process as shown in the slide. Please take a look at it on the web for details. But in this process, we identified 6 social issues at the top of the slide that have a positive or negative impact on the creation of corporate value. This slide shows an extract of these 6 issues. On the left are the 6 issues ranging from changing global dynamics to demand for enhancement of governance. And on the right side are the issues Nomura faces and the initiatives that we are working on. My colleague, Mr. Kishida will talk about specific issues and major initiatives under each theme later. I would like to introduce our initiatives related to number two, the environment; and number five, human capital, which are related to the Content Company, which I am double hatting. The first initiative is to collaborate with impact start-ups to address decarbonization and visualize impact. In April of this year, we established a sustainable innovation group as a virtual organization. This organization is pioneering business models that solve social issues and create synergies with our existing businesses. The first project we are working on involves Towing, a company that produces high-performance biochar using microbial culture technology and Sagri, a company that provides farmland and crop information services using satellite data and AI analysis as its core technology. It's a joint project between these 2 impact start-ups and Nomura Farm Hokkaido, which is our experimental farm. Towing's high-performance biochar will be spread on Nomura Farm Hokkaido's fields, replacing chemical fertilizers with organic ones. Soil samples from the biochar fields will be measured using Sagri's technology. We believe that this will enable us to measure the impact by providing numerical data on the effects of soil improvement on reducing environmental impact and increasing yields. In addition, the use of biochar on farmland can also generate carbon credits due to its carbon farming effect on the soil. And in the midterm, we will consider expanding this into our carbon credit business. As explained, we will pursue a balance between solving social issues, expanding business and enhancing economic value. The other initiative is about human capital. After this, Mr. Koike, President of Nomura Asset Management, will be touching on human capital and corporate value. So I apologize in advance for the slight overlap. As we indicated at the Investor Day, Nomura has been making various efforts to invest in human capital. However, it has been difficult to know the progress of these efforts and their effect on increasing corporate value. On the other hand, as you know, disclosure of human capital information has become mandatory for listed companies from the fiscal year ended March 2023. Using some of the comparable indicators among this disclosure, we analyze the relative position of Nomura Securities. We have highlighted in red the indicators for which Nomura is positioned within the top 20% of TSE prime companies. Let's look at this in a little more detail. Here is the distribution of prime companies in the female participation indicator and Nomura Securities position. You can see that we are doing relatively well. Compared to financial institutions, it may seem like we still have some way to go. However, back when I became manager, there were only about 20 female managers in the entire company. Now there are more than 800. And we are working to raise the female manager ratio from about 18% at present to 20% by next April. Next, looking at the length of employment, we see that women stay with the company for a very long time. And that the turnover rate, the percentage of employees who leave before retirement, is also relatively low. How do these human capital initiatives affect corporate value? We conducted a quantitative analysis at this point by Nomura's content company. And this is just a part of the analysis, which statistically analyzes, for example, the absolute values of various indicators of human capital and weather changes from the past correlates with ROE improvement, sales growth, stock price volatility and so on. For example, when we look at the indicator of female participation in the workforce, we found a statistically significant correlation between sales growth and female participation. Of course, a statistically significant correlation does not necessarily mean there's a causal relationship. So it does not necessarily mean that more female participation leads to growth. Moreover, female participation has a positive correlation with stock price volatility. This may also be due to the fact that statistically, there's a correlation between female participation and mobility of employment, which is high turnover. For your information, these are graphs showing the correlation between female participation and employment mobility. And as you can see in the far right column on the next slide, there is also a positive correlation with turnover rates, growth rates and volatility. There may be various ways to interpret this. But for example, it may be hypothesized that high turnover creates a corporate culture that places the right people in the right jobs, and this leads to the promotion of human resources without being restricted by gender, the active participation of females as well as growth. On the other hand, if volatility of the stock price is high, the cost of capital goes up, which is negative for corporate value. In other words, the statistical analysis suggests that female participation has a high -- has both a positive aspect of higher growth rate and a negative aspect of higher cost of capital. Meanwhile, we believe there are ways to mitigate this downside. Even if the high turnover rate increases volatility, one solution is to manage human resources in such a way that newly hired or promoted diverse talent can catch on quickly and contribute to growth as well as to foster our corporate culture that makes this possible, and these could be the solutions. Half of the annual hires at Nomura Securities are mid-career hires even as of today. I believe we have established an organizational structure and culture that allows them to be active immediately after joining. In addition, using the purpose that I introduced at the beginning, we have started initiatives to create a connection between the direction of individual employees and the purpose of company's existence and through these initiatives to enhance engagement. Furthermore, as we show in the upper right, in Nomura Securities case, as I shared earlier, we have added DEI as HI valuation item since the second half of last year, and Kishida will explain in more detail. Sometimes investors ask us, what good does it do to increase the number of male employees taking childcare leave? Well, this is not simply about making Nomura a better company, a better place for employees to work at. It's about creating an organization in which more people, including women can play an active role by being put in a different position than before, thereby gaining a new perspective and understanding others. We believe that the success of a diverse workforce will lead to a virtuous cycle that will put our purpose into practice. In addition, some point out that our human capital disclosure seems to be limited to the development of systems and the internal environment. We believe that we need to establish a certain structure, including an HR evaluation system in order to trigger an actual movement. But we also must admit that we are not communicating passionately enough, including conveying the future vision or the reality of what is really going on. In the Nomura report we published recently, we have tried to convey the real voices of our executives and employees while keeping these points in mind, but there are still some areas where our communication could be better. We'd be grateful if you could take a read through the report and give us your feedback. So after this, Mr. Kishida will explain Nomura Group's initiatives with some examples. Thank you.

Next, Kishida will present.

Hello. I am Kishida, Chief Sustainability Officer. On August 30, we published our integrated report or a Nomura report on our website. As Toriumi showed earlier, this is Nomura Group's materiality shown in Nomura report. Nomura is facing changing global dynamics, threats regarding natural capital, including the environment, advances in digital AI technologies and threats, changes in the domestic environment in Japan, including declining birth rate and aging population, increasing awareness of DEI human rights and human capital and demand for enhancement of governance. Today, I'd like to explain our initiatives on these 6 external environments. Firstly, from the viewpoint of creation of circulation of healthy risk money, I'd like to speak about sustainability related business to strengthen and promote sustainable finance initiatives. Nomura set the target of engaging in sustainable finance transactions worth $125 billion in Japan and abroad over 5 years from FY 2021 to March 2026. In FY 2023, we engaged in $28.5 billion of transactions bringing the 3-year total to $75 billion, which is in line with our target. This sustainability finance target includes fundraising through equities, bonds, mezzanine and so on through both public and private placements as well as infrastructure project power finance deals. Let me introduce 2 sustainable finance transactions that were conducted in Japan in FY 2023. The first is issuance of joint local government green bond, where multiple local governments, each of which cannot attain green bond issuance amount on their own jointly offer green bonds by bringing their target projects together. The second is digitally tracked green bonds. These are publicly offered digital bonds with the use of digital technologies such as blockchain, transparency of data regarding green investment is improved. In both of these transactions, Nomura Securities acted as a book runner and a digital structuring agency. Through these initiatives, in FY 2023, Nomura ranked first in Japan and ninth globally in terms of sustainability bond underwriting, which indicates our contribution to the environment and society through the capital market. Our initiatives in the area of fixed income as part of sustainable finance will be explained later by Nick Dent. Next, regarding our efforts to conserve natural capital. Let me speak about net zero. In September 2021, in order to realize decarbonized society, we established a net zero target of achieving effective zero emission of GHG for our own operations by FY 2030 and a net zero target for our investment and loan portfolio by FY 2050. As for reduction of GHG emissions from our own operations, we achieved renewable energy introduction ratio of 74% for the year ended March 2024 having achieved the target of achieving 70% or more by March 2025, ahead of the schedule. As for the remaining emissions, as of the end of FY 2030, we plan to use carbon credit and so on for offsetting such emissions. In February 2023, Nomura set an interim target for GHG reduction related to investments and loan in accordance with the framework of net zero banking alliance, which aims for net zero in 2050. Then in March 2024, we developed and disclosed our transition plan towards net zero. Due to the nature of our business, our investment and loan portfolio is smaller than those of commercial banks. And as the pie chart shows, power generation sector represents the largest portion of GHG emissions by sector. So we focus on the power generation sector and are looking to manage the ratio of investment and loan to renewable energy by establishing emission monitoring governance system to achieve our goal. For many nations and markets, stable energy supply and energy security are important issues, and we recognize the need to consider our initiatives while monitoring each nation's climate change goals and energy strategy. From such perspective, it's important to participate in rule-making efforts. While joining both domestic and international initiatives, Nomura works to disseminate our viewpoints by actively taking opportunities to join rule-making activities in the sustainability area and to express our opinions. For example, we are a member of GX League established by METI in February 2022, and Nomura has chaired GX Business Working Group, one of GX League's key initiatives since the inception of GX League. The working group has discussed how enterprise value can be improved by avoided emissions achieved by companies for the products and the services they provide to the market. The working group published the result of the discussion as the basic guidelines and compiled case studies to be used for avoided emissions disclosure and financial institutions evaluation of companies. In addition, I myself chair Sustainability Standard Advisory meeting and not only in the area of sustainability, but many of Nomura's officers and employees participate in various public conferences and will continue to make proposals on resolution of social challenges to contribute to the industry and the economy as a whole. Next, our digital initiatives and cybersecurity measures. To protect clients' information and assets from the increasing cybersecurity threats so that our clients can conduct transactions without concern, Nomura continuously enhances cybersecurity measures. As a professional department to analyze heightening threats and take countermeasures we established cybersecurity office in April this year. Under CIO, we have newly hired Chief Information Security Officer, serving as the Head of Cybersecurity Office and promoting a program to mitigate cyber risks and improve controls. In addition to technical measures on cybersecurity, we have implemented initiatives to strengthen effectiveness of controls such as internal cybersecurity drills attended by group CEO and officers. While defending ourselves, we need to develop digital talents proactively. Since 2023, we have conducted Digital IQ University, a program to develop digital talents. So far, about 3,000 employees have started online learning and have spent more than 40,000 hours on learning. Also in July this year, we conducted a global contest where our employees presented the ideas and skills regarding the potential of generative AI. Winning ideas are going to be actually deployed later on. To expand the digitally-enabled services, we are going to develop more digital talents. Next, to provide solutions to social issues arising from environmental changes, we are providing financial education. I'll focus on initiatives at Nomura Holdings and Nomura Securities since Koike will explain Nomura asset management initiatives later. In Japan, social environment is changing with the age of adulthood having been lower and the society becoming more cashless while the population is aging and the birth rate is declining. In order for each person to live a self-sustaining life without concern, the importance of financial literacy has been recognized. And in April this year, Japan Financial Literacy and Education Corporation or J-FLEC was established amid the growing interest in the financial education. Nomura's initiatives go back to the 1990s when the importance of financial education was not well recognized and talking about money in the educational setting was not considered favorable. Since such a time over the next quarter century, Nomura has continued to provide financial institution in order to contribute to society through our business. Nomura provides financial education to a broad range of people from children to adults. We have engaged in activities under the theme of next generation and especially, we have placed importance on the initiatives at educational settings at schools. Also as part of workplace business strategy of wealth management, we have run an asset building program for adults in the working generation. Today, I'd like to introduce our initiatives of schools. The slide shows we have so far provided financial education classes at more than 5,000 schools and 1.1 million students have taken our classes, and we have provided schools with 1.14 million copies of learning materials free of charge. For students at elementary schools and junior and senior high schools, Nomura Group's employees conduct lessons on finance, called Manabu classroom where students can experience finance. As a result of lessons, elementary school students are expected to feel closer to money. Junior high school students are expected to learn the significance of investment, and senior high school students are expected to learn the relation between the future and money. During the summer vacation season this year, we conducted Manabu classroom at 46 branches and 3 partner regional banks and about 1,200 pairs of elementary school student and their parent participated in the event where they learned about appreciation and depreciation of yen while playing games. Also, over the last 25 years, Nomura has been a sponsor of Nikkei STOCK League, which started in 2000, so far more than 150,000 students participated and the most recent Nikkei STOCK League event was attended by as many as 8,445 students. Nomura Group not only sponsors these events but our officers and employees have supported the events as volunteering judges. The event is drawing increasing attention with some schools incorporating the event into their comprehensive learning curriculum. Also, we have tied up with NTT DOCOMO and jointly conducted financial education program for students in early elementary grades. We are continuing our activities to realize financial well-being by working with various organizations, both private and public, including J-FLEC. Next, creating an organization that supports challenges, rewards, contributions and provides a comfortable work environment. I'm going to explain our activities on human capital. Since Toriumi has explained our initiatives on human capital and their impact on enterprise value. I'd like to introduce basic ideas behind our human resource management strategy and some specific initiatives. Based on feedback we received on human capital disclosure last year, we have revisited our disclosure in Nomura report and conducted detailed disclosure in our sustainability report. I encourage you to refer to such reports later in addition to today's presentations. Our purpose is we aspire to create a better world by harnessing the power of financial markets. To pursue this purpose and improve our corporate value is essential for our employees to take on the challenge of creating new added values as a group of professionals. We have reviewed our training system based on periodic hiring of new college graduates are all at once. And under our human resource development policy, we have enhanced measures to develop professional talent and leadership talents. To strategically develop management, the candidates, we are implementing various selective training programs that promote learning on multiple stages with emphasis placed on insight, decisiveness and leadership. And Nomura Keiei-juku, the flagship program. We also have overseas study program to which we have sent employees over the past 60 years and Venture Startup Secondment's training program, which started in FY 2022 and more than 10 employees have attended so far. Venture Startup Secondment program involves our employees making contributions as team members and learning skills to develop strategy, drive project managed business and so on. And seconded employees come back to Nomura with a sense of speed that they learn at the startups. In addition to company-wide training, a large amount of resources spent on more specialized department-led training, such department-led training is being conducted at business divisions, such as wealth management and wholesale as well as corporate functions. To give an example, Wholesale Division has a platform called M&A University, where internal and external experts provide junior employees with training and tools related to M&A. Also, if I may introduce one of self-development programs, a program called Nomura Business Academy provides a wide range of learning opportunities and about 6,000 employees participated in 2023. About employees with 90 nationalities work at Nomura and our diverse talents are the source of competitiveness, innovation and sophisticated risk management. And we are working to create a work environment where all employees can make the most of their strengths. Among all employees of Nomura Group, about 40% are female, and we are working on female participation as an important theme. As we strive to improve corporate value to accelerate DEI initiatives in FY 2023 at Nomura Securities, our employees, especially managers were tasked with activities to create a work environment where diversity is accepted, encourage male employees to take childcare leaves and help develop female employees' capabilities to promote female participation. Also to urge male employees to take childcare leave, we've introduced childcare leave acquisition incentive. Under this program, we provide incentive payment to employees who take childcare leave for longer than a month consecutively regardless of employees' gender. As a result, in the second half of the year ended March 2024, male employee childcare leave acquisition rate tripled from the first half of year. Also so that the employees can continue to work without concern, even when they face nursing care needs, we've expanded measures to support the employees and continuing to work while engaging in nursing care. These initiatives on Nomura were possibly evaluated. And in March, Nomura was selected for Next Nadeshiko company supporting dual care, dual parenting, which is jointly run by METI and Tokyo Stock Exchange. And 16 companies were selected and Nomura was the only securities firm. In February, we started Nomura Financial Wellness program, a financial education program for our employees. You may wonder why Nomura is conducting financial education for its employees. Indeed, before the program was started, there were questioning voices among employees, but the level of satisfaction with the program was very high. And with employees more motivated, the level of engagement improved. The program covers basics of financial management through a lifetime. The program is not just about video viewing but incorporates pragmatic content where participating employees calculate and understand what amount of pension they will be entitled to receive as well as the government pension amount. Based on social security system and the company's welfare program, the program content is based on participating employees, ages, titles and job types. We will be referring to feedback from employees to help develop content for workplace business and contribute to our clients' human capital management. The 6 challenges, further demonstration of corporate governance functions. And let me speak about our Board of Directors. Since 2003, the year when corporate governance system was introduced, we have operated as a company with the Nomination Committee and so on and have worked on strengthening supervision through separation of management supervision from business execution, and also accelerating decision-making with delegation of business execution authority from the Board to the management. Since 2010, we have worked to diversify our board by welcoming non-Japanese and female external directors and making the majority of the Board consists of external directors. Out of 12 directors, 8 are external, 4 are non-Japanese and 3 are female. Our Board is diverse in terms of nationality and gender. Also the Board is composed of directors with various areas of expertise, such as accounting, corporate management, law and regulation, digital IT and so on. Such diverse members are engaging in discussions on important management themes at the Board meeting, and we have received various opinions from the directors. For example, regarding medium- to long-term management strategy and effective use of capital, we received advice and also comment on issues based upon their expertise. And regarding the purpose we established in April, we received various opinions on all aspects from -- including how to formulate and embed the purpose. From time to time, the management is firmly challenged by the Board and executive officers attend the Board meeting with a sense of tension as if attending a shareholders' meeting. Finally, our initiatives on disclosure, we are reporting to the Board an audit committee on disclosure as an important challenge. And based on feedback, we are continuously working on enhancement of disclosure. As for sustainability-related disclosure, disclosure in securities report was made mandatory from the year ended March 2023 in Japan. Moving forward, we would need to address climate change related disclosure rules of the U.S. SEC. Also, just like the Japanese firms visit on the prime section of the TSE, we need to respond to domestic standards in Japan based upon ISSB standards. Against such backdrop, we are making preparation, including the analysis of content of disclosure standards. Also at the end of August, together with Nomura report, which is our integrated report, we created an uploaded sustainability report on our website for the first time to raise awareness of our initiatives related to sustainability. As for Nomura report based on our purpose formulated in April, as a starting point, we explained our initiatives to deliver values to stakeholders throughout the report. Our sustainability report now includes information based on recommendation by TCFD, which used to be reported in a separate report until last year. We will work on enhancement of disclosure so that stakeholders will deepen their understanding of our initiatives. I'd like to -- I'd appreciate your feedback on the content of these reports. That concludes my presentation. Thank you very much.

Next, we will have Mr. Koike explain.

This is Hiroyasu Koike from Nomura Asset Management. We, as a member of the Nomura Group aim to achieve a sustainable society through our asset management business. The mission of Nomura Asset Management is to achieve a sustainable and prosperous society through a virtuous cycle of investment. As shown on the slide, I would like to introduce 3 of our recent efforts to promote a sustainable investment chain: one, is diversifying our investment products; second, is engaging with the companies we invest in to enhance their value; and finally, I would like to introduce financial and economics education. Against the backdrop of Japan's national strategy for asset management, there's a need for more sophisticated management, diversification of investment products and globalization. As a global asset management company, 500 of our 1,500 employees are involved in overseas operations. Our asset management team is also active in many regions, such as London, Singapore and Malaysia. In particular, our London office focuses on global equity particularly GSE, Global Sustainable Equity, which is an impact investment strategy. In the initial approach of GSE we set the target impact and measurement items as indicated by the red arrow at the top of the slide. Based on this, we select and invest in companies that contribute to achieving the impact. After the investment, we encourage efforts to achieve the targeted impact through engagement. As a result, we measure and publicize how much impact we have achieved. The lower part of the slide presents an example of providing safe drinking water. Currently, approximately 770 million people around the world or about 10% of the global population still lack access to safe drinking water, which is a serious issue. In response, we invest in companies related to water treatment and engage in activities aimed at solving these social challenges. We strive to create social impact by promoting the supply of safe water to developing countries. This slide is from our company website. Investors can estimate the amount of impact that will be created by investing in our strategy based on the amount of money invested. In the middle of the slide titled, let's estimate the impact, you can input the investment amount. For example, if you invest JPY 10 million, you can see that the impact on providing safe drinking water will lead to the provision of 156.8 liters of safe drinking water as well as access to safe drinking water for 7.9 people through hygiene support programs. In this way, we believe that one of our sustainable activities should be to increase investors' awareness of social impact that is generated through their investments in our strategies. We also donate a portion of the trust fees and investment income we receive. Our London office that I introduced earlier donates a portion of its investment fees to Charity Water. Through Charity Water, we have supported the delivery of safe water to schools in Niger, Ethiopia and Mali in Africa. In Japan as well as overseas, we make donations through investments. We donate a portion of the trust fees from our ESG fund to various regions through the corporate version of the regional revitalization support tax system in order to support regional revitalization. The initiative that we started with regional financial institutions in 2021 was named the Kokorozashi project, and we are continuing our activities. We are also developing the TASUKI project with Nomura Securities. And this year, we started the Minna de Todokeru project together with Japan Post Holdings. Through our asset management business, we are developing projects nationwide to help resolve social issues in local communities and support regional revitalization. I would like to introduce a recent new initiative, Crossover Impact investment. In the domain of deep tech we aim to make high-quality crossover investments by combining UntroD Capital Japan's rich track record in venture capital with the engagement skills we have cultivated with listed companies. Additionally, by incorporating elements of impact investment, we would like to help solve social issues. We are currently preparing to set up the fund, which we plan to launch this fall onwards. Now I'd like to talk about our engagement with the portfolio companies. The slide presents the 9 key themes for our engagement. As you can see, ESG-related themes account for 2/3. ESG-related topics are evolving. In the past, climate change was the focus of our key issues. But recently, we have also begun to focus on new themes related to natural capital and people. In particular, human capital management has become a major topic among many companies. In our human capital management engagements, we are seeking clarification on human capital strategies that align with our growth strategies, including gender diversity and employee well-being. Not only are we promoting human capital management through engagement, but we also provide investment strategies on the theme of human capital management. This is the Japan workable corporate strategy. This strategy positions employees as important management resources, and invests in companies that are actively engaged in human capital management. We use the workable score, which is a metric we developed to select companies for investment. The workable score evaluates a company's human capital management from both financial and nonfinancial information, and emphasizes nonfinancial information such as productivity and efficiency, quality of the working environment and diversity. The more a company positions employees as an important management resource, the higher its workable score will be. Although the workable score does not appear in the company's financial statements or its accounts, it also affects employee engagement and productivity. And the idea behind this strategy is that it leads to an increase in corporate value. The bottom graph on the slide shows the correlation between the workable score and stock price performance. You can see that companies with high scores that is companies that strategically engage in human capital management tend to have strong stock price performance. Finally, I would like to introduce financial and economic education. In Japan, as a nation facilitating asset management, the scope of investing is and will expand. To further promote healthy dissemination, we conduct a variety of research, disseminate information and provide financial and economic education. As mentioned in the slide, we provide information addressing various concerns related to asset formation on our website, institute for growing money. In addition, in partnership with QuizKnock, we hold events for young people to learn about asset formation in an engaging manner, to explain investment trusts and the NISA scheme in an easy-to-understand way. We also distribute videos and publish books that include quizzes and manga. The number of subscribers to our YouTube channel has exceeded 15,000, and some videos have been viewed more than 100,000 times. We would like to continue these efforts and hope to have as many people as possible join the investment chain and start building asset formation. This slide introduces our materiality. It represents a key issue for achieving a sustainable and prosperous society through our asset management business. And it's something we should focus on based on our fundamental principles. Based on the policies related to a nation facilitating asset management, we will continue our efforts to evolve into our preferred asset management firm for our clients. We will establish materiality as our fundamental principle and develop our investment chain sustainably. We will also work to create a virtuous cycle of investment that contributes to the realization of an affluent society. Thank you very much for your attention.

Finally, Nick Dent will present.

My name is Nick Dent, and I'm Managing Director and Head of Debt Syndicate at Nomura. I'm here to talk about the role of debt capital markets within sustainability. I'm also a member of the Nomura Sustainability Business Forum. Our working capital markets for just over 25 years. First of all, starting out in risk management at Salomon Brothers moving through trading Eurobonds. And then I've been at in my current role at Nomura for 13 years based on the Syndicate Desk in London. This is a multi-asset class desk covering SSA, FIG sector, emerging markets, corporates, NTNs and sustainability products. The reason I'm presenting today is that when we originally set up our ESG bond franchise, we based it on the syndicate desk because we're the middle part of connecting the sell side and the buy side together through underwriting and execution of facilities. We're, therefore, very, very close to both sides of that market. But with ESG, it's a topic area. It also touches many other parts of the investment bank. That can be through not only global DCM, but fixed income, sales and trading, the investment banking product suite such as advisory and leveraged finance and solutions and structuring businesses. Before we go on to the role of Nomura in sustainability, I'd like to look at a little bit of the key milestones in the history of the market evolution because it's important to put the growth into context. In 2007, it's widely held belief that EIB was the first benchmark ESG bond in the market issuing its climate awareness bond. This was a catalyst for then a large number of other market participants coming into the market, such as the World Bank in 2008 with the first label green bond. And then from 2013 onwards, we started to see deal sizes that were in excess of the USD 1 billion mark. From here, corporate bonds started to make an appearance. And then the 2014 ICMA Green Bond Principles were published, and that was the start of having a defined framework for the bond market to operate in. From there, we started to print other transactions such as Poland. And then in 2017, ICMA produced a social bond principles and sustainability bond guidelines. From then onwards, we started to see other theme bonds emerge, such as blue bonds and other outcome bonds. But it was really from 2020 onwards that the EU taxonomy appeared, more regulation appeared and ESG bonds hit the $1 trillion mark globally. In terms of the actual market growth, as you can see from the slide pattern, we've seen an enormous amount of growth in this sector over the last few years. If you look back to the ICMA principles and guidelines that were set between 2013 and 2017, you can then see the growth from there onwards to create a market, which is in excess of $1 trillion annually. In fact, between 2007 and 2020, it took all of that time to create $1 trillion worth of bonds. And then from then, annually, we've been printing in excess of $1 trillion since 2021. Clearly, in 2021, COVID was a big part of the explosive growth where a lot of public sector came to the market and issued COVID response bonds and social bonds as a response. But then we've managed to hold on to those gains in the market. And since then, we've been operating at these elevated bond amounts from 2021. What I'd like to do is just break down some of the market trends within all of that volume. And as we know, ESG bonds encompass green, social sustainability, sustainability-linked bonds and transition bonds. Lots of formats in which to issue. And when we look at the different types of issuance, on the top left-hand side, you can see that the use of proceeds bonds such as green bonds, social bonds and sustainability bonds really form the largest part of the market. We do have a small amount of issuance in sustainability-linked bonds, but that still remains a very, very small part of the sector. When we look at the breakdown of issuer type, the super sovereign and agency market remains at the forefront. In terms of percentages, the SSA community commands around a 50% market share. But we have -- do have other sectors such as the corporate market and the FIG market, which are also around 28% and 20%, respectively. In terms of regional breakdown, Europe continues to lead from the front. It commands around a 44% market share. But others, such as the Asia Pacific region at 25%; and Latin America and the Middle East and Africa are also building gradually creating a truly global market. Also in terms of currency, the euro does remain the currency of choice. But again, other markets such as the dollar market, Aussie dollar market, yen market and sterling market all command good market shares. So how does Nomura fit into this market? For an overview of the International Sustainable Finance business at Nomura, we've achieved a lot of landmark advances over the past number of years in ESG debt underwriting. We're very well positioned globally in the ESG market. First of all, we're an award-winning franchise. In 2022, we won both the Lead Manager of the Year for corporate social bonds at the Environmental Finance Awards, and we were also Investment Bank of the Year for sustainable SSA financing in 2022 of the Banca Magazine's Investment Banking awards. Last year, 2023, we're also a Lead Manager of the Year for Transition Bonds at the Environmental Finance awards. When we look at the amount of bonds that we issue in our network, year-to-date, we're currently standing at just shy of $50 billion worth of ESG bonds underwritten, a total of 144 bonds in total. That puts us on track versus last year where we underwrote 226 bonds in total with a $92 billion nominal value in the market. In terms of revenue, certainly within Europe, it's a very commanding part of our network, and it's around 20% to 25% of our revenue that comes from ESG underwriting. In terms of our competitive advantage, where are Nomura strengths? Well, we have some very strong ESG ratings ranked in the top quartile of our peer group with the MSCI ESG rating at AA; CDP: A-; S&P at 63; and Sustainalytics at 20.6. We made a very early commitment to the green and social bond markets. Many years ago placing themed Uridashi bonds into the market and playing a lead role in the COVID-19 response bonds. We have a truly global cross-border franchise, and we have a lot of content and thought leadership. This is through a number of commitments that we make to the market including publications, such as the weekly ESG [ Maishu ] with over 1,000 clients registered to receive that; the Sustainable Finance Monthly; and also ESG Now, a dedicated sustainable finance conference. One area that Nomura is very strong at is the SSA underwriting business globally. On average, we're around #10 in the lead table, currently commanding a 12th position. And that helps us speak to the public sector globally and understand their needs, particularly when it comes to ESG financing. When we look at Nomura's recent ESG bond credentials, a couple of the highlights more recently have been the Mexico Samurai bond, the multi-tranche bond, which is the first time Mexico has been in that market for 2 years. And in Japan, the Development Bank of Japan sustainability bond that we placed recently in U.S. dollars. There are many more examples globally of borrowers accessing the markets in both dollars, euros, Aussie dollars and sterling that we have underwritten. In terms of our other competitive advantages, thought leadership is very strong. We continue to drive the evolution of the market through dedicated industry bodies. Nomura actively engages in implementing Japan's version of the ICMA social bond principles, the Japanese social bond guidelines and expanding them with additional social categories. Some of the highlights of the industry bodies that we're heavily involved in include -- including being a member of the ICMA Green Bond Principles, Advisory Council in both 2023 and 2024 and a member of the working groups within the social bond and green bond principles within ICMA. We're a member of the Net Zero Banking Alliance and have committed to deploying $125 billion worth of sustainable financing over the next 5 years, which we are currently on track to achieve. We also have a membership of the London Stock Exchange Sustainable Bond Market Advisory Working Group, which is a very small membership. And we also have our own internal sectoral risk appetite statements and ESG frameworks. In terms of outlook for the ESG market, we are poised for some robust growth. What lies ahead are trends developing in both emerging markets, regulatory and growing opportunities in other areas of the geographies, driven by strong demand from the buy side. In terms of proactive regulations, what we foresee is further work on the EU taxonomy; the CSDR reporting, which is corporate responsibility reporting in the EU; the SFDR frameworks, which are standardized disclosures for the financial industry; and also some SEC Climate Disclosure Rules. All of these trying to achieve a much more level playing field when it comes to proactive regulation. In terms of other major market trends, we can't ignore the use of AI, both in data and RegTech; and the use of DLT and Blockchain Technology within this market. We think that these 2 macro trends will go a long way to improving the ESG reporting requirements and large amounts of unstructured data that the ESG networks have to sift through in order to produce and spot patterns in both policies and procedures to maintain stakeholder trust. In terms of digital finance, Nomura has also been actively involved in creating ESG bond opportunities in Japan through the use of DLT and Blockchain reporting. And we expect to see that market trend grow significantly in the coming years. In terms of other areas of growth, we continue to see outcome bonds leading the way, whether this is on natural capital and biodiversity, blue bonds, outcome bonds or the circular economy, we expect a lot of these label bonds to continue their growth patterns. And in terms of regions, we continue to see further developments on the buy side in terms of the APAC and a surge in emerging market issuance. One critical component, which I will leave you with is transition finance and the financing of the hard-to-abate sectors. Japan has taken a full global leadership role in this part of the ESG framework and has been a key player issuing the first sovereign climate transition bond. We are also a member of the ICMA Advisory Council for transition bonds and part of the working groups. And it's our major wish to export a lot of the knowledge that has been used in Japan globally in order to grow this market significantly over the coming years. We currently hold a prominent #1 position globally in transition bond underwriting. Reaching net zero demand's sustainable capital investment, we continue to be committed to working together within the debt capital markets to increase the amount of underwriting and help contribute private financing driving these efforts forward. Thanks very much for your time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]