Japan’s First Self-Assessment-Based PIF: An Innovative Fundraising Model with Proactive ESG Financing

PIF is a type of ESG financing that focuses on the impacts of the corporate borrower’s activities on society, the economy, and the environment. Financial institutions analyze and evaluate these activities, and an independent third party provides certification. The framework encourages companies to maximize positive impacts and reduce negative ones, contributing to the realization of a sustainable society.

There are broadly two approaches to ESG finance. One, such as Green Finance or Transition Finance, restricts the use of funds. The other, which includes PIF, places no restrictions, and it can be applied to a wide range of businesses.
Because our company requires significant funds for diverse purposes, funding methods that place no restrictions on the use of funds are better suited to our needs. Since 2022, we have used PIF to raise funds from financial institutions multiple times.

In the conventional PIF model, each financial institution uses its own assessment framework to analyze a company, with the results certified by a third party. Because frameworks differ from bank to bank, every new loan required a new evaluation and certification.
With the self-assessment model, we created our own framework to evaluate the impact of our business activities. We could then seek financing after obtaining approval from an external certifier. The critical difference is that we apply our own framework as the borrower, rather than the lender’s framework.

The greatest benefit is reducing cost, time, and effort. Once in place, the framework only needs to be updated annually, and it can be applied across multiple banks. This reduces the need for third-party certification and legal fees while also shortening the lead time for borrowing from three months to about one month.
Previously, PIF was only feasible for large-scale financing, such as syndicated loans, because it was time- and cost-intensive. Now, the new framework can also be used for bilateral loans with regional banks, making it far more accessible. What’s more, financial institutions keen on promoting ESG financing may offer preferential interest rates, so it can also help reduce overall funding costs.

The challenge with conventional PIF is that it depends on assessment standards set up by each financial institution. We had been searching for a solution to that issue for several years. In April 2025, Mizuho Bank proposed the idea of a PFI model based on self-assessment, which prompted us to develop the framework together with the Sustainability Management Division. With support from the Japan Credit Rating Agency (JCR) and Mizuho Research & Technologies, we were able to establish the system.

The Treasury Division was primarily responsible for coordinating with financial institutions. We developed the framework with not only Mizuho Bank but also MUFG and SMBC, drawing upon their valuable insights and advice. When arranging the syndicated loans, we needed the participating financial institutions to understand the benefits of the self-assessment model, so we also held individual discussions with around 30 institutions.

While the framework is based on UNEP FI principles, each bank emphasizes different aspects, so the questions covered a wide range, and we addressed about 70 questions in total.

Through the self-assessment-based PIF, we procured three syndicated loans, each arranged by one of the three megabanks, and secured the participation of 25 financial institutions. A total of ¥171.4 billion was raised, the highest level of funding we have ever achieved through ESG finance. It was also our first attempt to bring three megabanks in as arrangers at the same time. In addition, we attracted the participation of new financial institutions, which has further broadened and strengthened our financing network.

Many financial institutions said they saw real value in reducing the time and effort required to execute PIF. In particular, they told us that the annual review process set up with external certification bodies will help reduce their workload and lower the barrier to taking part in PIF.

Another major advantage is that we can provide financial institutions with higher-quality information by conducting the impact assessment ourselves. Our business covers a wide range of areas, and there are aspects that cannot be fully understood from publicly disclosed information alone. With the self-assessment-based PIF, we, as the business operator, are able to directly present detailed data, which strengthens the reliability of the information. What’s more, we can demonstrate strong commitment by setting our own goals and KPIs, and financial institutions perceive our plans as more credible and achievable.

This scheme creates a cycle of self-assessment, identifying impacts, setting KPIs, monitoring, and engaging with stakeholders. This cycle requires various elements, including a management philosophy aligned with the SDGs, internal structures, and expertise. Having successfully implemented this cycle is itself an achievement that strengthens recognition from investors, including financial institutions.