The City of Yokohama has established the Yokohama City SDGs Certification System (Y-SDGs) to support small and medium-sized enterprises and organizations that promote SDGs, with the goal that companies and organizations will shift to sustainable management and operations, expand new customers and business partners, and that investors and financial institutions will utilize the Y-SDG certifications for investment and loan decisions such as Environmental, Social, and Governance (ESG) assessment and investment. This certification system was designed by Sumitomo Mitsui Banking Corporation (SMBC), one of Japan’s three largest banks; Sumitomo Mitsui Financial Group’s Japan Research Institute; and Yokohama SDGs Design Center.
Y-SDGs are certifications available for businesses (companies, various organizations, NPO corporations, civic activity groups) who are willing to contribute to the achievement of the SDGs. Evaluations are carried out in four fields: Environment, Social, Governance and Local, across 30 criteria. Certification is then made in 3 categories (Supreme, Superior, Standard) according to the status of efforts in each evaluation criterion. Certification authority lasts 2 years, and applications are accepted about once every three months. The evaluation is performed by Yokohama SDGs Design Center and certification issued by the Mayor of Yokohama.
SMBC has provided a loan to Yamashin-Filter, a company in Yokohama that is aiming for Y-SDGs certification. This is the first loan utilizing “Y-SDGs”, and the first case in a government-designated city where a certification system for SDGs created by the local government was weighed by financial institutions for an investment decision. It is expected that Y-SDGs will be considered as an important part of more companies’ non-financial data in the future.
In addition to being able to utilize the acquisition of certification as non-financial data, certified companies have the benefit of being able to post the certification mark on owned media for marketing purposes. In addition, from April 2021, Y-SDGs certified companies will be eligible for additional points in the scoring for public procurement competitive bids in Yokohama City. In addition, Yokohama City will add Y-SDGs certified companies to the credit guarantee fee subsidy under the city’s SME financing system, and support the smooth financing of the companies that have acquired them.
Major rating agencies perform ESG assessments of companies, but often the main target of such assessments is large companies. In Japan, SMEs account for more than 99% of all companies. The power of SMEs is indispensable for sustainable development. The Y-SDGs are designed to support the activities of all sizes of companies that promote the SDGs.
Yokohama SDGs Design Center
With the goal of helping Yokohama become a “SDGs Future City”, the Yokohama SDGs Design Center was established as an intermediate support organization that works in collaboration with various players toward the creation of a “Yokohama-style large city model” that aims to solve environmental, economic, and social issues in an integrated manner.