Investor groups to pressure Japan banks on climate change

April 14, 2023

Japan’s three largest banks are facing pressure from shareholder groups over climate change policies that the groups claim “lack credibility”.

A trio of organisations representing investors and environmental groups have published shareholder proposals for the forthcoming AGMs of Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.

The proposal – which is the same for each company – states that shareholders want to amend the banks’ articles of incorporation to require the issue and disclosure of “a transition plan to align lending and investment portfolios with the Paris Agreement’s 1.5-degree goal requiring net zero emissions by 2050”.

The three groups filing the proposals are Market Forces, Kiko Network, and the Rainforest Action Network. Along with Friends of the Earth Japan, Market Forces has also filed a similar proposal for Mitsubishi Corporation’s AGM, while Kiko Network and Market Forces have filed net zero proposals for energy giants Tokyo Electric Power and Chubu Electric Power.

The moves mark a significant step forward for Japanese shareholder activism on climate issues. Last year, three asset managers and the Australasian Centre for Corporate Responsibility co-filed three resolutions at Electric Power Development Co calling for the Japanese power company to set “credible emissions reduction targets”.

In a statement announcing this year’s shareholder proposals, the three organisations cited the Intergovernmental Panel on Climate Change’s latest report, released in March, which warned that global emission reduction plans were “too inadequate”.

Eri Watanabe, Japan energy finance campaigner at Market Forces, said the banks’ current policies “lack credibility” as they failed to align with international standards such as those set by the International Energy Agency and the Net Zero Banking Alliance.

“In particular, megabanks lag far behind their global peers, which have policies to limit support for new oil and gas development projects,” Watanbe added. “To fulfil their own commitments, they must act immediately to set short- and medium-term targets and investment and financing policies that are aligned with their long-term net-zero goal.”

Dr Sachiko Suzuki, Japan energy finance analyst at Market Forces, said that Tokyo Electric Power and Chubu Electric Power “cannot claim to be net zero companies while continuing to invest in new fossil fuel projects”.

“These companies must show the integrity of their transition plans by aligning the capital allocation with the critical pathway to limit global warming to 1.5 degrees,” Dr Suzuki said.