[Joint NGO statement]
Mitsubishi UFJ Financial Group considers end to loans for new coal fired power projects. NGOs demand stronger action to withdraw from coal.
12 April 2019
TOKYO - Today, several newspapers have reported that Mitsubishi UFJ Financial Group（MUFG）is considering the announcement of a policy to halt all lending to new coal fired power plant projects in principle and reduce its outstanding loans to coal fired power projects by 30-50% by 2030.
350.org Japan, the Japan Center for Sustainable Environment and Society (JACSES), Rainforest Action Network (RAN), Kiko Network, FoE Japan and Greenpeace Japan have released the following statement:
If adopted, MUFJ’s revised policy will be a clear improvement on its current lending and underwriting policy (“Environmental and Social Policy Framework”) released on 15 May 2018, which Japanese NGOs have criticised as being inadequate to meet the goals of the Paris Agreement. This time, we welcome the news that MUFG intends to end all lending to new coal fired power in principle and reducing coal plant loan exposure by up to 50% by 2030. If the policy is formalised, it would be the most progressive policy on coal among Japan’s three major financial groups.”
While lending to new coal fired power will be excluded in principle, the exact scope of the policy is unclear. The definition of “new” plants requires some scrutiny as it may not apply to new coal fired plants in the pipeline that are currently under negotiation or yet to reach financial close. If this is the case and normal debt reductions in outstanding loans are considered, the commitment to reduce outstanding loans to coal-fired power by 30-50% by 2030 means the new policy will still allow new financing of coal after the policy takes effect. Therefore, such a policy cannot be considered to be aligned with the Paris Agreement.”
The Banking on Climate Change: Fossil Fuel Finance Report Card 2019 authored by Rainforest Action Network and others reveals that MUFG was the biggest lender and underwriter to all fossil fuels among Japanese banks since the Paris Climate Agreement ( 2016~2018), ranking 7th globally among the 33 global banks surveyed. MUFG was also ranked the 6th largest global financier to the coal power sector during the same timeframe. MUFG’s current policies on fossil fuel financing received the lowest grade of F, due to the lack of restrictions on financing fossil fuel expansion.”
On March 28th, Japan’s Ministry of the Environment announced a policy to curb the development and expansion of coal-fired power plants. Given this announcement, Japanese banks that have substantial exposure to coal power, especially the megabanks, will be required to reduce coal lending more aggressively. In order to meet the goals of the Paris Agreement, there is no room to build new coal-fired power plants. The IPCC’s Special Report on “Global Warming of 1.5℃” clearly showed the urgent need for rapid decarbonization.”
MUFG is currently involved in syndicated loans for numerous new coal fired power plant projects both in Japan and overseas. These projects include the 1300MW Yokosuka coal fired power plant being developed by JERA in Kanagawa prefecture of Japan (due to start operations in 2023-2024) as well as the Van Phong 1 coal fired power plant in Vietnam which is yet to reach financial close. These projects should be included in the new coal plants that are ineligible for funding from MUFG. Furthermore, restrictions on finance to new coal power should extend beyond project finance and include corporate finance to companies involved in coal fired power development. As divestment from coal and fossil fuel related companies gathers pace worldwide, financial institutions with substantial financial exposure to the coal sector will be negatively viewed by investors.”
Considering MUFG’s considerable financial exposure to the coal sector, the company would do well to exclude all finance for new coal fired power, including projects that are yet to reach financial close and companies involved in the development of new plants. To ensure that the new policy - expected to be announced next month in May - results in a substantive restriction of new coal finance, we hope for MUFG to further tighten its policy in accordance with science-based targets.”
Media cover
Asahi 「石炭火力の融資、最大半減へ 環境に配慮 三菱ＵＦＪ」April 12, 2019（Japanese only)
Nikkei「石炭火力、狭まる包囲網 三菱UFJが新規融資中止へ 」April 12, 2019（Japanese only)
Reference
2018/5/25 [Press Release] “A small step forward, but not nearly enough”- Environmental NGOs Respond to Release of New MUFG Environmental, Social and Human Rights Policy（Link)
