350.org Japan
Japan Center for a Sustainable Environment and Society (JACSES)
Kiko Network
Market Forces
On March 4th, Sumitomo Mitsui Financial Group (SMBC Group) withdrew from the United Nations’ initiative "Net-Zero Banking Alliance (NZBA),” as reported by the media. 350.org Japan contacted the company, which confirmed that it had indeed withdrawn from the NZBA. As the climate crisis worsens, we, climate NGOs, are concerned about the company's withdrawal from financial institutions’ international decarbonization cooperation framework. We also ask other major domestic financial institutions to continue strengthening their response to decarbonization without leaving the NZBA.
The NZBA promised to reduce greenhouse gas emissions in financial institutions' investment and financing portfolios, aiming for net-zero by 2050 at the latest. Based on scientific evidence, they must set climate targets by 2030 in order to prevent global temperatures from rising above 1.5 degrees Celsius. Under the NZBA, banks have to set annual goals and sectoral goals, and requires financial institutions to disclose its carbon emissions and the progress of its countermeasures. SMBC Group claims that it will continue to take measures against climate change even after leaving the NZBA. Standards established by major global financial institutions like the NZBA enhance transparency in tracking decarbonization progress within investment portfolios of major banks such as SMBC Group, and also support Japan's long-term economic growth. The decision by SMBC Group to leave the alliance represents a step back in our demand for greater commitment by financial institutions’ to climate action, and more critically, deepens the crisis for citizens already experiencing the harmful impacts of climate change.
In March last year, it was found that Sumitomo Mitsui Banking Corporation (SMBC), a subsidiary of SMBC Group, also withdrew from the Equator Principle, which is an environmental and social consideration standard for the financing of large-scale development projects. SMBC Group's decision to distance itself from such international frameworks and guidelines increases the company’s reputational risk and concerns about the impacts of its financing on climate, the environment, and human rights.
We ask SMBC Group to reconsider its withdrawal from the NZBA. We ask other major domestic financial institutions to further strengthen their response to decarbonization without withdrawing from the NZBA.
Masayoshi Iyoda, 350.org Japan Campaigner, says:
"The withdrawal of Sumitomo Mitsui Financial Group, a major Japanese financial institution, from the Net-Zero Banking Alliance (NZBA) is deeply concerning. While changing political circumstances in the United States may have influenced this decision, the worsening climate crisis still demands accelerated fossil fuel divestment. If Sumitomo Mitsui intended to maintain its climate commitments despite withdrawing, there would have been no reason to leave the alliance in the first place. We strongly urge all major Japanese financial institutions, including SMBC Group, to be part of international frameworks like the NZBA to enhance transparency and ensure their decarbonization efforts remain comparable with other global financial leaders."
Eri Watanabe, Japan Energy Finance Campaigner of Market Forces Japan, says:
"It’s deeply concerning that SMBC Group has withdrawn from the Net-Zero Banking Alliance (NZBA), especially given the worsening climate crisis and record global temperature increases. Central banks and regulators have warned that current worldwide national climate policies are insufficient to prevent catastrophic global warming, which could result in a loss of 952 trillion yen to Japan’s GDP by 2050. Limiting global warming to 1.5 degrees is crucial for our economy and a safe future.
Despite being a member of the NZBA, Japanese megabanks SMBC Group, MUFG, and Mizuho all lack emissions reduction targets and fossil fuel financing policies aligned with the global 1.5-degree climate goal, and have continued significant financing to fossil fuels. It’s critical that SMBC maintains its commitment to net-zero emissions by 2050 and ends lending to new oil and gas. Japan’s megabanks must take stronger, more decisive action to mitigate dangerous climate change, including strengthening transition plan assessments for fossil fuel clients."
Yuki Tanabe, Program Director for Japan Center for a Sustainable Environment and Society (JACSES), says:
"Sumitomo Mitsui Financial Group has previously published medium-term financed emissions targets along with annual emission results in accordance with Net-Zero Banking Alliance requirements. For example, while the bank set a 2030 emission target of 138-195 gCO2e/kWh for its power generation sector, the most recent measurements (FY2022) show emissions at 292 gCO2e/kWh—revealing a significant gap between targets and current performance. Although SMBC Group has pledged to continue its climate change initiatives independently after withdrawing from the NZBA, it will need to substantially accelerate the decarbonization of its investment portfolio in order to achieve these medium-term goals."
Media contact:
Masayoshi Iyoda, 350.org Japan Campaigner, japan@350.org
