Global Investors Express Grave Concerns Over
Delays in Japan Inc.'s Climate Measures
Market Forces
Kiko Network
Rainforest Action Network (RAN)
Monday, July 8, 2024: Investors have sent a stern message by voting in favor of world-first shareholder proposals demanding Japan’s megabanks and Chubu Power disclose how their Board Directors will manage increasing climate and financial risks.
The world-first proposals have received record support from investors at annual general meetings of four Japanese powerhouse companies across the financial and electric power sectors: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Mizuho Financial Group, and Chubu Electric Power, a parent company of JERA, Japan's largest power generation company.
Global investors also backed proposals urging the three megabanks to align their fossil fuel sector clients' transition plans with the Paris Agreement's 1.5°C target. More than a quarter of shareholders supported disclosing assessment methods and response measures, such as limiting new funding if clients fail to develop credible transition plans in line with agreed global climate goals.
The proposals were resolved at the shareholder meetings of the four companies held at the end of June. Below are the full details of the proposals and their final published approval ratios:
| Company (Ticker) | Contents of the shareholder proposals | Support ratio (%) |
| Mitsubishi UFJFG (8306) | Proposal 1: Partial amendment to the Articles of Incorporation (Director competencies for the effective management of climate-related business risks and opportunities) | 25.79 % |
| Proposal 2: Partial amendment to the Articles of Incorporation (Assessment of customers’ climate change transition plans) | 18.38 % | |
| Sumitomo Mitsui FG (8316) | Proposal 1: Partial amendment to the Articles of Incorporation (Director competencies for the effective management of climate-related business risks and opportunities) | 26.34 % |
| Proposal 2: Partial amendment to the Articles of Incorporation (Assessment of customers’ climate change transition plans) | 24.21 % | |
| Mizuho FG (8411) | Proposal 1: Partial amendment to the Articles of Incorporation (Director competencies for the effective management of climate-related business risks and opportunities) | 25 % |
| Proposal 2: Partial amendment to the Articles of Incorporation (Assessment of customers’ climate change transition plans) | 22 % | |
| Chubu Electric Power (9502) | Partial amendment to the Articles of Incorporation (Director competencies for the effective management of climate-related business risks and opportunities) | 23.30 % |
The outcomes of these proposals indicate continued scrutiny of companies lagging in addressing climate change risks.
Chubu Electric Power
“Chubu Electric Power holds a 50% stake in JERA, which continues to expand its fossil fuel business which is aligned with a decarbonisation strategy out of step with global climate goals.”
“It’s unclear whether Chubu's board has sufficient expertise to manage climate-related risks and opportunities, exposing itself and its shareholders to significant financial risks.
“Nearly one quarter of investors are very concerned that Chubu is failing to disclose that its Board holds the necessary skill and competencies to manage growing climate risk.”
Dr. Sachiko Suzuki (Market Forces, Energy Finance Analyst)
“The majority of Chubu Electric Power's power source mix is fossil fuel-based power generation, with 22% coal and 42% LNG (FY2022 results). The company has set a target of reducing its overall CO2 emissions to net zero by 2050. Still, in the explanation and Q&A session at the AGM, abstract ideas such as restructuring the social system by promoting green transformation and digital transformation were presented. Still, no concrete measures towards net zero were presented. On the other hand, there were repeated assertions that nuclear power plants are essential for decarbonisation and that they should be restarted as soon as possible, which only increases the uncertainty as to whether decarbonisation can really be achieved at this rate. The 23.3% in favour of our proposal may reflect investors' expectations that we need people and climate competencies that can take more concrete and substantial climate action.”
Yasuko Suzuki (Kiko Network, Program Coordinator)
MUFG, Sumitomo Mitsui FG, Mizuho FG
“Global investors have sent a strong signal to the boards of Japan's three megabanks that they must improve their climate risk management.
“Japan’s megabanks are hellbent on increasing support for liquified natural gas and coal completely out of step with climate science and reflecting poor management of financial risks.
“Japan must join the rest of the world in ramping up investments in renewable energy and moving away from costly, polluting fossil fuels, which are harming Japan's competitiveness.
“Japan's ‘transition finance’ is hindering Asia's decarbonization by locking in the use of harmful fossil fuels. It's crucial that Japan’s megabanks confirm their commitment to limit global warming to 1.5 degrees by taking more serious climate action, that’s essential for economic and social stability.”
Eri Watanabe (Market Forces, Japan Energy Finance Campaigner)
“While we appreciate that the banks are stepping up their efforts to combat climate change, we believe that support for the Japanese electricity sector to phase out coal-fired power generation in line with the 1.5°C target is still insufficient. While the world is already discussing how to reduce the use of fossil fuels, Japan still has over 100 coal-fired power plants in operation. Financial institutions have a key role to play in the fight against climate change, so a credible decarbonisation plan is essential if they are to fulfill their own commitments and support their customers' decarbonisation strategies. Climate competence is needed to judge it on a scientific basis and to make a qualified assessment, and we will pay attention to how the company will proceed in response to the more than 25% vote in favour.”
Yasuko Suzuki (Kiko Network, Program Coordinator)
“Japanese megabanks are urged to take seriously the significant investor support for the proposals, to strengthen their systems for assessing whether their clients' transition plans are consistent with the 1.5°C target, and to strengthen their board governance systems to address the climate crisis. Although the three banks have committed to net zero, they continue to finance fossil fuels, particularly in the LNG sector, where Mizuho and MUFG are the largest financiers in the world in 2023. They are also financing North American companies that have no credible transition plans. This is indicative of inadequate systems for evaluating their clients' compliance with transition plans, as well as a lack of board governance and oversight. For example, megabanks are financing companies developing the Rio Grande LNG project and pipeline on the U.S. Gulf Coast. In addition to its high greenhouse gas emissions, this project has serious human rights concerns, including negative impacts on low-income local communities through environmental degradation and violations of Indigenous People’s rights. Megabanks have promised to conduct human rights due diligence and have emphasized respect for human rights at their annual meetings, but this kind of project shows that implementation is not enough. In both climate change and human rights, it is necessary to strengthen the implementation system of their policies.”
Toyoyuki Kawakami (Rainforest Action Network, Japan Senior Advisor)
For Editors: Notable Outcomes from our engagements
Shareholder proposals and dialogue with Japanese companies have steadily impacted climate change measures. Since the filing of our climate-related proposal to Mizuho FG in 2020, there has been significant engagement with the company following serious concerns voiced by many investors about major delays by Japanese companies in addressing climate change.
Withdrawal from Coal-Fired Power Generation:
In 2021, Market Forces filed a proposal to Sumitomo Corporation to align its business strategy with the Paris Agreement. This led to Sumitomo's withdrawal from the Matarbari 2 coal-fired power plant in Bangladesh in 2022, avoiding 187 million tons of carbon dioxide emissions annually.
Suspension of Financing for Fossil Fuel Projects and Policy Updates:
In 2020, Kiko Network's shareholder proposal led Mizuho FG to set a coal-fired power phase-out target by 2050, later revised to 2040. MUFG and other megabanks followed with similar commitments, including joining the Net Zero Banking Alliance.
In 2022, proposals led Sumitomo Mitsui FG to strengthen its investment policy for the coal mining sector and withdraw from the East African Crude Oil Project in 2023, following environmental and human rights concerns.
These dialogues have driven significant improvements in companies' climate efforts, with further progress expected in upcoming integrated reports.
For further information, including investor briefings and media releases,
please access: Asia Shareholder Action
Related Release
[Press Release] Four companies in the Tokyo Prime Market, including 3 “Mega-banks” face climate votes on their Directors’ competency (April 15, 2024)
Please contact regarding the shareholder proposals below
Market Forces https://www.marketforces.org.au
Antony Balmain E-mail: antony.balmain[@]marketforces.org.au
Kiko Network https://www.kikonet.org
Tokyo Office：TEL:+81-3-3263-9210
Yasuko Suzuki E-mail: suzuki[＠]kikonet.org
Rainforest Action Network（RAN）japan.ran.org
Toyoyuki Kawakami E-mail: toyo[@]ran.org
