For Immediate Release
CONTACT:
Marie Tanao, 350.org Japan: +81-90-2183-2113, [email protected]
Shin Furuno, 350.org Japan: [email protected]
“A small step forward, but not nearly enough”- Environmental NGOs Respond to Release of
New MUFG Environmental, Social and Human Rights Policy
May 25 2018 Tokyo, Japan — On May 15th, Mitsubishi UFJ Financial Group (MUFG) announced its adoption of a new “Environmental Policy Statement”, “Human Rights Policy Statement”, and “Environmental and Social Policy Framework” that will be applied to its clients. Japanese environmental groups ー 350.org Japan, Japan Center for a Sustainable Environment and Society (JACSES), Rainforest Action Network, Kiko Network and Friends of the Earth Japan ー issued the following statement on MUFG’s new policies:
“MUFG’s publication of comprehensive environmental and social safeguards for its loans and underwriting is a first among Japan’s megabanks, which consist of MUFG, Mizuho Financial Group and Sumitomo Mitsui Financial Group.
We are paying close attention to the announcement by MUFG, and believe the clarification of policies on environmental and social considerations indicates progress in addressing the serious climate, deforestation and human rights impacts of MUFG’s financing activities. The policy is an important step in the right direction, but must be further strengthened in order to align with critical international priorities including the Paris Agreement and the Sustainable Development Goals (SDGs).
We urge Japan’s megabanks including MUFG to announce business strategies and clear indicators and targets consistent with the Paris Agreement. The first course of action they must take in this regard is to stop any new financing for domestic and foreign coal-fired power projects and companies involved in those projects. In order to strengthen the MUFG Environmental and Social Policy Framework, we call upon MUFG to respond to the specific demands laid out in the “Petition to Japan’s Major Financial Groups to Stop Financing New Coal Developments” initiated by 350.org Japan and supporting groups. (1)”
The groups also issued the commentary below analyzing the newly announced policies:
“We welcome MUFG’s recognition of the importance of addressing climate change in its new environmental policy. MUFG states that it “promotes the transition to a low-carbon society and reduces climate change risk” through its own operations as well as products and services provided to its clients. MUFG explains that they are doing so through support for businesses involved in solar and wind power and other forms of renewable energy, consideration of the potential climate impacts associated with their financing, and research into the potential future impacts of climate change on their business. In addition, MUFG clearly indicates its support for international agreements and initiatives addressing climate change including the Paris Agreement, Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Principles for Responsible Investment (PRI).
However, we regret that the MUFG Environmental and Social Policy Framework does not give sufficient consideration for financing fossil fuels, which is the main contributor to climate change and a sector to which MUFG is significantly exposed.(2) Regarding financing to the coal-fired power generation sector, the policy states: “MUFG Bank and Mitsubishi UFJ Trust and Banking refer to international guidelines such as the OECD Arrangement on Officially Supported Export Credits, when considering the provision of financing for new coal fired power generation. Decisions on financing are made following recognition of both the local and the international circumstances surrounding coal fired power generation.” In the OECD public export credit arrangement there is a provision to narrow down eligible projects to high efficiency coal-fired power generation, but the United Nations Environment Program has stipulated that any support for new coal-fired power is inconsistent with the Paris Agreement goal of keeping global warming well below 2 degrees. Further, there is no mention of other carbon-intensive and financially risky fossil fuels such as tar sands, which is one of the most carbon-intensive forms of oil.
MUFG’s policy addressing deforestation, which is a major contributor to climate change and biodiversity loss, is a step in the right direction, but it does not meet international standards. By prohibiting transactions that negatively impact wetlands designated under the Ramsar Convention or UNESCO designated World Heritage Sites as well as transactions that violate the Convention on International Trade in Endangered Species of Wild Fauna and Flora (Washington Convention), the policy affords some protection for tropical forests and peatlands, which are especially critical for climate change mitigation. Also, it is noteworthy that the policy requires enhanced due diligence on transactions that impact High Conservation Value areas, and checks the client’s ability to manage such environmental and social risks. However, these policy measures are not consistent with the objective of zero deforestation set by international initiatives such as the Sustainable Development Goals (SDGs) and the Consumer Goods Forum (CGF), and it is disappointing that there is no mention of the High Carbon Stock Approach (HCSA), which is the widely endorsed methodology for companies to implement zero deforestation.
MUFG’s Human Rights Policy Statement is commendable in its clear stipulation that it respects international human rights standards including the Guiding Principles on Business and Human Rights, and prohibits transactions involving the use of child labor or forced labor. Especially, the recognition that “in countries where local legislation conflicts with internationally recognized human rights standards, MUFG seeks to respect international standards” is important. From this perspective, the UN Declaration of Indigenous Peoples should be included as part of the internationally recognized human rights standards. It is also noteworthy that MUFG requires enhanced due diligence for transactions that impact Indigenous Peoples and where land expropriation leads to involuntary resettlement. MUFG clearly states that “if the environmental and social management approach of [the client] is not considered sufficient relative to the level of the potential risks or impacts, financing will not be provided.” Based on this policy, we expect MUFG to reevaluate its present financing of a palm oil company that is involved in child labor as well as three companies constructing tar sand pipelines in violation of Indigenous Peoples’ rights. (3)
In Europe and the US, several major banks are already committing to divest from fossil fuel-related companies, especially coal-related businesses and companies, which emit the highest amounts of carbon dioxide (CO2). ING, BNP Paribas and Deutsche Bank prohibit financing for new coal-fired power generation projects, and many have also announced restrictions on financing for companies involved in coal-fired power generation. Regarding the protection of forests and peatlands, major banks in Europe, including HSBC and ABN Amro, are beginning to adopt policies consistent with zero deforestation.
We hope that MUFG and Japan’s megabanks will promptly strengthen and implement their policies on financing coal, other fossil fuels and deforestation to be consistent with the Paris Agreement and the SDGs.”
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Note to Editors:
- 350.org Japan and supportings NGOs are currently running a global petition calling upon Japan’s three biggest financial institutions — Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group (Mizuho FG), and Sumitomo Mitsui Financial Group (SMFG) — to cease all new lending to coal fired power generation and coal extraction, and make concrete steps to align their finance policies with the Paris Agreement. For more details please see: http://world.350.org/east-asia/divest-from-coal-en/
- MUFG was recently recognized as the world’s fifth largest financier of coal power and second largest lender to coal power development, and is a lead financier of the company behind a major tar sands pipeline being constructed in the United States. For more details please see: RAN, “Banking on Climate Change: Summary Briefing for Investors, Banks, and Regulators in Japan” http://japan.ran.org/wp-content/uploads/2018/05/BankingonClimateChange2018_Japan_Summary_FINAL_ENG.pdf
- The palm oil company is Indofood, the three companies constructing tar sand pipelines are Enbridge, TransCanada and Kinder Morgan. For more details please see: RAN & OPPUK & ILRF, “The Human Cost of Conflict Palm Oil Revisited” https://bit.ly/2GPimND , RAN, “Banking on Climate Change: Summary Briefing for Investors, Banks, and Regulators in Japan”