The "Three Megabanks" have been the driving force behind the Japanese economy. However, these banks are the world's top three lenders to the coal industry. They are one of the largest global financiers of fossil fuels.*
The world regards fossil fuels as "yesterday's energy." The world is seeing a major shift to renewable energy. Now is the time to phase out the use of fossil fuels.
* MUFG is the 6th largest fossil fuel financier in the world since the Paris Agreement. Mizuho ranked the 8th largest financier while SMBC ranked 18th. (Source: Banking On Climate Chaos, March 2022)
Mr. Jun Ohta, President & Group CEO, SMBC Group Mr. Hironori Kamezawa, President & Group CEO, Mitsubishi UFJ Financial Group Mr. Masahiro Kihara, President & Group CEO, Mizuho Financial Group
Calling on the 3 Japanese Megabanks to End Fossil Fuel Finance
We are already living through the climate crisis. For years, scientists have warned that the longer we delay a fundamental reform of our fossil fuel-dependent systems and the reliance on deforestation, the narrower our window to stop the climate crisis becomes. We must act now to mitigate the worst human and ecosystem impacts caused by the climate crisis.
In recent years, climate change risks have increasingly been associated with financial risks. Investors, young people, scientists, citizens, and other stakeholders are looking to financial institutions to take the lead in climate action by ruling out fossil fuels in their financing and investment portfolios and managing climate-related risks over the short, medium and longer term.
While the banks have improved their response to climate change in recent years, with the accelerating crisis, these efforts are simply not enough. To limit the rise in average global temperatures to 1.5 degrees compared to pre-industrial levels, and to halve greenhouse gas (GHG) emissions by 2030 and to achieve zero emissions at the latest by 2050, banks must take bold actions now.
There is already a directive in place that coal-fired power plants, which emit the most GHGs during power generation, should be completely abolished by 2030 in OECD countries and by 2040 worldwide. In May 2021, the International Energy Agency (IEA) announced that, in order to achieve net zero emissions by 2050, there should be no more investment in new fossil fuel development projects, with existing facilities gradually phased out. The IEA also recommended that electric power generation should be decarbonized in developed countries by 2035 and worldwide by 2040. Although there are issues associated with the IEA's roadmap, this announcement is highly significant because of its influence on the future direction of global energy policy.
Your targets to curb financed GHG emissions do not meet these requirements. Moreover, your policies on coal power, coal mining, oil and gas, and forest-related sectors remain insufficient and must go further. Japan's three megabanks, including your bank, are the world's top three lenders to the coal industry and the world's principal financiers of fossil fuel companies. On this basis they are one of the major contributors of the worsening climate crisis.
We call upon your bank to demonstrate leadership towards a carbon-free society through responsible financial actions described as below. This way, your bank will contribute to solving, not worsening, the climate crisis.
We call upon you to cease funding new fossil fuel-related projects and projects that involve deforestation without exceptions.
We call upon you to outline a strategy to phase out existing investment and financing for fossil fuel projects or related companies on a timeframe that is consistent with the Paris Agreement 1.5 degree target, and to clarify short-, and medium-term targets and metrics for the achievement of net-zero by 2050.
We call upon you to ensure that your roadmap for decarbonization is not overly reliant on practically unproven technologies, such as CCUS and co-combustion.