Climate groups have filed shareholder proposals with Japan’s three biggest banks in a novel approach to pressure financial institutions on climate change. The proposals, targeting Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group, call for stricter oversight of environment-related risks by the banks’ boards of directors.
Climate Proposal Details and Comparison
A coalition including Market Forces, Kiko Network and Rainforest Action Network submitted shareholder proposals to the companies. These aim to compel the banks to disclose how they assess directors’ competency in managing environmental risks. Even though they remain confidential for now, the proposals align with governance standards set by the International Sustainability Standards Board (ISSB), according to Reuters’ sources.
JOINT MEDIA RELEASE | @JPNRAN @kikonetwork | Four companies in the Tokyo Prime Market, including all three Japanese “mega banks” face climate votes on director competency #NetZero https://t.co/XKXeN0dLS3
— Market Forces (@market_forces) April 15, 2024
This marks a shift in tactics from last year, when environmental groups urged the banks to disclose plans for achieving carbon neutrality by 2050 – this year’s proposals focus on corporate governance, aiming to make the banks, key financiers of oil and gas projects, more transparent about how their boards assess climatic risks and ensure directors have the necessary expertise to handle them. Kiko Network has shared a press release about the resolutions.
Banks’ Responses
While Sumitomo Mitsui and Mizuho confirmed receipt of the proposals, Mitsubishi UFJ declined to comment. All three banks will face votes on the proposals at their annual general meetings scheduled for June. However, there may be some hurdles as last year, similar proposals received only about 20% backing from shareholders.
Public Perception and Shareholder Backing
Despite some resistance to green shareholder activity, pressure on Japanese companies to address climatic concerns does remain strong. Activists and some shareholders argue that Japanese businesses have been sluggish in moving away from fossil fuels and their financing. These proposals highlight the growing pressure on Japanese corporations to address climate change. Additionally, Market Forces and Kiko Network filed a similar proposal with Chubu Electric Power, seeking disclosure of director competencies in managing climate risks.
The environmental groups are also seeking additional information from the banks, such as details on how they assess their fossil fuel clients’ climate transition plans and the actions they plan to take if clients fail to present credible strategies.
Pressure on Japanese financial institutions to align their practices with environmental sustainability goals has gained momentum in Japan since 2020 when Mizuho faced the first climate-related vote by a listed company.
