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TOKYO REPORT: Major Japanese banks expanding “green loans”

  • September 13, 2021
  • , Jiji Press , 7:30 p.m.
  • English Press

Tokyo, Sept. 13 (Jiji Press)–Major Japanese banks are increasing their “green loans” as corporate clients step up decarbonization efforts in line with Prime Minister Yoshihide Suga’s international pledge to cut heat-trapping gas emissions in Japan to net zero by 2050.

 

Mitsubishi UFJ Financial Group Inc. <8306> announced a decision in April to boost the supply of funds to renewable, hydrogen and other sustainable energy projects to a total of 35 trillion yen by fiscal 2030, up from its initial target of 20 trillion yen.

 

Sumitomo Mitsui Financial Group Inc.  <8316> said the following month that it would provide 30 trillion yen to such projects by fiscal 2029, up from 10 trillion yen.

 

Mizuho Financial Group Inc. <8411> had supplied a total of 7.1 trillion yen in loans to sustainable programs by fiscal 2020 in line with its target of 25 trillion yen for fiscal 2019 to 2030.

 

The global market for sustainable funds was estimated at 3,000 trillion yen in 2018 and is expected to keep expanding.

 

Major Japanese banks are also starting to support business enterprises’ contributions to decarbonization through the development and adoption of innovative technologies.

 

Mitsubishi UFJ has declared that it will help its corporate clients reduce their greenhouse gas emissions to zero by 2050. “Finance holds the key to industrial structural reform” toward decarbonization, said Tetsuya Yonehana, senior managing corporate executive at Mitsubishi UFJ.

 

Sumitomo Mitsui is keeping tabs on the amount of greenhouse gas emissions from huge emitters, such as oil and gas companies and electric power utilities, and helping them to map out reduction targets, while Mizuho is promoting talks with its clients on emission cuts.

 

Japan is seen lagging behind other members of the Group of Seven major economies in efforts to end coal-fired power generation, a major contributor to the growth of greenhouse gas emissions.

 

Due in part to close scrutiny by environmental groups and investors, big banks said they will discontinue loans for projects to build new coal-fired power plants and reduce the outstanding balance of loans to such power generation to zero on a medium- and long-term basis.

 

At an annual shareholders’ meeting held by Mitsubishi UFJ in June, however, environmental group members proposed that the top Japanese financial services provider reinforce its environmental programs, suggesting that it is unclear whether the existing approaches comply with the Paris Agreement, an international treaty on the fight against climate change.

 

Environment activist investors are already affecting corporate business strategies overseas.

 

Shareholders of Exxon Mobil Corp., the biggest oil company in the United States, have elected board members backed by environmental activist investors.

 

BlackRock Inc., a top American asset management company, has announced a decision to vote against the selection of board members deemed unenthusiastic about addressing climate change, at companies it has invested in.

 

In Japan, environmental programs are being implemented “at an overwhelmingly slow pace” not only in the financial sector but in the whole of industry, a top executive of a big bank said, showing a sense of crisis.

 

In the Japanese banking sector, the promotion of measures to fight climate change jointly with corporate clients is becoming a priority issue.

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