On June 6, the international environmental NGO 350.org Japan, which is demanding Finance Ministers and Central Bank Governors regulate the finance industry to align investment policies with the 1.5 degree goal of the Paris Agreement, held a press briefing in Marunouchi, Tokyo entitled “Finance and ESG Investing in Accordance with the 1.5℃ Goal: Climate Change Risk Disclosure and Responsible Investing.”
Two days prior to the G20 Finance Ministers and Central Bank Governors Meeting (hereafter referred to as the G20 Finance Ministers Meeting), which will take place on June 8-9 in Fukuoka, Japan, the seminar featured a discussion about the role that Japan’s financial institutions can play in helping to tackle the climate crisis.
In 2017 the “Task Force on Climate-related Financial Disclosures(TCFD)” established by the Financial Stability Board (FSB) on the basis of the communique issued by the 2015 G20 Finance Ministers Meeting, recommended that the financial sector strengthen its measures for dealing with the risks of climate change. However, flying in the face of international consensus, it has become increasingly apparent that Japan’s major financial institutions continue to provide significant financing to the coal power industry across the globe, which is accelerating climate breakdown. They are swimming against the tide in the finance industry, which is rapidly moving towards a decarbonized world.
In recent years Japanese banks have faced increased criticism for coal-related lending and investments. In light of this, one after another of Japan’s megabanks have revised their investment policies around coal power since last year. Most recently, MUFG resolved that it would, in principle, no longer provide financing for new coal power plants. However, alongside SMBC and Mizuho, these policies retain loopholes for high-efficiency coal power stations, which make them wholly incompatible with the Paris Agreement’s 1.5 degree target.
Against this background, 350.org Japan submitted its “Divestment Pledge” to Minister of Finance Aso Taro, Governor of the Bank of Japan Kuroda Haruhiko, and Financial Services Agency Commissioner Endo Toshihide demanding that they call on Japanese financial institutions to implement disclosure practices in line with TCFD recommendations, adopt investment and lending policies in line with the Paris Agreement’s 1.5 degree temperature goal, cease new financing for coal power plants and fossil fuel development, and adopt investment and lending practices to accelerate the transition to a renewable energy based society. Calling broadly on the public, and in particular the youth, for support, the Pledge stated that “if our financial institutions continue to support businesses that accelerate the pace of climate change, then we will move our deposits to banks that are more environmentally friendly prior to the Tokyo Olympics in 2020.” Despite the stringent, short-term commitment this entails, a total of 909 people (including 366 students, with 50% aged under 30) signed the Pledge, representing deposits worth an estimated 2.2 billion yen (c.20.5 million USD).
At today’s seminar, experts evaluated the finance sector’s progress towards aligning their business practices in line with the Paris Agreement targets. Toshihiko Goto, representative director at Sustainability Forum Japan said that “a paradigm shift is already taking place globally and U.S. and European institutions are already in a fierce battle to realize a carbon-free society, but Japan is lagging far behind such a movement.”
Goto added that “I highly appreciate the fact that many Japanese non-financial firms have endorsed the TCFD recommendations”, however noted that “it is the role of financial firms, including Japan’s megabanks, to lead the way on climate risk disclosure.”
350.org Senior Campaigner Shin Furuno stated that “the decarbonization of financial flows is central to the achievement of the 1.5 degree temperature goal”. He added that “Japanese financial institutions that have endorsed the TCFD recommendations will be expected to transform their business practices in line with the Paris Agreement”. “While the climate policies of Japan’s 3 major financial groups have moved forward in recent years, as long as they continue funding coal plants their actions will be harshly evaluated.” he said. Regarding the value of companies taking concrete climate actions, “not only will their brand values be enhanced, they will be able to attract a new breed of young employees who value companies with clear environmental and social missions” said Furuno.
Professor Hikima Masafumi of Sophia University, regarding universities’ willingness to tackle ESG investment in order to build a decarbonized society, said “from the standpoint of education, it is important that students understand that social issues such as the risks of climate change can be tackled through investment decisions.” “As an asset owner, when entrusting investment decisions to investment managers, it is important that ESG investment policies are clearly defined and close communications are maintained to monitor investment portfolios” said the Professor.
350.org’s Japan campaigner Eri Watanabe noted that “1067 institutions across the world, which collectively manage 8.7 trillion dollars (953 trillion yen) have already declared that they will divest from fossil fuels, and 5.2 billion dollars (565.4 billion yen) in personal monetary assets have already been withdrawn from fossil fuels.The Japanese divestment movement is continuing to expand and has already begun to impact the policies of financial institutions. On the importance of pursuing climate justice, she noted that “it is particularly significant that this movement has been spreading among students and the younger generation now in their 10s and 20s – who will be the most affected by the climate crisis. Of those who signed the “Divestment Pledge”, 40% were students and those below 30 made up over half of the signatories. These young people are demanding that the Finance Minister, Governor of the Bank of Japan, and Financial Services Commissioner take their concerns seriously and take urgent action to regulate the financial sector so that their financial decisions uphold the goals of the Paris Agreement”, Watanabe said.
Regarding the importance of businesses and organizations choosing “earth friendly banks” that do not support fossil fuels, Team03 representative director Maeda Tsuyoshi added that “when choosing banks, rather than immediate benefits like low transaction fees, I would request that they disclose how they are integrating social and environmental considerations in their lending and investment decisions.” “Also, banks should be disclosing what negative social and environmental risks they are working to mitigate, not only including their exposure to fossil fuels, but their association with other harmful businesses such as the weapons industry”, he stated. On the future of responsible banking, Mr Maeda noted that “banks should be looking beyond short term returns and actively support companies that contribute to sustainable development.”
Representing young people concerned about climate change, University of the Sacred Heart Tokyo senior Okada Eri said “The climate crisis may take our future away, and I signed up to the Divestment Pledge to call for action right now. I hope to expand divestment at my university and make it a sustainable campus.” In addition, she asked of financial institutions, governments, and adults, “How long can you be complicit in not acting on the crisis?”. She called on Japan’s financial community to “stop investing in coal and fossil fuels, and be prepared to face climate change seriously. I want you to think.”
In the lead up to the G20 Finance Ministers meeting, 350.org Japan called on Japan’s Finance Minister to act swiftly to reign in the finance industry and align banking practices with the 1.5 degree temperature goal, by making a human banner in downtown Tokyo.
 For example, in the three years since their adoption of the Paris Agreement in 2015, Mitsubishi UFJ Financial Group(MUFG), Mizuho Financial Group and Mitsui Sumitomo Financial Group(SMBC) provided a total of 186 billion yen in capital to the fossil fuel sector.Reference: RAN, etc. “Fossil Fuel Finance Report Card 2019” Japanese summary version announcement
 As of February 2019, over 100 financial institutions including 40% of the world’s top 40 banks and 20 global insurance companies announced divestment from coal.Reference: IEEFA (http://ieefa.org/wp-content/uploads/2019/02/IEEFA-Report_100-and-counting_Coal-Exit_Feb-2019.pdf) Also, the”Powering Past Coal Alliance,” which is comprised of the 30 national governments(including Canada, England, France and Italy) and 22 regional governments, is targeting the incremental elimination of coal power in OECD countries by 2030, and across the world by 2050 in order to achieve the Paris Agreement targets.(https://poweringpastcoal.org/about/Powering_Past_Coal_Alliance_Declaration)）
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350.org Japan PR Manager Seki