Japan’s Private Banks

Despite many private banks around the world recognising the risks associated with climate change, Japan’s big banks are going against this trend.

The statistics say it all: in a global comparison looking at loans between 2016-2018, Japan’s three biggest banks — Mizuho, MUFG, and SMBC, were the 1st, 2nd, and 4th largest lenders to coal developers globally, providing nearly 27 billion USD over three years.

In order for the world to achieve the Paris Agreement goal of limiting global temperature rise to 1.5 degrees celsius, the banking sector must stop funding any new coal plants. Yet Japanese banks are still making money from coal, which is the most carbon-polluting fuel.

Some small steps have been taken, but more must be done. In 2018, Mizuho, MUFG and SMBC published policies suggesting a decrease in coal funding. But these policies are riddled with loopholes and leave the door wide open for continuing to invest in so-called “highly efficient” coal plants which will still wreck the climate.

Banks locking developing
countries into coal

Japanese banks are backing coal power projects in countries like Indonesia and Vietnam, as well as supporting coal mining in Australia.

Scientists have shown this having deadly consequences. A study conducted by a Harvard University team has estimated approximately 70 000 people in Southeast Asian countries will face premature death annually just from the air pollution from coal expansion by 2030.

In Indonesia, local people affected by Japanese-funded coal plants have reported issues such as land grabbing, loss of livelihoods, and health impacts. Some are even going to court to challenge and stop projects. The Batang power project in Java is funded by Japan’s mega banks among others. The project was originally presented as a so-called model case of Japanese ‘clean coal’ technology exports. But as the project progressed, it was revealed the technology was not up to scratch. The amount of air pollution emitted by the plant would be five times as much as Japan’s domestic coal plants, on average.

Similar issues have been documented in several projects funded by Japanese private banks.

No Coal Japan demands

Immediately end project finance for coal and end new corporate finance for coal developers. Shift all bank financing to be in line with the Paris Agreement goals.

Japanese banks are already world leaders in financing renewable energy and Sumitomo Mitsui Trust Bank and Resona Group have set an early standard by ruling out any new project finance for coal power.

Given the reality of climate change, all of the money currently flowing to coal and other fossil fuels needs to go into helping just transition to a 100% renewable energy future both in Japan and around the world.