Last week, Sumitomo Mitsui Banking Corporation (SMBC) had its annual shareholders meeting, failing to address issues of climate change and air pollution from coal power despite questions from the audience and those posted online.
SMBC has faced intense pressure in the last few years, facing petitions, open letters and other advocacy, urging it to step away from coal, and particular coal power stations in Indonesia, Vietnam and Bangladesh.
In April, the bank released a new policy, which made no substantive changes on its commitments to get out of coal from the previous year. While the bank itself does not support lending to coal power, it has several exceptions for ultra-supercritical coal power stations, carbon capture and storage technologies, and for projects for which it “provided support” before its policies came into effect. While it is not clear what “provided support” means in this context, this may mean that SMBC may be able to finance another three polluting coal power projects in Vietnam and Bangladesh.
When asked by Ayumi Fukakusa of Friends of the Earth Japan when SMBC would have a policy that excludes coal and align with the Paris Agreement, SMBC’s Group CEO, Jun Ohta, reiterated their policy and said that by 2040, the bank should have phased out most of its coal lending to projects. However Mr. Ohta ignored Ms. Fukakusa’s comment about the new coal power projects SMBC is intending to support.
One of these new coal projects is Vung Ang 2, a proposed new 1,200 MW project in Central Vietnam. The project itself is in an area ravaged by the Formosa toxic spill and another coal power station, Vung Ang 1. Expert analysis of the environmental impact assessment for the project has determined that key aspects of the assessment did not meet internationally accepted standards for evaluating potential impacts of the project, in particular, that the current modelling used to calculate the air pollution dispersal is incorrect and should be redone, and that the project applies weaker emissions standards than those in Japan or Korea. Several banks have withdrawn from this project, while SMBC remains. The bank is also linked to Vung Ang 3, another 1,200MW project in the same area.
SMBC is also currently acting as financial advisor for two projects on Matarbari island in Bangladesh. These projects have raised concerns from local communities about a lack of resettlement and compensation for lost homes and livelihoods. Air pollution, which is already a serious concern in Bangladesh, killing over 120,000 people in 2017, will be worsened by these coal power stations. One of these power stations, Matarbari Phase 1 would cause up to 14,000 premature deaths during its operational years. Bangladeshi citizens have raised questions about SMBC’s funding of coal power stations.
SMBC’s coal policy contrasts directly with Mizuho Financial Group, which also released a policy in April. Mizuho is the only Japanese bank to have any targets on when it will phase out any of its exposure to coal power, but even those targets are not Paris-aligned. None of the Japanese banks currently have any policies restricting lending to corporations, although their lending to fossil fuels remains high. SMBC itself has lent US$24.769 B from 2016 to 2019 to the 100 coal, oil and gas companies expanding fossil fuels.
SMBC’s current lending and potential future lending to three power stations show that it’s lagging behind other international banks, and even other Japanese banks. The bank has not demonstrated to investors that it is considering or managing climate change related risks and although it has committed to the Principles for Responsible Banking, SMBC has not sought to align its investments with the goals of the Paris Agreement. Mizuho Financial Group, just yesterday, faced a shareholder proposal, seeking a plan outlining a Paris-aligned business strategy which received overwhelming support from shareholders around the world. SMBC risks meeting a similar fate if it does not seek to change to meet the challenges of climate change.
 SMBC, online: https://www.smbc.co.jp/news_e/e600579_01.html
 Market Forces, Japanese banks coal policies, online: https://www.marketforces.org.au/research/global-coal-finance/japanbanks-nocoal/
 Minh Ha-Duong, an Ha Truong, Hong Nam Nguyen, Hoang Anh Nguyen Trinh. Vietnam Sustainable Energy Alliance, ‘Synthesis Report on Socio-environmental Impacts of Coal and Coal-fired Power Plants in Vietnam’ [Technical Report]. 2016, online: https://hal-enpc.archives-ouvertes.fr/hal-01441680/document.Mike Ives, New York Times ‘Outrage over Fish Kill in Vietnam Simmers 6 Months Later’, (3 October 2016), online: https://www.nytimes.com/2016/10/04/world/asia/formosa-vietnam-fish.html,
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 Market Forces. “Vung Ang 2,” online: https://www.marketforces.org.au/research/vietnam/vung-ang-2/
 Robin Hicks, Eco-Business, ‘OCBC is now coal-free: Singapore bank drops out of final coal project’ (1 November 2019), online: https://www.eco-business.com/news/ocbc-is-now-coal-free-singapore-bank-drops-out-of-final-coal-project; Minerva Lau, ‘DBS exits Vapco 2’, Project Finance International; Joe Brock, Reuters, StanChart exits three Southeast Asia coal plants worth estimated $7 billion, (18 December 2019), online: https://www.reuters.com/article/us-stanchart-coal/stanchart-exits-three-southeast-asia-coal-plants-worthestimated-7-billion-idUSKBN1YM0KP
 Market Forces, Matarbari coal power projects, online: https://www.marketforces.org.au/stop-matarbari-coal-power-projects/
 State of Global Air, 2019, online: https://www.stateofglobalair.org/sites/default/files/soga_2019_report.pdf
 Greenpeace, A Deadly Double Standard, online: https://storage.googleapis.com/planet4-southeastasia-stateless/2020/03/e06c0c3f-double_standard_report.pdf
 Kiko Net, (22-05-2020) online: https://www.kikonet.org/eng/press-release-en/2020-05-22/mizuho_shareholder_resolution_update2
 Banking on Climate Change, 2020, https://www.ran.org/wp-content/uploads/2020/03/Banking_on_Climate_Change__2020_vF.pdf