Banks Failing to Respond to Climate Risks, New Reports Find

TOKYO, June 22, 2017 — A report released today by four NGOs – Rainforest Action Network, BankTrack, Sierra Club and Oil Change International – revealed that the world’s biggest banks, including Japan’s three megabanks, are failing to respond to climate risks through their continued financing of extreme fossil fuels.

The report,Banking on Climate Change, provides analysis of 37 banks from around the world that are fueling climate change by funding some of the most carbon-intensive, financially risky, and environmentally destructive sectors of the fossil fuel industry: coal mining, coal power, extreme oil (tar sands, Arctic, and ultra-deepwater oil), and liquefied natural gas (LNG) export. Japanese banks, including Mizuho, MUFG and SMFG, are among the guilty institutions. Banking on Climate Change gives the three Japanese megabanks an F grade (the lowest score possible) based on their lack of any meaningful commitment to address climate change risks in these sectors.

Of the three large Japanese banks, Mizuho is the only one to have increased its exposure to extreme fossil fuels after the Paris Climate Agreement, highlighting its disregard for the global goal to keep temperature rise to well below 2 degrees. In 2016 alone, Mizuho contributed over 2.9 billion USD to some of the largest and most carbon-intensive fossil fuel companies in the world. Half of those investments were related to coal power, the dirtiest and most carbon-polluting energy sources. In aggregate, Mizuho has increased its fossil fuel financing by 60% since 2014, despite the Paris Agreement and the global trend toward carbon reduction.

In light of these findings, Rainforest Action Network, 350.org Japan, Friends of the Earth Japan, and Japan Center for Sustainable Environment and Society published the 2016 ESG Performance Report of Mizuho Financial Group as an independent review of Mizuho’s financial practices. In addition to Mizuho’s significant international exposure to extreme fossil fuels, the report finds that Mizuho is the top financier of Japanese fossil fuel and nuclear related companies and provides significant financing to companies driving tropical deforestation in Southeast Asia. Between 2011 and 2016, Mizuho provided over 38 billion USD in loans and underwriting to fossil fuel related companies in Japan, far exceeding its peers Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMFG). In the same period, Mizuho contributed over 4 billion USD (adjusted) in loans and underwriting to companies threatening rainforests in Southeast Asia, and nearly 8 billion USD to nuclear-related companies in Japan.

Mizuho is well behind its peers in adopting strong Environmental, Social, and Governance (ESG) policies with respect to addressing climate change, deforestation and human rights, and has failed to adequately disclose the material risks of its investments to shareholders. The inadequacy of Mizuho’s social and environmental safeguard policies has the financial group currently involved in major ESG controversies worldwide. These include the Dakota Access Pipeline in the United States, a project that has been condemned by UN officials due to its abuse of Indigenous rights; palm oil company Indofood, which has been linked to use of child labor in Indonesia; and the Cirebon-coal fired power plant in Indonesia which faces community opposition due to health and livelihood impacts. Without sector-specific ESG policies, Mizuho risks becoming embroiled in more corporate scandals, misplaced capital allocation into carbon-intensive industries that may become stranded assets, rainforest destruction or corporate liability for financing human rights abuses, any of which can impact shareholder value.

At a press conference held at the press club of the Bank of Japan, Toyo Kawakami, Japan Director at Rainforest Action Network said, “Fossil fuel burning and tropical deforestation are the leading drivers of climate change, and Mizuho is funding both with billions of dollars. Shareholders need to hold Mizuho accountable for its reckless financial practices.”

“Mizuho’s increasing financing of fossil fuels is contrary to the global goal set out in the Paris Climate Agreement. Mizuho should make full disclosure of climate related financial risks as part of its lending and investment policy and commit to decarbonization of its portfolio in line with the 1.5-2 degree temperature goal. Continued financing of projects like the Dakota Access Pipeline will make Mizuho an international target for divestment based on human rights and climate concerns,” said Shin Furuno, Japan Divestment Campaigner from350.org Japan.

“Mizuho is currently financing several major coal-fired power plants in Indonesia, which have only brought misery to the local communities. Mizuho needs to take cues from its peers and quit coal for good,” said Ayumi Fukakusa from Friends of the Earth Japan.

To download the Banking on Climate Change report: www.ran.org/bankingonclimatechange

To download the ESG Performance Report of Mizuho: www.ran.org/mizuho_riskyinvestment

About the Organizations:

Rainforest Action Network has a 30+ year history challenging power and systemic injustice to preserve forests, protect the climate and uphold human rights through frontline partnerships and strategic campaigns. For more information, please visit:www.ran.org

350.org Japan was established in April 2015 as the Japan office of 350.org, a global environmental organization. 350.org Japan is working to spread fossil fuel divestment in Japan, mainly through the My Bank My Future campaign. 350.org Japan is creating a people-driven movement to demand banks adopt sustainable investment policies that keep global warming well below 1.5-2℃ — a target codified in the Paris Agreement. 350.org’s global network extends to more than 180 countries. For more information please visit: http://350.org/ja

Friends of the Earth Japan tackles problems such as climate change and energy, forests and biodiversity, development finance and environment, Fukushima support and nuclear phase-out, and more. As a member of Friends of the Earth International, it have been active in Japan since 1980. Its ultimate goal is to create a world in which all people may live peacefully and equitably. For more information, please visit: www.foejapan.org/