Sumitomo Mitsui Financial Group (SMFG) [8316:JP] and Mitsubishi UFJ Financial Group (MUFG) [8306:JP], two of Japan’s three megabanks, have pledged not to fund new thermal coal mining projects, as reported by Nikkei Asia on April 1. The other megabank, Mizuho Financial Group (MFG) [8411:JP], has also made a similar policy adjustment last year. The three megabanks have combined outstanding loans of billions of dollars for thermal coal mining, which is expected to drop gradually with the end of new financing.
MUFG and SMFG successively suspended financing for coal-fired power plants in April and May 2021 amid increased pressure from global investors and environmental groups who urged lenders to cut funding for coal-related projects. Aside from that, SMFG has shelled out JPY20bn (USD160m) for sustainability investment. On the other hand, Japan’s financial institutes are encouraged to boost green and sustainable loans. Last December, the state-owned Bank of Japan (BOJ) [8301:JP] provided USD18bn of zero-interest loans to financial institutions under a scheme aimed at promoting activities to tackle climate change. Notably, these initiatives came after the Japanese government revised its 2030 greenhouse gas (GHG) emission-reduction target in April 2021. According to the new goal, Japan will slash its GHG emissions by 40% by 2030 based on fiscal 2013 levels, compared to a previous goal of a 26% reduction.