December 5, 2019. Madrid, Spain – The latest research report on global financiers of the coal industry was released by Urgewald, Banktrack and 30 partner NGOs today on the occasion of the UN Climate Summit.
- Japan’s biggest commercial banks Mizuho Financial Group (Mizuho), Mitsubishi UFJ Financial Group (MUFG) and Sumitomo Mitsui Financial Group (SMBC Group) are ranked first, second and third biggest lenders to the top coal plant developer companies, respectively
- Japan’s Government Pension Investment Fund (GPIF) is ranked the second biggest investor in the world in the top coal plant developers
- Global coal developer companies’ underwriting is dominated by Chinese financial giants
The report analyses the loans, underwriting, bond holdings and shareholdings in the top 258 coal plant developer companies, as defined by the global coal exit list. Alarmingly, global banks provided USD 745 billion to coal plant developers between 2017-2019, and Japan’s commercial banks and investors are ranked among the largest financiers in the world.
Urgewald’s Director, Heffa Schücking said, “Japanese companies are fuelling coal expansion in Asia twofold: Financially and through direct investments. It is troubling to see new coal plants being developed from Australia to Bangladesh, not just by utility companies like J-Power and Kansai Electric, but also by big trading corporations like Marubeni, Mitsubishi and Sumitomo.”
Despite the Japanese Government’s participation in the Paris Agreement, which aims to limit global temperature rise to well below 2 degrees celsius from pre-industrial levels, Japan’s top commercial banks – Mizuho, MUFG and SMBC Group – are respectively ranked the first, second and third biggest lenders to the top coal plant developers. Japan’s top three ‘megabanks’ together provided a whopping USD 39.3 billion in loans to coal plant developers between 2017-2019, in an industry which is responsible for almost one-third of global CO2 emissions.1
The total loans provided by Japan’s Mizuho (USD 16.8 billion), MUFG (USD 14.6 billion), and SMBC Group (USD 7.9 billion) are equivalent to almost 40 per cent of lending provided by the top 30 global banks, including Citigroup, BNP Paribas, State Bank of India and Barclays (See Attachment 1 for details).
In response to this latest data, 350.org Japan campaigner Eri Watanabe said:
“All three of Japan’s megabanks have recently committed to align their business practices with the Paris Agreement by signing on to the UN Principles for Responsible Banking (PRB). Their financing for coal is not only contradictory to this, but also a massive carbon-debt that must be urgently reduced in order for them to play a responsible part in the transition to a zero carbon economy”.
While Japan’s megabanks have all endorsed the Task Force on Climate-related Financial Disclosures (TCFD) recommendations on climate risk reporting, and recently introduced policies restricting finance for coal-fired power plant projects2, their continued financing of controversial new coal plants both at home and overseas is a significant risk to their international brand reputations as they look to expand their businesses abroad.
Prominent and highly contentious coal plants where all three Japanese banks have recently provided financing include Cirebon 2 in Indonesia, which is currently mired in a corruption scandal3, and Van Phong 1 in Vietnam, which is implicated in human rights issues with forced land reclamation and health concerns that likely violate several international frameworks and standards4. The Japanese megabanks are also considering funding Vung Ang 25 coal power station in Vietnam on the site of one of the worst environmental disasters in Vietnamese history and where communities already struggle with health and livelihood issues.
Japan’s pension fund GPIF is the number 2 investor in coal related companies globally, with total combined shareholdings and bond holdings worth USD 17.4 billion at the time of research. Global asset manager Blackrock is the number one investor to the coal industry with USD 17.6 billion in holdings while Vanguard comes in at number three (USD 12.4 billion) respectively. Other major Japanese asset managers are ranked 7th (Sumitomo Mitsui Trust), 8th (Nomura), 9th (MUFG) and 12th (Mizuho) biggest investors in the world. Japan’s investors are second only to the United States in terms of total investments in the coal industry.
Noting the high exposure of Japanese investors in coal plant developers, Japan head for 350.org, Takayoshi Yokoyama made the following comment: “Japan’s GPIF has admitted that its portfolio investments are in line with a 3 degree global temperature rise which spells both planetary and financial disaster. As a Board Member of the UN Principles for Responsible Investment (PRI) and biggest pension fund in the world, Japan’s GPIF is under global scrutiny to translate its lofty words into action and decarbonize its investment portfolio, starting with companies identified in the global coal exit list. It is imperative that Japanese investors move beyond disclosure to actively divest from companies that do not have business strategies aligned with the Paris Agreement goal of limiting temperature rise to below 1.5 degrees Celsius.”
Underwriting for coal: China’s Banks dominate the Top 10, followed by Mizuho
Underwriting for global coal developers is dominated by Chinese financial giants Industrial and Commercial Bank of China (ICBC), Asia Ping An Insurance Group, CITIC and Bank of China, with the top 4 alone providing over USD 110 billion in underwriting services during 2017-2019. Chinese financial institutions round out all the top 10 underwriters, with Japan’s Mizuho 11th biggest underwriter of coal. Alongside Japan, China’s outsized influence on global coal development can not be denied and there are significant concerns its Belt and Road Initiative will involve additional coal plant capacity in developing countries.
Press Contact: Aanchal Mehta Email: [email protected] Phone: +65 9770 1840
1 https://www.iea.org/geco/emissions/
2 world.350.org/…a/press-release/190828-eng
3nocoaljapan.org/bribery-case-and-japanese-mega-bank-loans
4foejapan.org/en/aid/jbic02/vp/190426