A coalition of climate groups, including Australia's Market Forces, Japan's Kiko Network, and a representative of Rainforest Action Network, have taken a significant step by submitting shareholder proposals to Japan's major banks - Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group. This move represents a milestone as it is the first time that climate groups are targeting the banks' boards to ramp up pressure on addressing climate change concerns.
The key emphasis of the proposals is to prompt stricter board oversight concerning climate-related business risks, directing the banks to unveil their methods for assessing director competency in managing such risks. Additionally, the proposals aim to push the banks to disclose credible transition plans outlining how they intend to achieve carbon-neutral targets by 2050. These actions align with governance standards put forth by the International Sustainability Standards Board (ISSB), which demand transparent disclosures on how governance bodies supervise sustainability-related risks.
The upcoming annual general meetings in June will be critical as the proposals from the climate groups are set to be voted on. Interestingly, last year's climate proposals at the banks faced resistance from shareholders, receiving only around 20 percent support, as revealed in the Reuters report. Furthermore, the climate groups are advocating for greater transparency from the banks in evaluating the climate change transition plans of their fossil fuel sector clients, along with contingency plans in case of failures to present credible strategies.
The wave of shareholder activism on climate change in Japan has been on an upward trajectory since 2020, when Mizuho made history by becoming the first publicly listed company in the country to confront a climate-related vote. This growing momentum underscores the increasing urgency and focus on climate-related risks within Japan's financial sector, highlighting the evolving landscape of corporate accountability in addressing environmental challenges.