Strengthens protections for climate & forests, setting new benchmark for Japanese banks
San Francisco – Today, Mizuho Financial Group (8411:Tokyo) –– Japan’s 2nd largest bank and a prominent financier of climate-destroying fossil fuels and deforestation, announced significant revisions to its policies on responsible investment and financing and adopted the strongest Environmental, Social and Governance (ESG) policies of any Japanese bank yet. The announcement comes on the heels of a shareholder resolution filed on Mizuho calling for a more progressive climate policy and years of criticism by Rainforest Action Network (RAN) and others for the bank’s reckless financing of new coal plants, pipelines, and rainforest destruction.
“With this policy, Mizuho has set a new benchmark for the Japanese banking industry. While some unfortunate exceptions remain on coal power, we commend the addition of No Deforestation, No Peat and No Exploitation (NDPE) policies for commodities driving deforestation, and stronger social and environmental protections for oil & gas and mining,” said Hana Heineken, Senior Responsible Finance Campaigner with RAN. “This will hopefully propel Mizuho’s peers, Mitsubishi UFJ Financial Group (MUFG) and SMBC Group, to match and even exceed Mizuho’s policy.”
In addition to Mizuho’s commitment to strengthen board-level oversight of sustainability and climate risk management, notable elements of Mizuho’s new policy include the following:
- Clients involved in forestry, palm oil and pulp & paper sectors will be asked to adopt best practice NDPE policies and respect the Free Prior and Informed Consent (FPIC) of local communities.
- No further financing of new coal power plants, except to projects already committed to before June 2020; or replacements of less efficient plants where it is also deemed necessary for stable energy supply in the host country. Support for development of next-generation technologies to support decarbonization will continue. Financial exposure to coal power will be reduced by 50% from 2019 by 2030, and zeroed by 2050.
- No further financing of mountaintop removal.
- Clients involved in coal mining as well as oil & gas will be evaluated for their management of transition risk, and closely scrutinized for their social and environmental impacts, including conflicts with Indigenous Peoples in the case of oil & gas companies.
- All financing will be subject to prohibitions on child labor and forced labor; negative impacts on Ramsar or UNESCO World Heritage site; and violations of CITES.
- All financing will include an assessment of the client’s risk mitigation or avoidance for activities that result in negative impacts on Indigenous Peoples or land expropriation leading to involuntary resettlement.
Mizuho is the third-largest banker of deforestation-driving commodities in Southeast Asia, which is home to one of the last remaining expanses of rainforests on the planet. Mizuho’s financing of pulp and paper and palm oil companies is particularly problematic, with recent financing directly linked to the 2019 forest fires in Indonesia which ravaged over 850,000 hectares of land and forest and emitted an estimated 709 million tons of GHGs. For years, Mizuho has also been one of the largest financiers of palm oil giant Indofood which has been embroiled in peatland destruction and illegal labor exploitation. Whether Mizuho continues to finance companies such as Indofood will be an important litmus test of the policy.
Mizuho is also the world’s ninth-largest banker of fossil fuels, with $103.4 billion in lending and underwriting over the past four years since the Paris Agreement was adopted. Moreover, between January 2017 and September 2019, Mizuho was the top lender to companies developing new coal power plants. Mizuho is also supporting controversial tar sands and fracked gas pipelines by banking TC Energy, the company behind the Keystone XL and Coastal GasLink pipelines, and Enbridge, the company behind Line 3.
“Mizuho’s stronger policy is welcome, but if Mizuho truly wants to be a leader in tackling the climate crisis, it must commit to get out of coal much sooner than its proposed 2050 exit, and end all financing that is furthering fossil fuel expansion and rainforest destruction,” said Heineken. “It is hypocritical for Mizuho to talk big on ESG while it continues to funnel money to climate-damaging, rights-abusing companies. It remains to be seen whether the new policies will end Mizuho’s reckless financing to these problematic companies. After all, a policy is only as good as its implementation.”
Effective implementation will be critical in addressing the dual crises of rapid climate change and unprecedented biodiversity loss and meeting Mizuho’s commitment as a signatory to the UN Principles for Responsible Banking.
Notes to Editors:
- More information on Mizuho’s risky financing practices can be found at: https://en.saynomizuho.com/
Examples of best practice in the banking sector can be found in Banking on Climate Change: Fossil Fuel Finance Report 2020, which assesses the strength of 35 global banks’ fossil fuel financing policies; as well as forestsandfinance.org/bank-profiles/, which assesses over 30 global bank’s policies on deforestation and human rights.