Japan’s largest bank MUFG adopts new policies to protect forests and the climate, but controversies abound

Mitsubishi UFJ Financial Group (MUFG), Japan’s largest financial group and the world’s fifth largest bank by assets, has just released an updated Environmental and Social Policy Framework that will govern its loans and underwriting.

MUFG’s announcement comes amid strong criticism from NGOs, who have noted that MUFG is the 6th largest lender and underwriter of companies driving tropical deforestation in Southeast Asia and the 7th largest global lender and underwriter to all fossil fuels. Among the big three Japanese banks, MUFG is the largest financier of the palm oil sector and the largest financier of fossil fuels, most notably coal power.

Hana Heineken, Senior Campaigner for Responsible Finance with Rainforest Action Network (RAN), responded to the news:

“This is an important step for MUFG and precedent setting for the Japanese financial sector, but there is much more to be done to ensure that the bank is not financing climate change, deforestation or human rights abuses. The science on impending species extinction and global climate disaster is abundantly clear, and we can no longer tolerate banking institutions who continue to fund the problem.

With this policy, MUFG has for the first time explicitly committed to mitigate negative impacts on forests, but the policy’s reliance on poorly enforced certification mechanisms could very well undermine this. We are encouraged by MUFG’s commitment to not finance new coal power projects, but we are disappointed by the inclusion of vague exceptions to this ban and the lack of broader commitments to stop finance for coal mining, or for the companies that build and operate coal power plants and mines.

Similarly, we will be watching to see if MUFG’s new policy will lead the bank to cut ties with controversial companies such as major palm oil company Indofood, which has been sanctioned for illegal acts and labor abuses.”