Spotlight on MUFG
Discover why it is crucial for MUFG to align its financing strategies with the targets set by the Paris Agreement.
© Paul Hilton
MUFG, widely known as Japan’s largest bank, pledged net-zero GHG emissions across its finance portfolio by 2050.
Despite MUFG’s climate policy, it remains the top Asian financier of fossil fuels and one of the top forest-risk commodity sector financiers (a sector that frequently is charged with human rights and Indigenous rights violations.) (Banking on Climate Chaos, Forest and Finance) This contradicts their goal of achieving net-zero emissions by 2050, as they still back companies with questionable policies and histories of issues like illegal deforestation and inadequate climate transition plans. (MUFG)
Investors, guide MUFG back towards net-zero.
© 123rf.com
In 2015, world leaders committed to the Paris Agreement, aiming to cap global temperature rise to 1.5C above pre-industrial levels. (UNFCCC)
A decade later, this commitment has transformed global markets. Companies in the fossil fuel sector now face evolving climate agreements, changing environmental regulations, and decarbonization trends, risking asset devaluation and stranding. (Science Direct)
Despite these changes, MUFG has invested US$313.5 billion in fossil fuels and deforestation-linked commodities since 2016. (Banking on Climate Chaos, Forest and Finance)
LNG:
MUFG is among the top banks worldwide that finance LNG projects. LNG is composed of methane, a greenhouse gas 80 times more harmful than CO2 over a 20 year period. (UNEP). For example, MUFG finances the contentious Rio Grande LNG project in Texas, USA, which is facing potential legal violations in addition to harming the climate. (Sierra Club）Construction could infringe upon the rights of local Indigenous Peoples as well as harm local community health and endangered species. The climate impact from the project is comparable to the emissions from 43 coal power plants. (RAN)
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Palm Oil and Forest-Risk Commodities:
MUFG, a top financier of forest-risk commodities, significantly contributes to the deforestation of Southeast Asian rainforests and peatlands through its funding of conflict palm oil and the pulp and paper sector. （Forest and Finance）This financing impacts the climate, biodiversity, and Indigenous communities, and violates MUFG’s own policy against deforestation in High Conservation Value Areas. (MUFG) From 2016 to 2023, MUFG financed about US$5.8 billion in these commodities, ranking it 12th among top financiers. (Forest and Finance)
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Deforestation:
An MUFG client, the RGE Group, has been implicated extensively in deforestation activities in Indonesia’s rainforests and in violating the rights of local and Indigenous communities. Recent investigations reveal that RGE has continued deforesting areas in North Sumatra via an affiliate company (RAN). In addition, a new mega-scale pulpwood mill likely under the group’s ownership could risk up to 600,000 hectares of ancient rainforests in Borneo and Papua (RAN) – equivalent to approximately 8,400 soccer fields.
© RAN
© RAN
MUFG: An Urgent Case for Concern
1
Potential Support of Illegal Practices
MUFG’s financing to clients in climate-problematic sectors and geographies indicates weak policies that may inadvertently support illegal activities. (Mongabay) Adding to this is the inconsistent application of policies. Boards of directors of these megabanks seem to lack the necessary expertise, and insufficient disclosure leaves shareholders unable to evaluate their competency
2
Financial Risk & Stranded Assets
Investing heavily in fossil fuels and deforestation sectors exposes MUFG to financial risks and the likelihood of stranded assets due to global shifts towards decarbonization, sustainability, and stricter environmental regulations.
3
Adverse Climate Impacts
MUFG’s financing portfolio continues to include the fossil fuel sector, and companies connected to deforestation, accelerating both the climate crisis and biodiversity loss.
4
Harming Communities
MUFG’s financial activities create significant threats to the livelihoods of Indigenous and frontline communities.
© COP28/ Christopher Pike
Economic Trends: Transitioning From Fossil Fuels
Last year, global economy-wide investments in renewables either matched or outpaced investments in fossil fuels for the first time, setting a new direction for financing. (IEA) However, MUFG continues to direct financing towards fossil fuels and is out of step with this trend. It would be wise for MUFG to consider a three-prong approach: aggressively ramping up clean energy financing to exceed fossil fuel funding by as much as four times; ending fossil fuel expansion financing; and phasing out financing for other high-carbon activities. Only then could the world meet its climate-saving goal of tripling renewable energy and doubling energy efficiency by 2030. (UNSDG)
© COP28/ Christopher Pike
Re-evaluating MUFG projects
The Rio Grande LNG terminal financed by MUFG is located in South Texas, a haven for wildlife, fishing, tourism, and recreation and home to Latine and Indigenous communities. The proposed site would be located on an ancestral burial site of Indigenous Peoples.
“If built, Texas LNG, Rio Grande LNG, and their proposed Rio Bravo Pipeline would destroy our low-income Latine community’s way of life. Pollution from these mega LNG/ methane export terminals would destroy the waterways where shrimp lay their eggs and our people fish to feed their families. ” – Bekah Hinojosa, South Texas Environmental Justice Network
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© RAN
© RAN
© RAN
For decades, Pargamanan-Bintang Maria community members have been in conflict with a pulp and paper producer under the control of MUFG client, RGE Group. Land taken over by the company overlaps 40 percent of their ancestral lands, a process that took place without the community’s full consent. The impacts are dire: droughts, floods and declining forest-dependent livelihoods. This reveals an inconsistency: MUFG’s deep financial backing to RGE group is at odds with MUFG’s Policy (MUFG) – which requires clients to be free of involvement in the deforestation of ‘High Conservation Value (HCV) Areas’.
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In January 2024, the U.S. White House and Department of Energy announced a temporary pause on pending approvals of LNG export terminals. This pause on building additional methane gas export terminals is expected to halt 12 projects in the proposal phase, that would be the equivalent of 223 coal plants. The U.S. already has eight existing methane export terminals and another seven projects under construction that includes the Rio Grande LNG of Texas. Banks should consider a similar ambitious stance. (Sierra Club, Newsweek)
© RAN
© RAN
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