SMBC Group:
Truly a “Global Solution Provider?”

There is little room for more CO2 emissions if the 1.5°C target is to be met.

To this end, the UN Secretary General has called for zero coal-based power in developed countries by 2030 and in developing countries by 2040.

The United Nations Environment Programme (UNEP) has also warned that if countries do not change oil and gas production plans, they will not be able to meet the 1.5°C target. To eliminate coal, gas and oil will require stopping new and expansion projects as well as the downsizing of existing fossil fuel infrastructure.

While SMBC maintains a policy of “no support for new coal-fired power plant construction or expansion projects,” there are many loopholes as below.

(a) Support for existing projects continues.
(b) SMBC could continue to support technologies such as CCUS and ammonia co-firing, which have not been proven to reduce emissions and/or are not economically viable. This support in turn extends the life of power plants that should be decommissioned.
(c) SMBC’s policies only apply to the project level – financing for companies that are highly dependent on coal continues.
(d) SMBC continues to support coal mining with the exception of mountaintop removal mining. (This policy will be subject to change in May.)
(e) Phase-out targets for coal-fired power plants only apply to project financing, not to corporate financing or coal mining.

For example, the Vietnam Vung Ang 2 coal-fired power project, for which the decision to provide support by SMBC was supposedly made in December 2020, has raised concerns not only from environmental groups and climate activists, but also from global investors.

The SMBC Group has stated that it will “assess the environmental and social impact” of its support for oil and gas projects, but in light of the Paris Agreement, it needs to have a policy of “ceasing support.” For example, the French bank “La Banque Postale” has explicitly stated that it will stop supporting oil, gas, and coal companies by 2030.

A new 1,443 km-long “East Africa Crude Oil Pipeline” (EACOP) connecting Uganda and Tanzania is currently under planning, which will be the world’s longest crude oil transportation infrastructure when completed. There are concerns that EACOP will not only displace tens of thousands of people and destroy national parks with valuable ecosystems, but also will increase global CO2 emissions by more than 34 million tons per year. There has been strong opposition around the world, including from local communities, and numerous banks have announced that they will not support the project. SMBC, which is believed to be one of the financial advisors to the project, has not responded to the public’s call to withdraw its support.