Natural Capital and Biodiversity (Disclosure based on the TNFD framework)

MUFG has organized and published our perspectives and activities related to natural capital in accordance with the TNFD (Taskforce on Nature-related Financial Disclosures) disclosure framework, issuing the MUFG TNFD Report. Click here for details of the MUFG TNFD Report.

For initiatives as an asset manager, please refer to MUFG Asset Management Natural Capital and Biodiversity 2024 (Japanese).

At COP15 held in 2022, the Kunming Montreal Global Biodiversity Framework was adopted, establishing an international agreement to achieve nature positive by 2030.

In 2023, the Taskforce on Nature related Financial Disclosures (TNFD) introduced a framework for nature and biodiversity related disclosure. Additionally, at COP16 held in Colombia in 2024, guidance on nature transition plans by TNFD and the Glasgow Financial Alliance for Net Zero (GFANZ) was published, steadily advancing the development of frameworks for achieving nature positive.

The MUFG Group Code of Conduct established under the MUFG Way states “Commitment to the Environment” and “Contribute to Communities.” The MUFG Environmental Policy Statement sets out guidelines for environmental awareness and behavior to implement these practices. Specifically, the policy is to support projects that conserve natural capital and biodiversity, while striving to identify risks and take appropriate measures to avoid negative impacts on natural capital and biodiversity.

MUFG positions “Drive Social & Environmental Progress” as one of the three pillars of the Medium Term Business Plan (MTBP) which began in FY2024. In the MTBP, we have identified priority issues for achieving a sustainable environment and society, including “Natural Capital and Biodiversity Restoration”.

Click here for details of “Priority Issues”.

In December 2024 we invited Professor Shunsuke Managi from the Faculty of Engineering at Kyushu University to engage with our executives in a discussion about international trends in natural capital and the necessary initiatives for social implementation.

MUFG's management regularly holds meetings with external advisors to exchange opinions and receive proposals that contribute to the enhancement of MUFG's policies and initiatives. In FY 2024, we engaged in discussions with executives on topics such as energy policy trends, draft guidance for TNFD and GFANZ transition plans related to natural capital, and the visualization of impact using SROI^(note1). The external advisors emphasized the importance of active management involvement and the inclusion of diverse stakeholders in addressing social issues, including natural capital conservation.

MUFG has established a governance structure to oversee initiatives related to respecting human rights, including human rights due diligence, through its Board of Directors and other various committees. In addition, MUFG’s Human Rights Policy Statement established in 2018 stipulates MUFG's commitment to collaborate with clients and suppliers to further uphold human rights in our business activities.

MUFG is committed to conducting business in a manner that minimizes adverse impacts on natural capital. Additionally, MUFG recognizes the importance of considering stakeholders closely connected to natural capital, including indigenous peoples and local communities. Based on this concept, MUFG is committed to human rights due diligence and providing remedies.

The initiatives related to respect for human rights are deliberated in executive management meetings, including the Executive Committee, the Sustainability Committee, and the Risk Management Committee. Additionally these efforts are overseen by the Board of Directors and the Risk Committee. Furthermore, the MUFG Human Rights Policy Statement is regularly reviewed and approved by the Board of Directors.

MUFG regularly invites external experts with knowledge in business and human rights to engage in discussions with top management. This exchange of opinions aims to advance initiatives that promote respect for human rights, with a comprehensive understanding of the responsibilities expected of financial institutions.

In addition to advocating for the executives and employees of each Group company to respect human rights in their daily operations, the statement also advocates for clients and suppliers to respect human rights and states MUFG’s commitment to appropriately dealing with this issue.

MUFG respects international standards and initiatives related to respect for human rights. In countries where local legislations conflict with internationally recognized human rights standards, MUFG strives to adhere to international standards.

MUFG recognizes that climate change and the loss of natural capital and biodiversity impacts human rights (Human Rights Policy Statement, Article 2). Furthermore, MUFG has identified the adverse impacts on indigenous peoples' communities, who are closely related to natural capital, as serious human rights issues. MUFG conducts human rights due diligence and provides remedies to address these concerns.

When considering financing, we assess the status for environmental and social considerations by our clients based on the MUFG Environmental and Social Policy Framework and the Equator Principles. For example, we recognize that large scale development projects often adversely impact the ancestral lands and rights of indigenous peoples who are closely connected to natural capital. Therefore, when evaluating financing, we ensure that our clients respect environmental and social considerations, such as adherence to FPIC^(note1).

The business activities of companies (clients) depend on and have an impact on natural capital throughout the entire value chain, from procurement of raw materials to disposal. Financial institutions, including MUFG, not only depend on and have an impact on natural capital through own busine ss activities, but also have connections to the activities of clients and their supply chains through investments and loans. Therefore, financial institutions need to understand clients’ dependencies and impacts on natural capital in order to manage risks appropriately. In addition, providing financial products and services related to natural capital can lead to the acquisition of business opportunities.

Among the various business opportunities related to natural capital, MUFG focused on five areas where MUFG Group can leverage its strengths. In addition to promoting dialogue with a wide range of stakeholders, we support our clients' initiatives for natural capital and collaborate with various companies and startups.

MUFG provides various types of financing for initiatives worldwide that contribute to the conservation of natural capital, including sustainable agriculture and forest conservation.

MUFG is working with stakeholders, including national and local governments and companies, to develop solutions and create businesses for achieving nature positive.

MUFG is utilizing satellites to observe CO₂ absorption by forests and to build an ocean database. By visualizing the impact on the environment and society through satellite data, we aim to create a highly reliable market and apply it to MUFG’s business, including finance.

In the field of “food,” in addition to the sustainable use of natural capital, nutrition is also an important issue. While the development of evaluation standards originating in Europe is progressing, there is a recognition that European standards do not necessarily lead directly to improvements in the health of the Japanese people. Therefore, we are participating in international rule-making through collaboration among industry, government and academia, and actively disseminating our opinions to ensure appropriate evaluation of the Japanese food industry.

In order to ensure a stable food supply for Japan, it is important to promote sustainable agriculture by reducing environmental impact while improving productivity. MUFG is working to promote sustainable agriculture through collaboration with food related clients.

In order to identify opportunities and risks related to natural capital in business, it is important to analyze dependencies and impacts. MUFG is working to identify key sectors in terms of opportunities and risks by analyzing dependencies and impacts of each sector in its investment and loan portfolio. In addition, for some sectors, we conducted analysis based on client location information (location analysis).

Using “ENCORE”, we analyzed each sector’s degree of dependencies on natural capital, and found that sectors such as construction and engineering; energy; food, beverages, and tobacco; healthcare; materials chemical, etc.); mining and metals; and utilities (electricity, water, etc.) are the most highly dependent on natural capital.

Using “ENCORE”, we analyzed each sector's impacts on natural capital and biodiversity and found that sectors such as construction and engineering; energy; food, beverages, and tobacco; materials (chemical, etc.); mining and metals; wholesale; transportation; and utilities (electricity, etc.) have large impacts on natural capital and biodiversity.

We are in the process of identifying material sectors by analyzing dependencies and impacts on natural capital by sector while taking into account the amount of exposure in our investment and loan portfolio.

For the food, beverages, and tobacco sectors, which have high dependencies and impacts, we are working on location analysis based on the location of our clients’ manufacturing sites. As a case study, we identified areas that are likely to experience water shortages (droughts) and flooding in the future. Through analyses like this, we aim to understand the impact of environmental changes and other factors on the businesses of our clients, and to identify nature related opportunities and risks.

MUFG is promoting initiatives such as effective use of plastic waste and paper resources, recycling of waste, and reduction of GHG emissions in order to reduce dependencies and impacts on natural capital from our business activities.

See here for an analysis of our own locations.

As a framework to understand and manage the environmental and social risks in consideration of Finance^(note1), the MUFG Environmental and Social Policy Framework has been established. This framework is applied in compliance with local laws and regulations.

Additionally, when financing large scale projects such as infrastructure and resource development, an environmental and social risk due diligence based on the Equator Principle^(note2) is conducted.

MUFG has designated businesses with a high likelihood of existing negative impacts on natural capital and biodiversity as transactions of high caution. When considering financing, we confirm our clients’ implementation of environmental and social considerations through a process of identifying and evaluating environmental and social risks or impacts. In April 2025, fisheries and aquaculture businesses, which are highly dependent on and have an impact on natural capital, were newly designated as businesses to be considered.

The Equator Principles are a framework for identifying, assessing, and managing environmental and social risks when providing financing for large-scale development projects. The International Finance Corporation (IFC) Performance Standards, which are referenced during due diligence conducted under the Equator Principles, stipulate considerations for biodiversity and the respect for the human rights of Indigenous Peoples. In addition to conducting due diligence before financing, the Bank also monitors projects after financing to ensure they do not cause adverse environmental and social impacts.

The standards concerning natural capital and biodiversity conservation (IFC Performance Standard 6) require that impacts on natural capital and biodiversity be minimized in accordance with the mitigation hierarchy. This approach involves prioritizing the “Avoidance” of impacts, “Minimization” of unavoidable impacts, “Rehabilitation and Restoration” on site, and finally, using “Biodiversity offsets” to compensate for any remaining impacts.

MUFG has systematically structured its actions towards realizing a societal vision and addressing short to long term impacts using a logic model framework. As part of this initiative, we have established "expanding support for nature related startups" as a key impact indicator. Additionally, we have set quantitative targets, including a sustainable finance goal and benchmarks for recycling rates.

MUFG will promote the following four initiatives toward achieving nature positive across the entire value chain.