Governance

At MUFG, the Sustainability Committee, which operates under the Executive Committee, is charged with periodically deliberating policies on and determining the status of the Group's response to opportunities and risks arising from climate change and other environmental and social concerns. MUFG has positioned climate change-related risk as one of the Top Risks that it must pay close attention to. Accordingly, these risks are discussed by the Credit & Investment Management Committee, the Credit Committee and the Risk Management Committee, all of which are under the direct supervision of the Executive Committee.The Chief Strategy Officer (CSO) presents and reports significant matters related to sustainability, including climate change, such as policies, strategies, frameworks, and initiatives, to the Board of Directors. Additionally, the Chief Risk Officer (CRO) presents and reports significant matters related to the management, policy and frameworks of sustainability risks, including climate change to the Board of Directors.

Conclusions reached by the above committees are reported to the Executive Committee‒which is tasked with deliberating and making decisions on important matters regarding business execution‒and, ultimately, reported to and discussed by the Board of Directors. In addition, matters discussed by the Credit & Investment Management Committee and the Risk Management Committee are also examined by the Risk Committee, which mainly consists of outside directors, and then reported to the Board of Directors. In these ways, the Board of Directors exercises supervision over MUFG's climate change-related initiatives.

The Board of Directors has designated sustainability, including climate change, as a key deliberation item. The Board reviews initiatives related to business opportunities and risks associated with climate change on a regular basis, at least once a year. Through the Board of Directors and its subcommittees, which are composed of directors with knowledge, expertise, and experience in sustainability, approximately 30 sustainability-related proposals were deliberated on in fiscal year 2023.

The Executive Committee discusses matters for deliberation and reporting related to the progress of transition plans, environmental policies, and revisions to the MUFG Environmental and Social Policy Framework as addressed by the Sustainability Committee. Under the umbrella of the Sustainability Committee, various meetings are held, including the Sustainability Review Meeting, the Steering Committee, review and study sessions, the Transition Plan Review Meeting, and the FE Monitoring Meeting.

We have launched a global and group-wide project team to discuss strategies and policies, and to engage in agile decision-making through steering committee and review meetings with participation by the CEO and other key management members. This takes place under the supervision of the Board of Directors. In fiscal year 2023, we held two Steering Committee meetings.

MUFG has established the degree of improvement in our evaluation by external ESG rating agencies as a medium- to long-term performance-linked indicator for stock compensation. Additionally, we have established contribution to resolving environmental and social issues, including climate change, as a target for the qualitative evaluation of performance for bonuses to be paid to the Group CEO and other relevant officers.

Furthermore, we are revising the executive compensation system in fiscal 2024 based on the new medium-term business plan. The main points of the revision are as follows:

MUFG’s Board of Directors is comprised of individuals with experience in global operations in light of our business development as well as IT and digital technology and sustainability to take the lead in our digital shift and solving social issues such as climate change.

We hold regular meetings for exchanging ideas between external advisors and members of management to utilize outside expertise in our sustainability initiatives.