Highlights
In April 2021, we defined our purpose as being “Committed to empowering a brighter future.” Since then, we have been implementing our medium-term business plan, led by a heightened commitment to helping resolve environmental and social issues. To better contribute to building a sustainable environment and society, MUFG has selected 10 priority environmental and social issues. One of the priorities we especially focus on is climate change measures and environmental protection. MUFG has taken another step forward by announcing the MUFG Carbon Neutrality Declaration in May 2021. Guided by this declaration, MUFG is implementing group-wide environmental measures globally, aiming to achieve net zero GHG(note) emissions from the financed portfolio by 2050 and net zero GHG emissions from our own operations by 2030.
Acutely aware of the importance of climate-related financial disclosure, MUFG has declared its support of relevant recommendations formulated by the Task Force on Climate-related Financial Disclosures (TCFD), a special taskforce established by the Financial Stability Board (FSB). In line with these recommendations for disclosure of climate change-related risks and opportunities in its Governance, Strategy, Risk Management, and Metrics and Targets, TCFD is pursuing the following.
- Green House Gas
Status of Response to the TCFD Recommendations
Governance
Disclose the organization's governance around climate-related risks and opportunities.
a．Describe the board's oversight of climate-related risks and opportunities. b．Describe management's role in assessing and managing climate-related risks and opportunities. |
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- Opportunities and risks related to the environment and society, including climate change, are regularly discussed by the Sustainability Committee under the Executive Committee. Depending on the theme, matters are also reviewed by the Credit & Investment Management Committee, Credit Committee, and Risk Management Committee also under the Executive Committee. The contents of the review by the committees are reported to the Executive Committee and then to the Board of Directors to be reviewed.
- The contents of the review by the Credit & Investment Management Committee and the Risk Management Committee are reported to the Board of Directors after being reviewed by the Risk Committee, which is composed mainly of outside directors.
- To be determined by the Board of Directors from May 2021: Clearly stated the commitment to proactively disclose information concerning the environment, including climate change.
- Started to review the performance-linked indicators for executive compensation from FY 2021 and reflected the degree of improvement found through the external ratings granted by five major ESG rating agencies to further advance sustainability management.
- For bonus-related qualitative evaluations of performance of duties by the president and other relevant officers, set targets related to contribution to the resolution of environmental and social issues, the promotion of inclusion & diversity, and the strengthening and upgrading of MUFG’s governance structure. In FY2023, added targets related to human rights, biodiversity, and human capital.
Strategy Disclose the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material.
a．Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. b．Describe the impact of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning. c．Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. |
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- Declared the achievement of net-zero GHG emissions from our finance portfolio by 2050 and net-zero GHG emissions from our own operations by 2030 (May 2021)
● Initiatives Aimed at Net-Zero Emissions in the Financed Portfolio
- Set an interim target for 2030 to reduce emission intensity in the power sector from 328gCO2e/kWh (2019) to 156-192gCO2e/kWh. Results for 2021 were 299gCO2e/kWh, a reduction of about 9% from FY2019.
- Set an interim target for 2030 to reduce absolute emissions in the oil and gas sector by 15%-28% from 84MtCO2e (2019). Results for 2021 were 76MtCO2e, a reduction of about 9% from FY2019.
- Within the real estate sector, set interim targets for 2030 to reduce emission intensity in commercial real estate from 65kgCO2e/㎡ (2020) to 44-47kgCO2e/㎡, and reduce emission intensity in residential real estate from 27kgCO2e/㎡ (2020) to 23kgCO2e/㎡.
- Set an interim target for 2030 to reduce absolute emissions in the steel sector by 22% from 22MtCO2e (2019).
- Set an interim target for 2030 to reduce the PCA (note) score in the shipping sector to 0% or lower.
- A consistency metric that indicates the difference from the required level across the financed portfolio for shipping. It is calculated from the Vessel Climate Alignment (VCA) of individual vessels to which finance is provided, weighted for percentage within the loan portfolio.
- Approach to the achievement of carbon neutrality
- Policy proposals in cooperation with industry and government agencies
- Lead discussions on the formulation of guidelines for transition finance in the Net-Zero Banking Alliance (NZBA) and Asia Transition Finance Study Group (ATFSG).
- Participated in the five working groups of the Glasgow Financial Alliance for Net Zero (GFANZ)
In June 2023, appointed Masamichi Kono, Senior Advisor of MUFG Bank, Former Deputy Secretary General of the OECD, was appointed as GFANZ Japan Advisor. - Participated by MUFG Asset Management (hereafter "MUFG AM") in the Net Zero Asset Managers (NZAM) initiative in November 2021. In October 2022, set an interim target for 2030 covering 55% of assets under management, to reduce GHG emissions per unit of economic intensity (absolute emissions amount (tCO2e) / balance of assets under management) by 50% compared to 2019 level.
- In October 2022, we published the MUFG Transition Whitepaper 2022 to communicate the importance of recognizing different regional characteristics, interdependency among industries, and individual efforts in maximizing renewable energy to achieve carbon neutrality in Japan.
As the next phase, In September 2023, we published the MUFG Transition Whitepaper 2023, to present the list of technologies in supply chains that are important in advancing the path to carbon neutrality in Japan’s “electricity and heat” segment. MUFG will also steer its activities towards clarifying Japan’s transition plan to seek for new opportunities ahead of us.
- Strengthening of ability to offer solutions that support decarbonization by customers in line with government policies and strategies
- Set sustainable finance targets with a cumulative execution amount of ¥35 trillion (including ¥18 trillion in the environmental area) from FY2019 to FY2030. The cumulative execution amount through FY2022 is ¥24.5 trillion (including ¥8.9 trillion in the environmental area) and is steadily growing.
- Actively support transition finance with a focus on transition bonds and loans.
- Develop and provide solutions aimed at carbon neutrality and originating with customer needs, including support for GHG emissions visualization, TCFD consulting services, and carbon credits.
- Leverage relationships with customers, local governments, and industry organizations to grasp new needs and issues
- Advance carbon neutrality through cooperation with regions such as Hokkaido and Osaka.
- Study the creation of a blended finance scheme in collaboration with NEXI to tackle climate change issues with the Asia Zero Emission Community (AZEC) in mind.
- Regularly aggregate and share knowledge among relevant officers and lower levels, and launch the GX Strategy PT as a venue for communicating information that contributes to concrete business creation and promotion of GX investment and financing.
- To reinforce expertise of relationship managers at branches and enhance capabilities for engagement, The Bank has assigned "Sustainable Business Promotion Leaders" (hereinafter "Promotion Leaders") at corporate sales branches nationwide.
- In 2021, assigned ESG Heads and ESG specialist managers to regions (Europe, Americas, and Asia) to strengthen ESG teams in the regions. Also built a system to consolidate intelligence and business opportunities by bringing together top management from regions at the Global ESG Conference.
- At partner banks (Krungsri and Danamon), promote initiatives to achieve a sustainable environment and society through sustainable finance, etc.
- In May 2023, together with Mitsubishi Corporation and Pavilion Private Equity Co., Ltd., the Bank established Marunouchi Climate Tech Growth Fund L.P. The Fund has Marunouchi Innovation Partners Co., Ltd. as its general partner, and will invest mainly in climate-tech-related startups for growth.
- Organize cases of impact (cases of potential risks) for each category of major transition risks and physical risks arising from climate change.
- Conduct a scenario analysis of transition risks through 2050 and physical risks through 2100.
[Transition Risks]
| Scenario | ・Various scenarios, including the sustainable development scenario (the [less than] 2°C scenario) of the IEA and the 1.5°C scenario that the NGFS has released. |
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Analytical method |
・An integrated approach is adopted to assess the impact by combining the bottom-up approach at the individual company level and the top-down approach at the sector level. Using this approach, the impact on credit ratings in each scenario is analyzed along with the effect on the overall financial impact of the sector's credit portfolio. |
| Target sector | ・Energy, utilities, automotive, steel, air and maritime transportation sectors |
| Target period | ・Until 2050 using the end of March 2022 as the standard |
| Result of analysis | ・Single-year basis: 1.5 billion yen to 28.5 billion yen (Last time result: 1.5 billion yen to 23 billion yen) |
[Physical Risks]
| Scenario | ・RCP 2.6 (the 2°C scenario) and 8.5 (4°C scenario) published by the Intergovernmental Panel on Climate Change (IPCC). |
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Analytical method |
・Estimated damage in the event of a flood is analyzed, and an approach to measure its impact on the overall credit portfolio using the change in default probability that the occurrence of floods would have on the credit portfolio is adopted. ・In the calculation of financial impact, the period of the suspension of the business of the borrower and the loss of assets, among other aspects, are reflected. |
| Target sector | ・Flood |
| Target period | ・Until 2100 using the end of March 2022 as the standard (Last time period: Until 2050 using the end of March 2021 as the standard). |
| Result of analysis | ・Cumulative total: Approximately 115.5 billion yen |
- Formulate a roadmap for net-zero emissions by 2030 and set interim targets for reduction of domestic GHG emissions by two-thirds in FY2025 compared to FY2020 level and reduction of group and global GHG emissions by 50% in FY2026 compared to FY2020 level.
- Perform first-time calculation of Scope 3 (Categories 1-14) GHG emissions from MUFG, the Bank, the Trust Bank, the Securities, NICOS, and ACOM, the Group's six major companies in Japan.
Risk Management Disclose how the organization identifies, assesses, and manages climate-related risks.
a．Describe the organization's processes for identifying and assessing climate-related risks. b．Describe the organization's processes for managing climate-related risks. c．Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management. |
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- Recognizing climate change-related risks as one of the most important risk categories, they are discussed by the Credit & Investment Management Committee, Credit Committee, and Risk Management Committee under the Executive Committee. The contents of the discussions held by the Credit & Investment Management Committee and the Risk Management Committee are discussed by the Risk Committee, which consists mainly of outside directors, and then reported to the Board of Directors.
- From FY 2021, climate change-related risks have been added to the Risk Appetite Statement.
- Climate change-related risks are positioned as one of the Top Risks.
- To consider a management framework for supervising countermeasures against climate change risks, a project team is established with the Group Chief Risk Officer (CRO) as the lead and with participation of the CROs from the holding company, the Bank, Trust Bank and Securities, as well as regional CROs of the holding company and Bank. Risk management is strengthened by tracking and sharing regulatory trends and establishing risk management frameworks on a Group and global basis.
- Revised policies concerning the climate change-related sectors of forests, palm oil, and coal mining (2023).
Metrics and Targets Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
a．Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. b．Disclose Scope1, Scope2 and, if appropriate, Scope3 greenhouse gas (GHG) emissions and the related risks. c．Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. |
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| Sector | Interim target for 2030 | Emissions at the time of target setting | Results |
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| Power sector | 156-192gCO2e/kwh (Emission intensity) |
328gCO2e/kwh (2019) |
299gCO2e/kwh (2021 results) |
| Oil and gas sector | 15-28% reduction compared with 2019 level (Absolute GHG emissions) |
84MtCO2e (2019) |
76MtCO2e (2021 results) |
Real estate sector |
Commercial: 44-47kgCO2e/㎡ Residential: 23kgCO2e/㎡ (Emission intensity) |
Commercial: 65kgCO2e/㎡ Residential: 27kgCO2e/㎡ (2020) |
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| Steel sector | 22% reduction compared with 2019 level (Absolute GHG emissions) |
22MtCO2e (2019) |
ー |
| Shipping sector | PCA≦0% | PCA+0.6% (2021) |
ー |
- Aggregation of MUFG’s GHG Emissions on a Group and global basis for FY2022. Total emission of Scope 1 and Scope 2 in FY2022 was 189,000 tCO2.
- On June 2022, MUFG achieved a switch to 100% renewable power sources for in-house contracted electric power at all consolidated subsidiaries in Japan.
- The target amount of sustainable finance has been set at 35 trillion yen (of which 18 trillion yen is for the environmental sector) for the period from FY2019 to FY2030. We steadily accumulated results of ¥24.5 trillion (including ¥8.9 trillion in the environmental area) through the end of FY2022, and are also studying a review of our targets.
- MUFG set a cumulative CO2 reduction target of 70 million tCO2 from FY2019 to FY2030, and disclosed its progress. The achievement through FY2022 was 36.63 million tons.
- The loan balance reduction target to achieve a 50% reduction from FY 2019 in FY 2030 and zero by around FY 2040 is set and disclosed (October 2020). Project financing at the end of FY2022 was $2,581million.
- Set and disclosed a target for reducing the outstanding balance to zero by FY 2040 (April 2022). Corporate financing at the end of FY2022 was approximately ¥80 billion yen.
● Carbon-related assets (credit amounts)
- In addition to the previously disclosed energy and utilities sectors, the breakdown of other carbon-related assets (transportation, materials and buildings, agriculture, food and forest products) following the revision of the TCFD recommendations in October 2021 has been disclosed.