Strategy

MUFG has placed “Drive Social & Environmental Progress” as one of the three pillars of the medium-term business plan (MTBP) launched in FY2024 and has set 10 priority issues. Among those issues, one of the most important issues is the achievement of a carbon neutral society.

MUFG has been taking action based on three unwavering commitments: (1) to help achieve the 1.5°C target, (2) to support a smooth transition to a decarbonized society, and (3) to create a sustainable society by fostering a virtuous cycle between the environment and the economy. We also take into account the growing importance of natural capital, circular economy, respect for human rights, and just transition.

In order to achieve carbon neutrality, we are advancing initiatives toward net-zero GHG emissions in our financed portfolio, decarbonization through financing, and net-zero emissions from our own operations, as we take action to meet our targets for 2030, 2040, and 2050.

MUFG has developed its own transition plan in accordance with the transition plan guidance framework by GFANZ. For details, please see MUFG Climate Report 2025 (P83).

Based on the MUFG Carbon Neutrality Declaration released in May 2021, we are working to achieve net zero emissions in our finance portfolio by 2050.

In April 2022, we set interim targets for 2030 at levels aligned with the Paris Agreement, and in April 2024, we added new target sectors. We recognize that the processes for achieving these targets vary depending on the characteristics of each region and business. We are also aware that our business is greatly affected by geopolitical risks and other factors, so we will share issues that we find through engagement (dialogue) with customers and support them to help resolve these issues.

Innovations which are still in the conceptual stage is another indispensable element for the world to achieve decarbonization. We believe that there is a gap between the real world and the goal that is yet to be materialized.

Therefore, our aspiration is to further contribute to the changes where the world advances more towards decarbonization by developing research on new technologies for implementation.

To reflect our stance mentioned above, we have set ranged interim targets in order to work together with our stakeholders to achieve net zero GHG emissions by 2050.

We have adopted the following four approaches to setting the interim target.

Going forward, we will reflect the changes in the IEA (International Energy Agency) scenario and various guidelines, as well as the increase in the quality of data disclosed by our customers, as appropriate.

Following the NZBA Guideline, MUFG ensures that the interim target for 2030 is scientifically “well below 2˚C, preferably to 1.5˚C,” as agreed in the Paris Agreement.

As a benchmark for 1.5°C, we refer to scientific scenarios published by IEA and others.

We use the best available data to set targets. However, there are limits to the amount and quality of data currently available, so we use the PCAF data quality score to check the quality of emissions data disclosed by MUFG.

When data is updated or new data is disclosed, improvements in accuracy and quality will be reflected. MUFG will also contribute to improving data accuracy by being highly transparent when disclosing information.

MUFG believes that targets should be set from a global perspective using widely accepted and transparent methods. We collect insights from various initiatives and reflect them in the targets we set.

We proceed with target setting, incorporating guidelines and rules developed by NZBA, PCAF, PACTA, and SBTi etc., as well as the outcomes of the global working groups which we participate in.

Pathways and the methods to achieve carbon neutrality vary by sector, so for each sector we take into consideration the characteristics of the business, the guidelines and the targets set by each customer.

By taking this approach, MUFG will identify issues in each sector and support customers’ efforts for achieving carbon neutrality.

Below table shows the FY2023 results of reducing emission from our financed portfolio and interim targets.

For detailed information on our approach for each sector and the respective interim targets we have set, please refer to the MUFG Climate Report 2025 (P52-59, P85-89).

According to estimates by the Ministry of Economy, Trade and Industry, Japan is aiming to mobilize over 150 trillion yen in funds from public and private investment. Private-sector investment will be attracted by implementing a combination of appropriate regulations and support measures, tailored to the business risks and environments of each sector.

In addition to Green Bonds and Green Loans to underpin investment plans, support for transition innovation in industries will also become a significant business opportunity for financial institutions.

MUFG will continue to identify new needs and issues through the solutions we provide while offering suggestions to policymakers in collaboration with industries and government agencies. As we deepen our relationships with clients, local governments, and various industries, we provide valuable insights to both industries and government agencies on emerging needs and issues related to decarbonization. We are here to collaborate with our clients towards decarbonization in a responsible manner.

MUFG has established a project team for the purpose of promoting climate change-related businesses, and is regularly consolidating and sharing knowledge with employees at the executive level and below. This is designed to strengthen our ability to engage with clients seeking carbon neutrality and provide high-quality products and services. Through our global sustainable business promotion structure, we provide solutions for our clients’ business transformation and innovations, directed towards addressing environmental and social issues.

MUFG is a leading financial institution in the renewable energy sector globally. Over the past 10 years, MUFG has ranked first in the world for project finance for renewable energy as a lead arranger^(note).

MUFG aims to provide 100 trillion yen in sustainable finance by FY2030, with 50 trillion yen allocated to the environment areas. As of the end of FY2024, we have delivered approximately 18 trillion yen, reaching nearly 37% of the FY2030 target.

MUFG supports the promotion of sustainability through the provision of products and services to customers who aim to address climate change and other environmental concerns.

By investing in climate-tech^(note)-related startup funds and forest funds, MUFG enhances the corporate value of investees and supports technological innovation towards a carbon-neutral society.

Under our Sustainable Business Investment Strategy (hereinafter “the Investment Strategy”), we invest in funds that contribute to solving environmental and social issues. Through the Investment Strategy, we seek to acquire knowledge and explore new business opportunities. In addition, we aim to solve issues through our fund investment activities by creating positive impacts and innovation, and nurturing of new industries.

Generally, companies that engage in financing and investment, including banks, consider costs and returns when making investment decisions. For the funds under the Investment Strategy currently set by our bank, we are able to make investment decision taking account of the effect of carbon cost reduction added to the investment returns, in addition to the effects of the investment itself, through converting the reduced carbon cost, calculated by multiplying the reduction amount by the internal carbon pricing^(note), into revenue adjustments, in respect of the investments with disclosed impacts, especially those expected to reduce CO₂ emissions.

Based on this Investment Strategy, we have made seven investments in advanced funds that incorporate impact investment mechanisms into their management processes and conduct impact evaluations. As a result, our bank's share of the investment is expected to generate an impact (CO₂ reduction effect) of approximately 144,000 tons annually. The internal carbon pricing used in this investment decision was USD 40/tCO₂ (as of the fiscal year 2024). By incorporating environmental impact into investment and financing decisions, in addition to risk and return, we are conducting equity investments. We aim to accumulate know-how and consider investments based on the international direction and development status of impact evaluation methods, to capture and disclose a broader range of environmental and social impacts in our business (investment and financing).

MUFG is actively involved in discussions to realize carbon neutrality through participating in various Japanese and international initiatives and committees hosted by the public sector, such as governments. Additionally, the contents of discussions held in committees and other forums are shared internally, and we ensure alignment between the policies of industry associations related to climate change and MUFG's policies. If there are any significant vulnerabilities, we engage in constructive dialogue to encourage a review of the stance of the relevant associations. Through this process, we ensure consistency with the stance taken by industry associations towards achieving carbon neutrality.

MUFG believes that financial institutions can achieve carbon neutrality through realizing clients’ carbon neutrality, in other words decarbonizing the real economy. To achieve decarbonization in the real economy, it is more important for financial institutions to support decarbonization of the real economy including carbon intensive sectors, rather than focusing on greening their balance sheets (also the so-called “paper decarbonization”). MUFG believes that such support for decarbonization is the key purpose of transition finance.​

The decarbonization of the real-economy requires development and implementation of transition strategy which reflects regional characteristics, industry structure and relative strength, inter-dependency among industries, and differences in energy mix. Japan and Asia’s unique challenges include transition timelines and pathways being different from those of Europe and the United States because Japan and Asia are still highly dependent on fossil fuels, coal-fired plants in this region are relatively young, and potential to scale up renewable energy is limited at this moment. Also, it is crucial to balance the economic growth and decarbonization in Asia where energy demand is expected to continue to increase in the coming years. As a global leading financial institution with an extensive footprint across Asia and Japan, we believe it is important to facilitate a whole-of-economy transition in a responsible way by engaging with broad stakeholders, and acknowledge as well as respect regional, sectoral or individual client’s pathways.       ​

A transition implies a major overhaul of the whole-of-economy, and therefore requires significant amount of capital mobilization and risk-taking. In doing so, public finance plays a critical role in crowding-in private finance. MUFG is committed to creating an enabling environment where both real-economy and financial institutions can proactively promote transition.​

Below three items are the main initiatives for transition support. For details, please see MUFG Climate Report 2025 (P29-P39).

MUFG has implemented a transition assessment framework, which evaluates our clients’ transition status, and a transaction screening process in order to provide managed transition support. We monitor the progress toward achieving our 2030 interim targets as we strengthen our client engagement activities through these activities. The Transition Plan Monitoring Meeting, jointly chaired by the CSO (Chief Strategy Officer) and CRO (Chief Risk Officer), will verify the effectiveness of these frameworks and the progress of our transition plan.

MUFG assesses the transition status of clients in carbon intensive sectors, looking at areas such as 1.5°C alignment with interim targets, transition plans, climate-related governance structure, and past emission reduction records. In addition to this assessment, other information obtained through engagement activities are reflected in the six-tier category to evaluate our clients’ transition progress.

There are two kinds of climate change-related risk. First, there are risks arising in the course of the transition to a decarbonized society, such as stricter regulation and the introduction of decarbonizing technologies (transition risks), and second, there are risks arising from physical damage due to the growing occurrences of climate change-induced natural disasters and abnormal weather (physical risks).

Financial institutions are required to address both risks, which may directly impact their own business activities and indirectly affected due to impacts on clients.

Based on this understanding, we are taking measures to mitigate the impact of business interruptions due to flooding by formulating a Business Continuity Plan (BCP) and other measures, considering physical risks for our assets.

Additionally, for financing that is deemed to have significant transition risks or physical risks, or both, we comprehensively examine our clients' responses towards these risks and proceed with the financing accordingly.

Based on the suggestions of the TCFD, MUFG has summarized the examples of physical and transition risks for each of the major risk categories. The timelines (short, medium, and long term) are also organized by risk category.

MUFG has organized examples of impact (potential risk scenarios) of transition risks and physical risks arising from climate change in each major risk category, based on our recognition that these risks may affect MUFG's entire value chain.

Risks are classified mainly around the following six categories. In the future, the classification of the risks and　examples will be reviewed in response to changes in the environment.

In FY2024, MUFG reviewed the heat map of transition risks and physical risks by sector recommended for disclosure by TCFD. As with scenario analysis, sector assessments will continually be reviewed and upgraded to keep pace with changes in climate change-related policies, technologies, markets, and other changes, as well as the latest developments in climate science.

MUFG has conducted scenario analysis to identify risks across its entire credit portfolio. This analysis covers transition risks up to 2050 and physical risks up to 2100. In fiscal year 2024, MUFG broadened the scope to include all sectors and added “temperature rise” to the physical risk assessment. The scenario analysis reflect verified results from external experts. Furthermore, MUFG maintains ongoing dialogue with regulatory authorities and is continuously working on enhancing its analytic methods.

Based on the MUFG Carbon Neutrality Declaration released in May 2021, we are working to reduce GHG emissions from our own operations to net zero by 2030. Through partnerships with our clients, we aim to steadily reduce our own emissions and environmental impact. This is facilitated by visualizing GHG emissions, promoting energy efficiency and conservation, renewable energy, and advancing initiatives in our own value chain.

In FY2024, GHG emissions was 159 thousand tCO₂e, which is a 16 thousand tCO₂e (9%) decrease from the previous year (175 thousand tCO₂e). This results in achieving our FY2026 interim target (50% reduction from FY2020) ahead of schedule.

To achieve our remaining targets, we will continue to promote energy efficiency & conservation, convert electricity contracted by other companies to renewable energy, achieve carbon neutrality with our business vehicles, and utilize of insights gained from proactive decarbonization efforts in the Chubu region in Japan. In addition, we will further contribute to reducing our environmental impact by strengthening procurement of renewable electricity with additionality^(note).

For details and other measures to reduce environmental impact, please see the link.