Policies and Guidelines

1. Introduction

   The international community, aiming at achieving the Sustainable Development Goals (SDGs) and Paris Agreement on climate change, is working towards the protection of the global environment, which is fundamental to the existence of humanity and all living creatures, and the realization of a sustainable society.
   Mitsubishi UFJ Financial Group (hereinafter, MUFG) defines its purpose as “Committed to empowering a brighter future.” in its MUFG Way, and we implement various initiatives that contribute to the protection of the global environment and human rights.
   In addition, through the financial services we provide we are actively working towards finding solutions to environmental and social issues which also contribute to our sustainable business growth and enhancement of our corporate value.
   MUFG recognizes that the environmental and social risks arising from the business activities of each group company are important to our business and require managing appropriately. This Environmental and Social Policy Framework (hereinafter, Framework) has been developed based on the “MUFG Environmental Policy Statement” and “MUFG Human Rights Policy Statement” which establish the basis for our policies for management of environmental and human rights issues respectively. The opinions and perspectives of various stakeholders were taken into consideration in the development of the Framework.
   The Framework outlines the approach that MUFG takes in responding appropriately to environmental and social issues in our business activities and contributing to sustainable environmental and social development. Through the adoption of this approach, we expect to contribute to the realization of a sustainable environment and society.
   To promote understanding and cooperation regarding our approach, the contents of this Framework is communicated to clients in all of our group companies. The application of this Framework remains subject to compliance with local laws and regulations.



2. Governance

   The MUFG Way guides the way in which we carry out our business activities. To realize our MUFG Way, the MUFG Group Code of Conduct have been established which apply to executives and employees of all group companies and guide their everyday decisions and actions.
   The Framework is based on our MUFG Way and Code of Conduct.

   • Positioning of the Environmental and Social Policy Framework
     The Framework is based on the “MUFG Environmental Policy Statement” and “MUFG Human Rights Policy Statement” and is structured to enable the appropriate identification and management of environmental and social risks associated with our business operations. The Framework is aligned with the MUFG reputational risk management framework to avoid negative impacts to MUFG corporate value.
   • Governance and Management System
     The Sustainability committee, which reports to the Executive Committee, is responsible for developing appropriate responses to the environmental and social issues relevant to our business.
     Individual transactions with significant environmental and social risks or impacts that have the potential to negative impact on the corporate value of MUFG are assessed for reputational risk, as necessary. Transactions are evaluated with the involvement of executive management, taking into consideration the potential transaction related reputational risks.
   • Role of Business Group
     Business Groups are responsible for performing environmental and social due diligence to assess the potential environmental and social issues associated with the products and services to be provided. The assessment includes information collected from approaches such as interviews with clients. In implementing environmental and social due diligence, Business Groups consult with the relevant department responsible for management of environmental and social risks.
   • Management of the Environmental and Social Policy Framework
     The Framework was discussed by the Sustainability Committee and approved by the Executive Committee. The Sustainability Committee regularly reviews the need to update the Framework and makes amendments as necessary to reflect changes in our business activities and the business environment.


3. Applicable Products and Services

   Products and services provided to clients by each group company include the extension of credit and the underwriting of bonds and stocks (hereinafter, financing). We recognize that the provision of financing may potentially contribute to environmental and social impacts as well as an increase in associated risks.
   The Framework applies to new finance in all countries / regions for corporate clients of MUFG's core subsidiaries; MUFG Bank, Mitsubishi UFJ Trust and Banking, and Mitsubishi UFJ Securities Holdings (hereinafter referred to as “Core Subsidiaries”). The Framework is integrated into the internal procedures and standards of each Core Subsidiary.
   MUFG Bank also conducts environmental and social due diligence of large-scale projects based on the Equator Principles adopted in 2005.
   We also acknowledge the importance of considering environmental and social impacts in our asset management business. At the same time, we recognize the importance of preserving and fulfilling our independent fiduciary duties in line with interests of our clients. For this reason, we have established a separate responsible investment policy for this business.



4. Applicable Transactions

   The Framework provides a guideline allowing us to confirm whether corporate clients receiving financing from each Core Subsidiary are fulfilling their social responsibility by demonstrating appropriate consideration of environmental and social issues based on applicable legislation and international best practice.
   Taking into consideration the nature and severity of associated environmental and social risks or impacts, MUFG has identified transactions which are “Prohibited Transactions” and “Transactions of High Caution”.
   

   • Prohibited Transactions
     The transactions listed below are considered as having significant environmental and social risks or impacts. In cases where each Core Subsidiary is aware of the environmental and social risks or impacts, financing is not provided.
     
     A) Illegal transactions and transactions for illegal purposes
     B) Transactions which violate public order and good morals
     C) Transactions that negatively impact wetlands designated under the Ramsar Convention
     D) Transactions that negatively impact UNESCO designated World Heritage Sites
     E) Transactions violating the Convention on International Trade in Endangered Species of Wild Fauna and Flora (Washington Convention)^{(note1)
     (note1) Taking into consideration country specific considerations}
     F) Transactions involving the use of child labor, forced labor or human trafficking
     G) Cluster Munitions and Inhumane Weapons Manufacturing
     Civilian populations have been greatly affected by cluster munitions as they release many bomblets over a wide area and because of their indiscriminate effect. As a result, their use has generated significant humanitarian concerns internationally. In light of the inhumane nature of cluster munitions, Core Subsidiaries prohibit the provision of financing to any company that manufactures cluster munitions.
     Nuclear weapons, biological and chemical weapons, and anti-personnel mines, which are produced for use in wars and conflicts and have indiscriminate and serious effects on people, including civilians, are, along with cluster munitions, internationally recognized as being of great humanitarian concern. In light of the inhumane nature of nuclear weapons, biological and chemical weapons, and anti-personnel mines, Core Subsidiaries prohibit the provision of financing for the production of these weapons.
     
   • Transactions of High Caution
     

     Transactions of High Caution consist of cross-sector guidelines and sector specific guidelines. For transactions where the conditions listed below may exist, the potential that environmental and social risks or impacts may exist is considered to be high and clients are expected to implement the appropriate environmental and social measures. When each Core Subsidiary is considering providing financing for these transactions, the identification and assessment process for environmental and social risks or impacts will be used to confirm the client's approach to managing environmental and social issues.
     If the environmental and social management approach of client's is not considered sufficient relative to the level of the potential risks or impacts, financing will not be provided.
     (i) Cross-sector guidelines
     A) Impact on Indigenous Peoples Communities
     B) Land expropriation leading to involuntary resettlement
     C) Impact on High Conservation Value areas
     D) Cause of or contribution to, or direct linkage with, violation of human rights in conflict areas
     
     (ii) Sector specific guidelines
     A) Coal Fired Power Generation 
     Protection of the environment, in particular actions which contribute towards combatting climate change and supporting development of more sustainable sources of power, is one of the most important issues for MUFG in fulfilling its social mission.
      In order to achieve the goals agreed upon in the Paris Agreement, we will support the smooth transition to a decarbonized society through our business activities and contribute to the realization of a sustainable society via the virtuous cycle of the environment and the economy.
     MUFG will not provide financing to new coal fired power generation projects or expansion of existing facilities.
     However, coal-fired power generations equipped with CCUS^(note2), Mixed combustion, and other technologies necessary to achieve the Paris Agreement target may be considered on an individual basis.
     ^{[note2 Carbon dioxide Capture, Utilization and Storage]}
      
     B) Mining
     a) Mining (General)
     The mining industry supplies the raw materials used in various industrial products and is indispensable for society and our daily lives. Moreover, as it also supplies materials for renewable energy equipment and batteries, etc., it is an important industry for achieving carbon neutrality.
     At the same time, MUFG recognizes that consideration must be given to the environmental and social impacts, including impacts on ecosystems and indigenous peoples’ communities, and human rights violations, such as child labor or forced labor, of the mineral mining business (mining and mineral beneficiation and the disposal of tailings resulting from those processes).
     When we consider providing financing for mineral mining businesses, we assess the status of such client's consideration for environmental and social impacts, including impacts on ecosystems and indigenous peoples’ communities, and consideration of human rights.
     b) Mining (Coal)
     MUFG recognizes that coal mining operations, if not managed responsibly, can have negative social and environmental impacts, including death and injuries from mine collapse, human rights abuse, and impacts on local biodiversity from toxic mine waste. Moreover, coal burning in power generation emits relatively large amounts of greenhouse gases compared to other energy sources. We recognize that the development of new coal mines to supply thermal coal for power generation projects could result in an increase in greenhouse gas emissions in the future.
     When considering whether to provide finance to the development of coal mines we assess the status of such client's consideration for environmental and social impacts. The assessment includes how the client addresses the impacts of the development on local ecosystems, relationships with local residents, and occupational safety and health issues.
     We will not provide any financing to:
     ・Coal mining projects using the mountaintop removal (MTR) method which has severe and negative impacts on the natural environment.
     ・New thermal coal mining projects, or expansion of existing thermal coal mining projects, for power generation.
     ・New development of, or expansion of, infrastructure linked with thermal coal mining projects for power generation.
     ・Companies with no existing financing transactions with MUFG whose primary business is thermal coal mining for power generation or infrastructure services linked therewith.
     However, transactions such as those where it is confirmed that greenhouse gas emissions at the time of use are to be captured or which are necessary for the protection of the environment may be considered on an individual basis.
     
     C) Oil and Gas 
     Oil and gas are essential to our society and daily lives as energy sources for social infrastructure including electricity, but we must be aware of the effect of their production and use on the global environment, including climate change, through greenhouse gas emissions.
     a) Oil Sand
     MUFG recognizes that oil sands developments require consideration of their environmental and social impacts.
     When we consider providing financing for new projects for the extraction of oil sands, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the developments.
     b) Development of the Arctic
     MUFG recognizes that oil and gas developments in the Arctic require consideration of the impacts on indigenous peoples and the habitats of rare species.
     When we consider providing financing for the extraction of new oil and gas in the Arctic Region (north of latitude 66°33 minutes north), we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the developments.
     c) Shale oil and gas
     MUFG recognizes that development of shale oil and gas requires consideration of the impacts on ecosystems, including depletion of freshwater resources, water pollution, and triggering earthquakes.
     When we consider providing financing for new projects for extraction of shale oil and gas, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and communities affected by the developments.
     d) Oil and Gas Pipelines
     MUFG recognizes that pipeline construction and operation require consideration of the impact of oil leaks on the ecosystem, the impact of logging and other activities on the environment, and local indigenous peoples’ communities.  When we consider providing financing for new projects for construction and operation of oil and gas pipelines, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the development.
     
     D) Large Hydropower
     While large-scale dams contribute to flood control, agricultural production and the supply of clean energy, MUFG recognizes that dams can cause wide-ranging changes in river basin ecosystems and the living environment and livelihoods of residents.
       When we consider providing financing for new large-scale hydropower plants, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, such as the impact of dam construction on the ecosystem, local communities, and the living environment and livelihoods of residents.^{(note3)
     [note3 New development of a hydroelectric generation dam which exceeds 15 meters in height and can generate over 30WM electricity]}
     
     E) Biomass power generation
     While biomass power generation contributes to supplying clean energy as a renewable energy source, MUFG recognizes that consideration must be given to the environmental and social impacts it has when fuels are produced and processed.
     

     When we consider providing new financing for biomass power plants or businesses that process fuels for use at such plants, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner, such as giving due consideration to the conflict between using biomass for fuels and using biomass for food, sustainability of fuels, and lifecycle greenhouse gas emissions.
     
     F) Forestry
     Forests provide habitats for various wildlife species. Therefore, they have significant value for biodiversity conservation and protection, as well as serving as important sources of timber for paper, pulp, and other products that support regional economies. Forests additionally play a significant role in mitigating climate change by absorbing and storing carbon dioxide. MUFG recognizes that uncontrolled, large-scale deforestation has severe and negative impacts on the global environment, especially climate change.
     When we consider providing financing for logging businesses in the forestry, pulp or other sectors, including management of forest plantations, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner.
     In addition to confirming that illegal logging and deforestation in high conservation value areas are not involved, we request our clients to certify^(note4) the relevant operations according to internationally recognized certification organizations such as Forest Stewardship Council (“FSC”) and Programme for the Endorsement of Forest Certification Schemes (“PEFC”), when providing finance to the subject business activities mentioned above, in countries other than High Income OECD countries. We will request our clients to submit action plans to achieve certification when relevant operations are not certified.
     When we consider providing financing for Large-scale industrial farm^(note5)  development and operation projects involving logging, we will urge our clients in these sectors to respect Free, Prior, and Informed Consent (FPIC) in relation to indigenous people and to formulate a sustainable environmental and human rights policy, such as No Deforestation, No Peat, and No Exploitation (NDPE).
     We will request our clients to enhance supply chain management and traceability to encourage that similar initiatives will also apply to their supply chain.
     In the event that the client has not taken appropriate measures to address social issues during the term of a transaction, we will request the client to promote remedial measures and, if the client’s remedial measures are unsatisfactory, we will not provide new financing.
     _{(note4) Certification, such as Forest Stewardship Council (“FSC”) and Programme for the Endorsement of Forest Certification Schemes (“PEFC”), requires the respect of Free, Prior, and Informed Consent (FPIC).
     (note5) Large-scale industrial farm means a farm with an area covering 10,000 ha or more, which is cultivating soy, natural rubber, cocoa, coffee, etc. or used for grazing.}
     
     G) Palm Oil
     Palm oil is used to make products which are essential for everyday life, such as cooking oils, detergents, paints, etc. Increases in palm oil consumption have facilitated economic growth in many countries. On the other hand, development of palm oil plantations may entail deforestation of natural forests and slash-and-burn agriculture in peatlands, etc. which could lead to impacts on biodiversity and climate change as well as conflicts with local communities. As a result, MUFG recognizes that the palm oil plantation business can have severe and negative impacts on the global environment if not managed responsibly.
     When we consider providing financing for business activities developing and managing palm oil plantations, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner.
     We encourage clients to become members of the Roundtable on Sustainable Palm Oil (“RSPO”), and request them to have relevant operations certified by RSPO^(note6) as well as to publicly commit to No Deforestation, No Peat and No Exploitation (“NDPE”), when providing financing to the subject business activities mentioned above. When relevant operations are not certified by RSPO or clients have not made their commitment to NDPE public, we will request clients to submit action plans to satisfy the conditions.
     We will request our clients to enhance supply chain management and traceability to encourage that similar initiatives will also apply to their supply chain.
     In the event that the client has not taken appropriate measures to address social issues during the term of a transaction, we will request the client to promote remedial measures and, if the client’s remedial measures are unsatisfactory, we will not provide new financing.  
     _{(note6) RSPO certification requires the respect of Free, Prior, and Informed Consent (FPIC) in relation to indigenous people, and to formulate a sustainable environmental and human rights policy, such as No Deforestation, No Peat, and No Exploitation (NDPE).}
        
     

5. Identification and assessment process for environmental and social risks or impacts

   A due diligence process to identify and assess the environmental and social risks or impacts associated with transactions has been introduced.

   • Standard Due Diligence
     Standard due diligence is implemented by the department in the relevant business division of each Core Subsidiary responsible for communications with the client.
     The decision regarding categorization of the transaction as “Prohibited Transactions” or “Transactions of High Caution” is made based on available public information and information provided by the client.
   • Enhanced Due Diligence
     Transactions categorized as “Transactions of High Caution” are subject to enhanced due diligence in addition to standard due diligence, if necessary. This is implemented by the department responsible for management of environmental and social risks in each Core Subsidiary. Decisions on financing are made following assessment of the findings of the enhanced due diligence.
   • Financing Reputational Risk Management Approach
     Transactions assessed as having the potential to have significant negative impacts on the corporate value of MUFG are evaluated with the involvement of executive management.


6. Training
   • Corporate Training and Education
     Training on environmental and social issues is provided to relevant employees of each Core Subsidiary. The objective of the training is to enhance the understanding of global initiatives to environmental and social issues, as well as the process of confirming the client's approach towards management of environment and social issues. The training also aims at the spread of ideas supporting the Framework, and the environmental and social due diligence process.
     Specialized training, with the objective of advancing the implementation of the Framework, is provided in divisions responsible for management of environmental and social risks.
   • Stakeholder Engagement
     Implementation of the Framework includes constructive dialogue with various stakeholders. This dialogue is intended to help identify appropriately environmental and social risks or impacts to which MUFG is to respond and provides information relevant to discussions on revisions to the Framework to increase its effectiveness.
   
   

   [Disclaimer]
   No agency or contractual relationships between MUFG or each of the other group companies and other parties arise from the disclosure and implementation of the Framework. MUFG and other group companies assume no legal obligation, liability or responsibility as a result of such disclosure and implementation.

1. Introduction

   The international community, aiming at achieving the Sustainable Development Goals (SDGs) and Paris Agreement on climate change, is working towards the protection of the global environment, which is fundamental to the existence of humanity and all living creatures, and the realization of a sustainable society.
   Mitsubishi UFJ Financial Group (hereinafter, MUFG) defines its purpose as “Committed to empowering a brighter future.” in its MUFG Way, and we implement various initiatives that contribute to the protection of the global environment and human rights.
   In addition, through the financial services we provide we are actively working towards finding solutions to environmental and social issues which also contribute to our sustainable business growth and enhancement of our corporate value.
   MUFG recognizes that the environmental and social risks arising from the business activities of each group company are important to our business and require managing appropriately. This Environmental and Social Policy Framework (hereinafter, Framework) has been developed based on the “MUFG Environmental Policy Statement” and “MUFG Human Rights Policy Statement” which establish the basis for our policies for management of environmental and human rights issues respectively. The opinions and perspectives of various stakeholders were taken into consideration in the development of the Framework.
   The Framework outlines the approach that MUFG takes in responding appropriately to environmental and social issues in our business activities and contributing to sustainable environmental and social development. Through the adoption of this approach, we expect to contribute to the realization of a sustainable environment and society.
   To promote understanding and cooperation regarding our approach, the contents of this Framework is communicated to clients in all of our group companies. The application of this Framework remains subject to compliance with local laws and regulations.



2. Governance

   The MUFG Way guides the way in which we carry out our business activities. To realize our MUFG Way, the MUFG Group Code of Conduct have been established which apply to executives and employees of all group companies and guide their everyday decisions and actions.
   The Framework is based on our MUFG Way and Code of Conduct.

   • Positioning of the Environmental and Social Policy Framework
     The Framework is based on the “MUFG Environmental Policy Statement” and “MUFG Human Rights Policy Statement” and is structured to enable the appropriate identification and management of environmental and social risks associated with our business operations. The Framework is aligned with the MUFG reputational risk management framework to avoid negative impacts to MUFG corporate value.
   • Governance and Management System
     The Sustainability committee, which reports to the Executive Committee, is responsible for developing appropriate responses to the environmental and social issues relevant to our business.
     Individual transactions with significant environmental and social risks or impacts that have the potential to negative impact on the corporate value of MUFG are assessed for reputational risk, as necessary. Transactions are evaluated with the involvement of executive management, taking into consideration the potential transaction related reputational risks.
   • Role of Business Group
     Business Groups are responsible for performing environmental and social due diligence to assess the potential environmental and social issues associated with the products and services to be provided. The assessment includes information collected from approaches such as interviews with clients. In implementing environmental and social due diligence, Business Groups consult with the relevant department responsible for management of environmental and social risks.
   • Management of the Environmental and Social Policy Framework
     The Framework was discussed by the Sustainability Committee and approved by the Executive Committee. The Sustainability Committee regularly reviews the need to update the Framework and makes amendments as necessary to reflect changes in our business activities and the business environment.


3. Applicable Products and Services

   Products and services provided to clients by each group company include the extension of credit and the underwriting of bonds and stocks (hereinafter, financing). We recognize that the provision of financing may potentially contribute to environmental and social impacts as well as an increase in associated risks.
   The Framework applies to new finance in all countries / regions for corporate clients of MUFG's core subsidiaries; MUFG Bank, Mitsubishi UFJ Trust and Banking, and Mitsubishi UFJ Securities Holdings (hereinafter referred to as “Core Subsidiaries”). The Framework is integrated into the internal procedures and standards of each Core Subsidiary.
   MUFG Bank also conducts environmental and social due diligence of large-scale projects based on the Equator Principles adopted in 2005.
   We also acknowledge the importance of considering environmental and social impacts in our asset management business. At the same time, we recognize the importance of preserving and fulfilling our independent fiduciary duties in line with interests of our clients. For this reason, we have established a separate responsible investment policy for this business.



4. Applicable Transactions

   The Framework provides a guideline allowing us to confirm whether corporate clients receiving financing from each Core Subsidiary are fulfilling their social responsibility by demonstrating appropriate consideration of environmental and social issues based on applicable legislation and international best practice.
   Taking into consideration the nature and severity of associated environmental and social risks or impacts, MUFG has identified transactions which are “Prohibited Transactions” and “Transactions of High Caution”.
   

   • Prohibited Transactions
     The transactions listed below are considered as having significant environmental and social risks or impacts. In cases where each Core Subsidiary is aware of the environmental and social risks or impacts, financing is not provided.
     
     A) Illegal transactions and transactions for illegal purposes
     B) Transactions which violate public order and good morals
     C) Transactions that negatively impact wetlands designated under the Ramsar Convention
     D) Transactions that negatively impact UNESCO designated World Heritage Sites
     E) Transactions violating the Convention on International Trade in Endangered Species of Wild Fauna and Flora (Washington Convention)^{(note1)
     (note1) Taking into consideration country specific considerations}
     F) Transactions involving the use of child labor, forced labor or human trafficking
     G) Cluster Munitions and Inhumane Weapons Manufacturing
     Civilian populations have been greatly affected by cluster munitions as they release many bomblets over a wide area and because of their indiscriminate effect. As a result, their use has generated significant humanitarian concerns internationally. In light of the inhumane nature of cluster munitions, Core Subsidiaries prohibit the provision of financing to any company that manufactures cluster munitions.
     Nuclear weapons, biological and chemical weapons, and anti-personnel mines, which are produced for use in wars and conflicts and have indiscriminate and serious effects on people, including civilians, are, along with cluster munitions, internationally recognized as being of great humanitarian concern. In light of the inhumane nature of nuclear weapons, biological and chemical weapons, and anti-personnel mines, Core Subsidiaries prohibit the provision of financing for the production of these weapons.
     
   • Transactions of High Caution
     

     Transactions of High Caution consist of cross-sector guidelines and sector specific guidelines. For transactions where the conditions listed below may exist, the potential that environmental and social risks or impacts may exist is considered to be high and clients are expected to implement the appropriate environmental and social measures. When each Core Subsidiary is considering providing financing for these transactions, the identification and assessment process for environmental and social risks or impacts will be used to confirm the client's approach to managing environmental and social issues.
     If the environmental and social management approach of client's is not considered sufficient relative to the level of the potential risks or impacts, financing will not be provided.
     (i) Cross-sector guidelines
     A) Impact on Indigenous Peoples Communities
     B) Land expropriation leading to involuntary resettlement
     C) Impact on High Conservation Value areas
     D) Cause of or contribution to, or direct linkage with, violation of human rights in conflict areas
     
     (ii) Sector specific guidelines
     A) Coal Fired Power Generation 
     Protection of the environment, in particular actions which contribute towards combatting climate change and supporting development of more sustainable sources of power, is one of the most important issues for MUFG in fulfilling its social mission.
      In order to achieve the goals agreed upon in the Paris Agreement, we will support the smooth transition to a decarbonized society through our business activities and contribute to the realization of a sustainable society via the virtuous cycle of the environment and the economy.
     MUFG will not provide financing to new coal fired power generation projects or expansion of existing facilities.
     However, coal-fired power generations equipped with CCUS^(note2), Mixed combustion, and other technologies necessary to achieve the Paris Agreement target may be considered on an individual basis.
     ^{[note2 Carbon dioxide Capture, Utilization and Storage]}
      
     B) Mining
     a) Mining (General)
     The mining industry supplies the raw materials used in various industrial products and is indispensable for society and our daily lives. Moreover, as it also supplies materials for renewable energy equipment and batteries, etc., it is an important industry for achieving carbon neutrality.
     At the same time, MUFG recognizes that consideration must be given to the environmental and social impacts, including impacts on ecosystems and indigenous peoples’ communities, and human rights violations, such as child labor or forced labor, of the mineral mining business (mining and mineral beneficiation and the disposal of tailings resulting from those processes).
     When we consider providing financing for mineral mining businesses, we assess the status of such client's consideration for environmental and social impacts, including impacts on ecosystems and indigenous peoples’ communities, and consideration of human rights.
     b) Mining (Coal)
     MUFG recognizes that coal mining operations, if not managed responsibly, can have negative social and environmental impacts, including death and injuries from mine collapse, human rights abuse, and impacts on local biodiversity from toxic mine waste. Moreover, coal burning in power generation emits relatively large amounts of greenhouse gases compared to other energy sources. We recognize that the development of new coal mines to supply thermal coal for power generation projects could result in an increase in greenhouse gas emissions in the future.
     When considering whether to provide finance to the development of coal mines we assess the status of such client's consideration for environmental and social impacts. The assessment includes how the client addresses the impacts of the development on local ecosystems, relationships with local residents, and occupational safety and health issues.
     We will not provide any financing to:
     ・Coal mining projects using the mountaintop removal (MTR) method which has severe and negative impacts on the natural environment.
     ・New thermal coal mining projects, or expansion of existing thermal coal mining projects, for power generation.
     ・New development of, or expansion of, infrastructure linked with thermal coal mining projects for power generation.
     ・Companies with no existing financing transactions with MUFG whose primary business is thermal coal mining for power generation or infrastructure services linked therewith.
     However, transactions such as those where it is confirmed that greenhouse gas emissions at the time of use are to be captured or which are necessary for the protection of the environment may be considered on an individual basis.
     
     C) Oil and Gas 
     Oil and gas are essential to our society and daily lives as energy sources for social infrastructure including electricity, but we must be aware of the effect of their production and use on the global environment, including climate change, through greenhouse gas emissions.
     a) Oil Sand
     MUFG recognizes that oil sands developments require consideration of their environmental and social impacts.
     When we consider providing financing for new projects for the extraction of oil sands, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the developments.
     b) Development of the Arctic
     MUFG recognizes that oil and gas developments in the Arctic require consideration of the impacts on indigenous peoples and the habitats of rare species.
     When we consider providing financing for the extraction of new oil and gas in the Arctic Region (north of latitude 66°33 minutes north), we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the developments.
     c) Shale oil and gas
     MUFG recognizes that development of shale oil and gas requires consideration of the impacts on ecosystems, including depletion of freshwater resources, water pollution, and triggering earthquakes.
     When we consider providing financing for new projects for extraction of shale oil and gas, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and communities affected by the developments.
     d) Oil and Gas Pipelines
     MUFG recognizes that pipeline construction and operation require consideration of the impact of oil leaks on the ecosystem, the impact of logging and other activities on the environment, and local indigenous peoples’ communities.  When we consider providing financing for new projects for construction and operation of oil and gas pipelines, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, including impacts on ecosystems and indigenous peoples’ communities affected by the development.
     
     D) Large Hydropower
     While large-scale dams contribute to flood control, agricultural production and the supply of clean energy, MUFG recognizes that dams can cause wide-ranging changes in river basin ecosystems and the living environment and livelihoods of residents.
       When we consider providing financing for new large-scale hydropower plants, we conduct an assessment of clients to ensure that developments are conducted in an environmentally and socially responsible manner, such as the impact of dam construction on the ecosystem, local communities, and the living environment and livelihoods of residents.^{(note3)
     [note3 New development of a hydroelectric generation dam which exceeds 15 meters in height and can generate over 30WM electricity]}
     
     E) Biomass power generation
     While biomass power generation contributes to supplying clean energy as a renewable energy source, MUFG recognizes that consideration must be given to the environmental and social impacts it has when fuels are produced and processed.
     

     When we consider providing new financing for biomass power plants or businesses that process fuels for use at such plants, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner, such as giving due consideration to the conflict between using biomass for fuels and using biomass for food, sustainability of fuels, and lifecycle greenhouse gas emissions.
     
     F) Forestry
     Forests provide habitats for various wildlife species. Therefore, they have significant value for biodiversity conservation and protection, as well as serving as important sources of timber for paper, pulp, and other products that support regional economies. Forests additionally play a significant role in mitigating climate change by absorbing and storing carbon dioxide. MUFG recognizes that uncontrolled, large-scale deforestation has severe and negative impacts on the global environment, especially climate change.
     When we consider providing financing for logging businesses in the forestry, pulp or other sectors, including management of forest plantations, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner.
     In addition to confirming that illegal logging and deforestation in high conservation value areas are not involved, we request our clients to certify^(note4) the relevant operations according to internationally recognized certification organizations such as Forest Stewardship Council (“FSC”) and Programme for the Endorsement of Forest Certification Schemes (“PEFC”), when providing finance to the subject business activities mentioned above, in countries other than High Income OECD countries. We will request our clients to submit action plans to achieve certification when relevant operations are not certified.
     When we consider providing financing for Large-scale industrial farm^(note5)  development and operation projects involving logging, we will urge our clients in these sectors to respect Free, Prior, and Informed Consent (FPIC) in relation to indigenous people and to formulate a sustainable environmental and human rights policy, such as No Deforestation, No Peat, and No Exploitation (NDPE).
     We will request our clients to enhance supply chain management and traceability to encourage that similar initiatives will also apply to their supply chain.
     In the event that the client has not taken appropriate measures to address social issues during the term of a transaction, we will request the client to promote remedial measures and, if the client’s remedial measures are unsatisfactory, we will not provide new financing.
     _{(note4) Certification, such as Forest Stewardship Council (“FSC”) and Programme for the Endorsement of Forest Certification Schemes (“PEFC”), requires the respect of Free, Prior, and Informed Consent (FPIC).
     (note5) Large-scale industrial farm means a farm with an area covering 10,000 ha or more, which is cultivating soy, natural rubber, cocoa, coffee, etc. or used for grazing.}
     
     G) Palm Oil
     Palm oil is used to make products which are essential for everyday life, such as cooking oils, detergents, paints, etc. Increases in palm oil consumption have facilitated economic growth in many countries. On the other hand, development of palm oil plantations may entail deforestation of natural forests and slash-and-burn agriculture in peatlands, etc. which could lead to impacts on biodiversity and climate change as well as conflicts with local communities. As a result, MUFG recognizes that the palm oil plantation business can have severe and negative impacts on the global environment if not managed responsibly.
     When we consider providing financing for business activities developing and managing palm oil plantations, we conduct an assessment of clients to ensure that developments and management are conducted in an environmentally and socially responsible manner.
     We encourage clients to become members of the Roundtable on Sustainable Palm Oil (“RSPO”), and request them to have relevant operations certified by RSPO^(note6) as well as to publicly commit to No Deforestation, No Peat and No Exploitation (“NDPE”), when providing financing to the subject business activities mentioned above. When relevant operations are not certified by RSPO or clients have not made their commitment to NDPE public, we will request clients to submit action plans to satisfy the conditions.
     We will request our clients to enhance supply chain management and traceability to encourage that similar initiatives will also apply to their supply chain.
     In the event that the client has not taken appropriate measures to address social issues during the term of a transaction, we will request the client to promote remedial measures and, if the client’s remedial measures are unsatisfactory, we will not provide new financing.  
     _{(note6) RSPO certification requires the respect of Free, Prior, and Informed Consent (FPIC) in relation to indigenous people, and to formulate a sustainable environmental and human rights policy, such as No Deforestation, No Peat, and No Exploitation (NDPE).}
        
     

5. Identification and assessment process for environmental and social risks or impacts

   A due diligence process to identify and assess the environmental and social risks or impacts associated with transactions has been introduced.

   • Standard Due Diligence
     Standard due diligence is implemented by the department in the relevant business division of each Core Subsidiary responsible for communications with the client.
     The decision regarding categorization of the transaction as “Prohibited Transactions” or “Transactions of High Caution” is made based on available public information and information provided by the client.
   • Enhanced Due Diligence
     Transactions categorized as “Transactions of High Caution” are subject to enhanced due diligence in addition to standard due diligence, if necessary. This is implemented by the department responsible for management of environmental and social risks in each Core Subsidiary. Decisions on financing are made following assessment of the findings of the enhanced due diligence.
   • Financing Reputational Risk Management Approach
     Transactions assessed as having the potential to have significant negative impacts on the corporate value of MUFG are evaluated with the involvement of executive management.


6. Training
   • Corporate Training and Education
     Training on environmental and social issues is provided to relevant employees of each Core Subsidiary. The objective of the training is to enhance the understanding of global initiatives to environmental and social issues, as well as the process of confirming the client's approach towards management of environment and social issues. The training also aims at the spread of ideas supporting the Framework, and the environmental and social due diligence process.
     Specialized training, with the objective of advancing the implementation of the Framework, is provided in divisions responsible for management of environmental and social risks.
   • Stakeholder Engagement
     Implementation of the Framework includes constructive dialogue with various stakeholders. This dialogue is intended to help identify appropriately environmental and social risks or impacts to which MUFG is to respond and provides information relevant to discussions on revisions to the Framework to increase its effectiveness.
   
   

   [Disclaimer]
   No agency or contractual relationships between MUFG or each of the other group companies and other parties arise from the disclosure and implementation of the Framework. MUFG and other group companies assume no legal obligation, liability or responsibility as a result of such disclosure and implementation.

Mitsubishi UFJ Financial Group, Inc. has published Personal Information Protection Policy.

Personal Information Protection Policy