On June 13, Mizuho Financial Group (Mizuho) announced its adoption of a new “sector specific policy” on responsible financing. Japanese environmental groups ー 350.org Japan, Japan Center for a Sustainable Environment and Society (JACSES), Rainforest Action Network, Greenpeace Japan, Kiko Network and Friends of the Earth Japan ー issued the following statement on Mizuho’s new policies.

“First, we welcome the fact that in the document released, Mizuho recognizes the high social and environmental risk accompanying coal-fired power, palm oil, deforestation, and the weapons industry.(1) Mizuho’s decision to make efforts to mitigate and avoid these risks in its financing and financial advisory services is a small step in the right direction. However, the policy is lacking details on the concrete actions needed to achieve the goals of the Paris Agreement, and further progress is required.

With regards to financing the coal-fired power generation sector, the policy states, “For projects financing coal-fired power, financing decisions will be made by comparing feasible alternative technologies which possess equivalent energy efficiency and by verifying their economic rationale.” Mizuho is the second financial group after Mitsubishi UFJ Financial Group (MUFG) to announce such a policy on financing to the coal-fired power sector, and it represents progress compared to past policies.

However, the United Nations Environment Programme (UNEP) has made clear that meeting the Paris Agreement goal of keeping global warming well below 2 degrees requires no new coal-fired power plants to be built – no matter how efficient – and the early phase out of existing coal power. The need for the exclusion of new coal power is not reflected in Mizuho’s newly published policy. We continue to urge Japan’s megabanks including Mizuho to swiftly announce a stop to any new financing for domestic and foreign coal-fired power projects and companies involved in such projects, with a clear strategy and timeline. (2)

Additionally, under “transactions deserving special attention”, Mizuho’s new policy states that when making financing decisions it will “refer to international guidelines” while confirming the social and environmental considerations of prospective clients. Nevertheless, in April this year, the three major Japanese financial groups including Mizuho agreed to participate in financing the new polluting Nghi Son 2 coal power station in Vietnam. Nghi Son 2 uses large-scale Supercritical (SC) technology which is inferior to the current standard Ultra-supercritical (USC) technology, in violation of  international standards set out under the OECD Sector Understanding on Export Credits for Coal-Fired Electricity Generation Projects. There have also been concerns raised regarding the Environmental Impact Assessment associated with the project, such as the failure to consider alternative energy sources or conduct proper consultation with local communities, breaching international standards for the management of social and environmental risks under the Equator Principles.

In addition to coal-fired power, Mizuho’s policy strengthens its risk management towards the palm oil and timber sectors, which cause deforestation and forest degradation and are a major source of carbon emissions. However, Mizuho’s position of relying solely on certification systems for palm oil and timber is inadequate. Mizuho must also confirm how their clients are actually addressing deforestation and managing peatlands.

To achieve the Paris Agreement target to keep global warming well below 2 degrees Celsius, regulations on fossil fuels such as coal and tar sands are expected to become more stringent. In addition, efforts to protect forests, especially tropical rainforests, which play an important role in mitigating climate change, are essential. The need to take concrete measures to address climate change is also included under the United Nations’ Sustainable Development Goals (SDGs).

We hope that Mizuho and the other two major financial groups in Japan, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, will promptly proceed with divesting from the coal sector, which carries  high environmental and economic risks.”

Note to the Editors:

1. Mizuho’s new policy on responsible financing announced on June 13, mentions “industries highly likely to have negative impact on the environment and society” including coal-fired power, weapons industry, palm oil, and wood products. https://www.mizuho-fg.co.jp/release/pdf/20180613release_jp.pdf
2. 350.org Japan and supporting NGOs are currently running a global petition calling upon Japan’s three biggest financial institutions — Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group — to: i) disclose financial exposure to carbon intensive industries in line with the Task Force on Climate Related Financial Disclosures (TCFD); ii) outline business strategies and clear targets and metrics to align their finance policies with the Paris Agreement; iii) cease all new lending to coal fired power generation and coal extraction projects and companies involved in such projects. For more details please see: http://world.350.org/east-asia/divest-from-coal-en/

Reference:  “A small step forward, but not nearly enough”- Environmental NGOs Respond to Release of New MUFG Environmental, Social and Human Rights Policy, http://world.350.org/ja/press-release/mufgpolicy_en/