Mizuho to stop lending to new coal-fired energy projects

TOKYO (Reuters) – Mizuho Financial Group to stop funding new coal-fired power plant projects and end all coal loans by 2050, under pressure from a group of leading investors for climate concessions ahead of the bank’s annual shareholders meeting in June.

FILE PHOTO: The Mizuho Financial Group logo is seen at the company’s headquarters in Tokyo, Japan, August 20, 2018. REUTERS / Toru Hanai / File Photo

The policy change leaves Japan’s third-largest bank in terms of assets with ample leeway for loans to planned or under construction projects, while the 2050 threshold has been dismissed by campaigners as too late for an exit dirtiest fossil fuel.

Mizuho, ​​one of the world’s largest lenders to coal-fired power plant developers, said in a statement on Wednesday that it would reduce its 300 billion yen ($ 2.8 billion) balance in project loans. ‘coal-fired electricity from March this year to half by 2030 and would reduce to zero by 2050.

A shareholder resolution sent to Mizuho’s management last month calls on the bank to outline a plan and set targets so that its business practices are more in line with the Paris Agreement, the global pact to fight climate change .

It was the first time that a Japanese publicly traded company received a shareholder resolution on climate change. The resolution was sponsored by Kiko Network, a Japanese activist group that focuses on coal and also owns stakes in Mizuho.

“Climate change is one of the most important global issues that can affect the stability of the financial market,” Mizuho said. “Responding to the environment and climate change is a key issue in our business strategy.”

Kiko Network’s international director, Kimiko Hirata, welcomed the move, but questioned exceptions that would allow some projects to move forward.

PHASE OUT

“I hope they stick to basic policy and stop all funding for coal,” Hirata said, adding, “Coal power must be phased out before the 2040s around the world. This means that it is too late to reach zero by 2050. “

Climate activists have recently focused on Mizuho, ​​most notably with a full-page ad in the Financial Times in March calling for the bank to drop funding for coal.

Japanese banks are among the few major lenders that have focused on supporting coal projects, even as others like JPMorgan have cut lending to the company.

According to data from Refinitiv SDC Platinum, Mizuho has been the world’s third largest energy and coal mining lender for the past five years. Japan’s other two largest banks – Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group – are also among the top five.

Still, the pressure on Japanese banks can work. A source at Sumitomo Mitsui told Reuters that his banking unit would change its funding forecast to not lend to coal-fired power plants in principle.

A spokesperson for Sumitomo Mitsui said the bank plans to update its policies “based on international circumstances and revised guidelines” on climate risk disclosure.

Investment funds with nearly $ 200 billion in assets and holding shares in Mizuho said last month they would support the Kiko network’s motion.

“This new coal restriction policy is an important and valuable initiative by Mizuho that other banks, insurers and financiers in Japan will surely follow, as the tide increasingly turns away from extremely risky coal projects,” Jeanett Bergan, responsible for responsible investment at KLP, Norway’s largest pension fund and life insurance company, told Reuters.

Reporting by Chris Gallagher, Takashi Umekawa and Aaron Sheldrick; Written by Aaron Sheldrick; Editing by Tom Hogue and David Holmes

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