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Japanese megabanks are under growing pressure from activist investors to fight climate change more aggressively, but the country's continued reliance on coal makes the mission more difficult than it could be.
In what was Japan's first shareholder-led climate change resolution on a listed company, Kiko Network, an activist group that owns 31,000 shares in Mizuho Financial Group Inc., filed a shareholder motion in mid-March to force the megabank to rein in lending to coal companies. A month later, Mizuho said it would stop issuing loans to new coal-fired plants from June and that it aimed to exit coal financing completely by 2050.
The next day, Sumitomo Mitsui Financial Group Inc., another megabank in Japan, also said it would no longer lend to new coal-fired plants from May 1.
"The ESG investment has been established," Makoto Kikuchi, CEO of Myojo Asset Management, said. "So the Japanese banks have no option but to show this stance to meet their [investors’] demand."
Despite the emission goals in the Paris Agreement, under which Japan is seeking an 80% reduction in greenhouse emissions by 2050, the world's third-largest economy still heavily relies on coal power. Largely because many of the nation's nuclear...