MUFG Progress Report
Moving towards Carbon Neutrality
April 2022

Contents

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

1.

Introduction ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

2

2.

Overview ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

3

3.	Net Zero GHG Emissions from the Financed Portfolio
3-1. Setting Interim Targets ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

4

3-2. Interim Target: Power・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

7

3-3. Interim Target: Oil & Gas ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

9

3-4. Aligning with NZBA Guidelines ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 11

4.

Decarbonization through Financial Services ・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 12

5.

Net Zero GHG Emissions from Own Operations ・・・・・・・・・・・・・・・・・・・・・・・・・・ 14

6.

Decarbonization through Responsible Investment—MUFG as an Asset Manager ・・・・・・・・ 16

7.

Global Initiatives and Structural Enhancements ・・・・・・・・・・・・・・・・・・・・・・・・・・ 17

8.

Initiatives of Partner Banks ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 18

9.

Glossary ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 19

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary1Introduction

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary2◦	In April 2021, we defined our purpose as being “Committed to empowering a brighter future.” Since then, we have been implementing our medium-term business plan, led by a heightened commitment to helping
resolve environmental and social issues.
◦	To better contribute to building a sustainable environment and society, MUFG has selected 10 priority environmental and social issues with an eye on better fulfilling society’s expectations in areas where MUFG’s
strengths can be applied. One of the priorities we especially focus on is climate change measures and environmental protection.
◦	We have always been proactive in addressing climate change and environmental protection issues. It included formulating the MUFG Environmental and Social Policy Framework for assessing and managing the risks
associated with our business activities as well as setting sustainable finance targets. During this period, the movement to combat climate change gained tremendous global momentum, as can be seen, for example,
by the Japanese government’s Carbon Neutrality Declaration. MUFG has taken another step forward by announcing the MUFG Carbon Neutrality Declaration in May 2021. Guided by this declaration, MUFG is
implementing group-wide environmental measures globally, aiming to achieve net zero GHG emissions from the financed portfolio by 2050 and net zero GHG emissions from our own operations by 2030.
◦	This report highlights the progress of MUFG’s carbon neutrality initiatives and the measures that we are taking. In addition to the results and targets, we also report on our approach to achieving them and our thoughtprocess on which they are based. Through sharing the concept of MUFG‘s initiatives in detail, we hope to work together with wide range of stakeholders to achieve a sustainable environment and society.

Purpose: Committed to Empowering a Brighter Future.
Medium-term Business Plan

10 Priority Environmental and Social Issues That MUFG Must Address

Corporate transformation

Response toaging population& low birthrate＝
Digital transformation (DX)×Transforming our corporate
cultureSupporting
industrial
development &innovation

Inclusion &diversity

Identify areas of high affinity
between world expectations andour business operations

Reduction of
educational
disparities

Contributing to resolving
environmental and social
issues×

Developing
socialinfrastructure

MUFG’s Sustainability
Management

Climatechangemeasures &environmental
protection

Integration withmanagement strategies

Ensuring equal
access tofinancial services

Response topoverty
Promotingworkstylereforms

Overcoming
threats to health

MUFG Carbon Neutrality Declaration

Net zero GHG emissions from our financed portfolio by 2050
Net zero GHG emissions from our own operations by 2030

Overview

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

3(year)

Milestones

2030

…

349gCO2e/kWh156-192
gCO2e/kWhNEW

83MtCO2e15-28% reduction
from 2019

NEW

2019

2020

2021

2022

…

2040

❶N
 et Zero GHG Emissions from the Financed Portfolio
Power: Interim Targets for 2030 (emission intensity)
Oil & Gas: Interim Targets for 2030 (emission reduction rate)❷ Decarbonization through Financial Services
Sustainable finance(cumulative balance from FY2019)

3.7 trillion yen(including 2.2 trillion yen
for the environment)

7.9 trillion yen(including 3.6 trillion yen
for the environment)

USD 3.58 billion

USD 3.77 billion

10.4 trillion yen throughthe first half(including 4.3 trillion yen
for the environment)

35 trillion yen(including 18 trillion yen
for the environment)

Credit balance targets for coal-fired power generation
Project finance (FY)Corporate finance (FY)❸ Net Zero GHG Emissions from Own Operations

50% reduction
from FY 2019

Approx.120 billion yen

Zero
Zero

Completely shift to 100%
Completely shift to 100%
renewable energy for electricity
renewable energy for
procured domestically by theNEWelectricity procured
Bank, the Trust Bank, and thedomestically
Securities HD

NEW

Net zero

Progress Since the Carbon Neutrality Declaration❶ Net Zero GHG Emissions from the Financed Portfolio❷ Decarbonization through Financial Services❸ Net Zero GHG Emissions from Own Operations

Set interim targets for the power and oil & gas sector

Accelerated a range of initiatives based on customers’ needs

Made progress on measuring global group-wide GHG emissions⃝ Determined the power and oil & gas sectors as priority sectors. Measured
actual results (2019) and set interim targets for 2030.

⃝ Providing diverse solutions to help them measure their own GHG emissions,
set reduction plans, and implement carbon offsets. Proactively worked toestablish rules and design markets.

⃝ Measured global group-wide GHG emissions for the first time.

⃝ Power: GHG emission intensity from 349gCO2e/kWh to 156-192gCO2e/kWh;Oil & Gas: Reduce absolute GHG emissions from 83MtCO2e by 15-28%.

Decarbonization through Responsible Investment

Set corporate finance targets for coal-fired power generation

Shifted to 100% renewable energy for electricity procured domestically by the
Bank, the Trust Bank, and the Securities HD⃝ Set corporate finance target to reduce the credit balance to zero by FY2040.

⃝ Completed ahead of initial target: March 31, 2022. As a result, GHG emissions
have been reduced by approximately 60% domestically (approximately 30% of
global GHG emissions)

Participation in Initiatives

Other Efforts

Joined NZAM and will set interim targets for 2030

Leading the discussion on the development of a global framework

Krungsri announced their Carbon Neutrality Vision⃝Positioning climate change as a significant ESG issue and promoting
engagement with investees.

⃝ Appointed as Chair of the Financing & Engagement Subcommittee of the NetZero Banking Alliance (NZBA), which is responsible for developing a framework
for transition finance.

⃝ Krungsri has committed to decarbonization of own emissions by 2030 anddecarbonization of financial services by 2050.

⃝ In November 2021, we joined the Net Zero Asset Managers initiative (NZAM)
to accelerate our efforts. Set interim targets for 2030 by October 2022.

⃝
Through discussions at the initiatives, we are gathering a wide range of
information on global trends and the movements of global financial institutions
to strengthen MUFG's initiatives.

Revision of the MUFG Environmental and Social Policy Framework⃝ Tightened the Policy Framework, including prohibition of financing to new thermal
coal mining projects for power generation.
Click here for details

Net Zero GHG from the Financed Portfolio

Setting Interim Targets

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary42030 Interim Targets◦ MUFG joined NZBA in June 2021 after announcing the Carbon Neutrality Declaration. NZBA members share a common goal: net zero financed portfolios by 2050. They are also required to set interim targets for 2030
or earlier using a science-based approach.
◦ We are committed to helping achieve the goals of the Paris Agreement by achieving carbon neutrality by 2050, and at the same time, supporting a smooth transition to a decarbonized society through our financial
services, and proactively contributing to creating a sustainable society by fostering a virtuous cycle between the environment and the economy. Today, we have set interim targets for 2030, aligned with the Paris
Agreement. 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 bematerialized. 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.

Net zero GHG emissions from the financed portfolio◦ Net zero GHG emissions from the financed portfolio means decarbonizing the sector portfolio by reducing the GHG (Scope 3) generated through financing customers and projects.
◦ GHG emissions from the financed portfolio are defined as “financed emissions”. This is the amount of GHG emissions attributed to each financial institution through financing each customer or project.
◦ MUFG uses the calculation model recommended by the PCAF. When calculating MUFG’s attribution factor, while the PCAF guidelines recommend using outstanding amounts of loans and investments, MUFG
uses outstanding credit amount which includes the undrawn amount of commitment in order to reflect our credit stance as a financial institution more accurately.

Financed Emissions by PCAF model∑（

Attribution Factor

MUFG’s credit share to debt + equity ofeach customer/project.

Credit amount for each customer/project(outstanding loan + undrawn committment)

÷Debt + equity foreach customer/project×Emissions from each customer/project）

Net Zero GHG from the Financed Portfolio

Setting Interim Targets

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary5

Four Approaches to Setting the Interim Target◦ 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.

Science-based

Highly standardized and transparent⃝ Following the NZBA Guideline, MUFG will ensure that the interim target for 2030 is scientifically“well below 2˚C, preferably to 1.5˚C,” as agreed in the Paris Agreement.

⃝ MUFG believes that targets should be set from a global perspective using widely accepted andtransparent methods. We participate in various initiatives, collecting insights and reflecting themin the targets we set.

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

⃝ We will 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 weparticipate in.

Data quality

Sector-specific⃝ We use the best available data to set targets. However, there are limits to the amount and qualityof data currently available, so we will use the PCAF data quality score to check the quality of
Click here for reference pageemissions data disclosed by MUFG.

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

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

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

Interim target-setting process◦ MUFG will set interim targets for the following processes.

Identifying priority sectors

Sector analysis

Determine methodologies andmeasure GHG emissions

Set interim targets

Net Zero GHG from the Financed Portfolio

Introduction

Setting Interim Targets

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Decarbonization
through
Responsible
Investment

Net Zero GHG
from Own
Operations

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

6

Glossary

Identifying Priority Sectors◦ The NZBA Guidelines define nine carbon-intensive sectors that should be prioritized when setting
targets: agriculture; aluminium; cement; coal; commercial & residential real estate; iron & steel; oil &gas; power generation; and transport. Among these sectors, MUFG especially puts priority on the
power and the oil & gas sectors for the following reasons.

Figure 1: Global CO2 emissions in 2019 (GtCO2)

By sector■ Power■ Building■ Industrial■ Others*1■ Transportation

By fuel■ Oil (energy source)■ Gas (energy source)■ Coal (energy source)■ Others*2（1）CO2 emissions from the power sector account for approximately 40% of global CO2 emissions. The power sector
is expected to take a leading role in promoting decarbonization across industries through electrification.
（2）Oil & gas are widely consumed by industry and households, accounting for approximately 50% of global CO2
emissions from fuels and therefore important for reducing GHG emissions from fossil fuels.
（3）Both sectors have relatively large financed emissions in the MUFG portfolio.
（4）Both sectors have relatively well-developed data and methodologies.

0

20

40

60

80

100 (%)

Source: IEA World Energy Outlook 2021
1. Agriculture, forestry, fisheries, etc.
2. CO2 emissions from sources other than fossil fuel combustion (industrial processes, waste, etc.)

Characteristics of the power sector

Characteristics of the oil & gas sector⃝ In the transition stage to a decarbonized society, the demand for power is expected to increase due to economic growthin developing countries and the electrification of industry. So, the power sector will need to shift to renewable energy andlow-carbon fuels, while ensuring a stable supply of energy.** Electricity demand under the IEA 1.5°C scenario (IEA NZE scenario in which the increase in the global surface
temperature rise is limited to 1.5°C with a 50% or greater probability of success) is estimated to grow by 39% by 2030
and 166% by 2050 (compared with 2020).
⃝ The policies and initiatives of each country are important because the business model of this sector is local and therefore
has particularly strong regional characteristics.

Figure 2: Global electricity demand (TWh)⃝ For decarbonization, GHG emission reductions can be done through electrification of production processes, CCUS, etc.
(i.e. Scope 1, 2 of the upstream business). On the other hand, a large amount of this sector’s GHG emissions is due tocross-industrial consumption (Scope 3), indicating that decarbonization in the oil & gas sector cannot be achieved
without industries and households transitioning away from fossil fuels.
⃝ The IEA figures suggest that currently there is a large gap between the demand (IEA APS scenario that is based on thecommittments announced by each country) and the 1.5°C scenario. It is important to promote decarbonization in the
demand sectors as well in order to close the gap between these two scenarios.

Figure 3: Global primary energy demand for Oil & Gas (EJ)
● Historical

80,000● NZE60,000● Historical

400

● APS

● NZE

300
＋166%

40,000＋39%

20,000

200
100
0

0
2015

2019

2020

2030

2035

2040

2045

2050

Electrification18%
rates*

19%

20%

26%

32%

39%

45%

49%

Source: IEA World Energy Outlook 2021

* The ratios of electricity to final energy consumption

2015

2019

Source: IEA World Energy Outlook 2021

2020

2030

2035

2040

2045

2050

Net Zero GHG from the Financed Portfolio

Interim Target: PowerIntroduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Decarbonization
through
Responsible
Investment

Net Zero GHG
from Own
Operations

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

7

Setting Interim Target for the Power Sector◦ Following SBTi and PACTA, the value chain and emission scope which we cover is Scope 1 of thepower generation business, which accounts for the majority of GHG emissions in this sector.
◦ The power sector is expected to take a leading role in driving cross-industry decarbonization. GHG
emission intensity, a measure of emission efficiency, will be used as the metric because the power
sector needs to support the increasing electricity demand while simultaneously moving ahead withclean energy conversion.
Click here for reference page◦ The average PCAF score for the target portfolio that is included in the calculation is 2.4.
In addition to information disclosed by customers, we use data sources, including CDP and
Bloomberg, etc. for GHG emission data. In cases where GHG emission data is not available, we use
production data obtained from these data sources as well as emission intensity information obtained
from IEA database, etc. to make estimates. Customers who do not have GHG emission data or
production data are excluded from the calculation, yet we manage to cover more than 85% of ourcredit portfolio for this sector.

◦ Going forward, we will expand our target coverage and improve data quality reflected in our PCAF
score in line with enhanced data availability.

Method for calculating emission intensity for the power sector∑（

GHG emissions intensity of eachcustomer/project (gCO2e/kWh)×Loan amount toeach customer/project
MUFG total loan amount topower sector

Value chain: Power generation businesses
Emission scope: Scope 1

Target scope

Loan amounts (including undrawn-committed amounts)*
As of December 31, 2019

Asset scope*More than 85% of the exposure is included in the calculation.

Target metric

Emission intensity (gCO2e/kwh)

PCAF score

Average PCAF score 2.4 (score 1-2: 54%, score 3: 46%)

Data source

Information disclosed by each customer, CDP, Bloomberg, etc.

Interim Targets for 2030 for the Power Sector◦T he interim target for 2030 is 156-192gCO2e/kWh.
◦ The power sector has a local business model with strong regional characteristics, and is expected
to take a leading role in promoting each NDC with governments. We will achieve 192gCO2e/kWhby supporting our customers to meet each country’s NDCs, which are essential for achieving theParis Agreement, and also by helping their initiatives for green, transition and innovation. 192gCO2e/
kWh is a level well below the IEA 2˚C scenario in 2030.
◦ In addition to the above, we aim for 156gCO2e/kWh, which is consistent with the IEA 1.5˚C scenario
in 2030, by making further contributions to the promotion of renewable energy, etc. as a leading
company in sustainable finance.

2019 results

GHG emission intensity target for 2030

349

156-192

gCO 2e/kWhgCO 2e/kWhwell below 2°C, preferably to 1.5°C）

Net Zero GHG from the Financed Portfolio

Interim Target: PowerIntroduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

8

Status of Engagement in the Power Sector◦ MUFG conducts the following types of engagement (dialogue) with customers who have initiatives to reduce GHG emissions.
Japanese Corporate

Global Corporate○ Engagement example 1○ Engagement example 3 (EMEA)MUFG coordinates dialogues between customers in the power sector and overseas institutional
investors. As a financial institution, we encourage customers and investors to close the gap intheir perceptions of their position, particularly the ideals and the reality of becoming carbon
neutral. Most recently, we exchanged views on respective approaches to transitioning andcontributed to building a foundation for formulating strategies.

A UK utility company defined ESG as its core strategic priority to achieve its energy transition.
MUFG has had on-going discussions with the company’s management team to provide financing
support. As a result, MUFG provided financing support to the company by serving as its financial
advisor for a CCS project, collaborating on an offshore wind power project, and providing
support on ESG-linked loan and green bond issuance.

○ Engagement example 2○ Engagement example 4 (Oceania)

MUFG, including top management, regularly exchanges opinions with customers in the power
sector regarding the external environment and awareness of problems, and we are working togain a more multifaceted understanding of the position of customers through tours of power
generation plants. To achieve the common goal of carbon neutrality for both customers and
MUFG, we will discuss how MUFG can best contribute to the formulation and implementationof customers’ strategies, including the possibility of strategic investments and contributing
human capital.

An Australian company building and maintaining infrastructure for high-voltage power transmission
was looking to expand its renewable energy operations. In Australia, coal accounts for a large
percentage of power generation, and the company launched a transmission infrastructure development
project to improve the transmission infrastructure that could support the enhancement of renewableenergy generation capacity. MUFG proposed financing solutions for this project, provided ESG-related
advice, and engaged with participating companies as well as public and private stakeholders. MUFG
contributed to the promotion of renewable energy project as the company’s financial advisor.

Corporate finance targets for coal-fired power generation◦ As we report in this document, MUFG set an interim target for 2030 for GHG emission intensity in the power sector as a target
for becoming carbon neutral in 2050 through loans and investments to customers in the power sector. Going forward, we will
disclose the progress toward the targets

Carbon-related assets (coal-fired power) 1.2 trillion yen
For coal-fired power generation◦ For credit related to coal-fired thermal power generation, we have set a target to reduce to zero* the balance of financing tocoal-fired power generation projects by FY2040.

Project FinanceCorporate Finance◦ In addition, for extending credit to customers in the power sector, we newly set a target to reduce the balance of corporate
finance for coal-fired power generation to zero* by FY2040.

Approx. 380 billion yen

Approx. 120 billion yen◦ We will continue to promote investments and loans for green, transition and innovation through engagement (dialogue) aimed
to help customers decarbonize who are operating coal-fired thermal power generation.

FY 2040: Zero
(Halved by FY 2030)

FY 2040: Zero

* Projects that contribute to the transition toward a decarbonized society are excluded following the MUFG Environmental and Social Policy Framework.

As of March 2021

Net Zero GHG from the Financed Portfolio

Interim Target: Oil & Gas

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Decarbonization
through
Responsible
Investment

Net Zero GHG
from Own
Operations

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

9

Glossary

Setting Interim Target for Oil & Gas Sector◦According to PACTA, upstream businesses of fossil fuel sectors are important as they havesignificant impact on other segments down the value chain. Therefore MUFG focuses on the
upstream of the value chain, which have the largest environmental impact. The emission scope
which we look into covers not only Scope 1 and Scope 2 but also Scope 3, from which the majorityof GHG emissions from this sector is generated.
◦ We have chosen to use absolute GHG emissions as the target metric to directly capture fossil fuelburns (Scope 3) which are the main cause of GHG emissions.
Click here for reference page◦ The average PCAF score for the target portfolio that is included in the calculation is 2.6.
In addition to information disclosed by customers, we use data sources, including CDP and
Bloomberg, etc. for GHG emission data. In cases where GHG emission data is not available, we use
production data obtained from these data sources as well as emission intensity information obtained
from IEA database, etc. to make estimates. Customers who do not have GHG emission data or
production data are excluded from the scope of calculation, yet we manage to cover more than 85%
of our credit portfolio for this sector.

◦ Going forward, we will expand our target coverage and improve data quality reflected in our PCAF
score in line with enhanced data availability.

Absolute GHG emissions calculation method in the Oil & Gas sector∑（

Attribution factor
MUFG’s credit share against debt +equity for each customer/project×

GHG emissions from eachcustomer/project）

Value chain: Upstream production businesses(including integrated businesses heavily involved in upstream businesses)
Emission scope: Scope 1, 2, 3

Target scope

Loan amounts (including undrawn-committed amounts)*
As of December 31, 2019

Asset scope*More than 85% of the exposure is included in the calculation.

Target metricAbsolute GHG emissions (MtCO2e)

PCAF score

Average PCAF score 2.6 (score 1-2: 44%, score 3: 56%)

Data source

Information disclosed by each customer, CDP, Bloomberg, etc.

Interim target for 2030 for the oil & gas sector◦T he interim target for 2030 is 15%-28% reduction from 2019.
◦ We will achieve 15% reduction by engaging with our customers and supporting their efforts in
reducing GHG emissions. 15% reduction is a level well below the IEA 2˚C scenario in 2030.
◦ We aim for 28% reduction which is consistent with the IEA 1.5˚C scenario in 2030. However, toachieve this it is essential for both the oil & gas sector (supply-side) and the industries (demand-side)
to simultaneously accelerate decarbonization. Therefore, we intend to achieve 28% reduction bymaking contribution to the world to further advance toward decarbonization.

2019 results

GHG emission reduction target for 2030

83

Base year 2019

MtCO 2e

Reduction rate

15%-28%well below 2°C, preferably to 1.5°C

Net Zero GHG from the Financed Portfolio

Interim Target: Oil & Gas

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

10

Engagement in the Oil & Gas Sector◦ MUFG conducts the following types of engagement (dialogue) with customers who have initiatives to reduce GHG emissions.

Japanese Corporate

Global Corporate○ Engagement example 1○ Engagement example 3 (EMEA)MUFG uses a wide range of engagement activities with customers in the oil & gas sector to help themachieve transitions, including exchanging opinions on the future of the industry as well as providing
opportunities to discuss developments in new areas, such as forest management. We are also
focusing on ways to deepen mutual understanding by providing suggestions gained from ourparticipation in COP26 and information on the environment in which financial institutions are operating.

MUFG has been having regular conversations with a global energy company’s senior management
team to support the company’s transition strategy. In addition to understanding the company’s energy
transition strategy, MUFG shared its views and made proposals tailored to the company’s strategy byleveraging MUFG’s strength in structured finance. This led to providing financial support to contributeto the acceleration of the company’s energy transition.

○ Engagement example 2○ Engagement example 4 (Oceania)

MUFG not only provides project finance support for geothermal power projects to customers in the
oil & gas sector, but we also encourage customers to enter the renewable energy field by providing
financial advisory services for equity investments in these projects. We are also one of the leadmanagers for issuing green bonds, and MUFG Group companies are working together to help
customers make successful transitions.

The company was considering participating in a CCS project as its core strategy to prepare forcarbon neutrality – in line with the Paris Agreement. However, CCS market is still immature andrequires cooperation beyond public-private partnership to achieve practical application. MUFG teams
in Japan and Australia jointly provided early stage financing advice as well as facilitated discussions
between various stakeholders, which ultimately contributed to the company’s progress in CCS
opportunities and in energy transition.

Net Zero GHG from the Financed Portfolio

Aligning with NZBA Guidelines

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

11

MUFG’s achievement so far◦ We have set the interim targets for the power sector and oil & gas sector in line with the NZBA Guidelines. MUFG will continue to follow NZBA Guidelines by reporting annual progress for the targets, reviewing
the targets within five years, and setting new interim targets for other carbon-intensive sectors.

Outline of the NZBA Guidelines

Set 2050 targets for alignment with the Paris Agreement

Disclosure
requirement

For carbon-intensive sectors, set interim targets for 2030 or earlier for several
key sectors within 18 months of joining

MUFG’s action

Announced target of net zero by 2050 in the MUFG Carbon Neutrality Declaration*Agriculture; aluminium; cement; coal; commercial & residential real estate; iron & steel; oil & gas;
power generation; and transport. (Banks may prioritize sub-sectors based on GHG emissions andfinancial exposure and/or data and methodology availability.)

Disclosed interim targets for 2030 for the power and the oil & gas sectors

Set interim targets for 2030 or earlier for the majority of carbon-intensive
sectors within 36 months of joining

We will set targets for the sectors other than power
and the oil & gas sectors going forward

Scenarios

Use of widely accepted science-based decarbonization scenarios

Refer to the scenarios published by the IEA

Data used

The target base-year shall be no more than two full reporting years prior to thesetting of the target. (If there are issues, such as economic conditions or data
quality, then data older than two years is acceptable. In that case, explanations
will be required.)

Asset scope

Loans (on balance sheet)
Investment (on balance sheet) remains a recommendation

Used 2019 data
*We use 2019 GHG emissions data as 2020 is impacted by Covid-19

Included corporate finance and project finance*Underwriting is not included. (consistent with NZBA guidelines, PCAF is still in the process of developing guidelines.)*Proprietary trading and loans from partner banks account for less than 5% of the total, so they are not consideredmaterial and are not included.

Decarbonization throughFinancial Services

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Decarbonization
through
Responsible
Investment

Net Zero GHG
from Own
Operations

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

12

Engagement Activities Based on the Needs of Customers◦ MUFG intends to be a financial institution that empowers a brighter future by supporting customers’ decarbonization. We aim to start engagement (dialogues) with customers through the Energy Transformation
Strategy Project Team and to support customers to become carbon neutral by developing and providing solutions based on the varied issues and needs of each customer.

Engagement activities: Dialogue with Japanese and non-Japanese customers

Approx. 550 companies

Understanding customer issues and needs
Further initiatives
to achieve carbon neutrality

Current initiatives

Visualization support
Strategy development support

GHG emission visualization
support (collaboration with
Zeroboard Inc. and Hitachi, Ltd.
/ collaboration with busikul*1
through zeroboard)

NEW

NEW

Consulting service
for ESG rating
evaluation

TCFD consulting service(in collaboration with
Tokio Marine & Nichido
Fire Insurance Co., Ltd.)

NEW

Green
Investments andloans, solutions, etc.

Started green deposit

Boost to promote the realizationof carbon neutrality by 2050 byorganically linking improved
ability of execution by MUFG tocustomer needs that areunderstood through GHG
emission visualization andstrategy development support.

Sustainable FinanceTransition
Innovation

Carbon credits
Visualization andstrategydevelopment
Involvement inestablishing rules anddesigning markets

Renewable energy financeNEW
Collaboration with Japan
Credit Rating Agency, Ltd.
for the development ofsustainability-linked loans

Investments andloans, solutions
Carbon credits*1 Management problem-solving platform for corporate DX*5 Integrity Council for Voluntary Carbon Markets

Transition FinanceHydrogen, ammonia

Distributed power supply,
storage batteries

CCUS

NEW

Provide overseas carbon credits to Japanese companies (collaboration with ENGIE SA, and others)

Japanese Government Study Group on GHG
Emission Calculations
Taskforce on Preparation of theEnvironment for Effective
Transition Finance*2

NEW
Lead Asia Transition
Finance Study GroupMETI Carbon Credit Study Group*4*2 Jointly held by METI, MOE, and FSA.

JPX Sustainable Finance Platform Development
Working Group*3 Global CCS Institute

Join NZBA

Participate in IC-VCM*5

Join GCCSI*

3

Support for
the GX League

NEW

Contribute to market design
and rulemaking by participatingin councils and member
organizations.

*4 Study Group on Environmental Development for Appropriate Use of Carbon Credits to Achieve Carbon Neutrality

Decarbonization throughFinancial Services

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

13■ Target: Environment ﬁeld
■ Results: Environment ﬁeld
Target and Results of Sustainable
Finance

Target:35 trillion yen

18 trillion yen

Cumulative
FY2019-FY2030■ Target: Environment field■ Results: Environment field

The Third ESG Finance Awards Japan

Underwriting green bonds

1.2 trillion yen

Results:
10.4 trillion yen

Corporate loan origination for businesses contributing toclimate change mitigation and adaptation, etc.

0.5 trillion yen

4.3 trillion yen

Financial advisory for businesses that contribute to climatechange mitigation and adaptation

1.2 trillion yen

Cumulative
FY2019-H1 FY2021○ Gold award in the Banking Category(MUFG Bank)○ Silver Award in the Financial Service
Category (Securities Division)(MUFG Morgan Stanley Securities)○ Selected as an Environmental
Sustainable Company in theEnvironmental Sustainable
Company Category(MUFG)

Project finances, etc. for renewable energy and environment1.3 trillion yen
related businesses

New Initiatives by MUFG
Collaboration with Tokio Marine & Nichido Fire Insurance Co., Ltd.

Collaboration with Japan Credit Rating Agency, Ltd. (JCR)⃝	Two financial institutions that focus on long-term engagement have joined forces to address TCFD disclosure issues for⃝	We collaborate with JCR, an agency with an extensive track record in evaluations for sustainable finance, and developed acustomers. These issues include climate change risk/opportunity analysis and formulating strategies. By leveraging thesustainable finance product that incentifies GHG emissions reductions by combining JCR’s expertise with MUFG Bank’s

complementary strengths of these two institutions, we now provide consulting services with an eye to providing solutions.

customer base, financial expertise and Zeroboard Inc.’s services.

Support for Building Ammonia Supply Chains

Participation in the Global CCS Institute (GCCSI)⃝	Marubeni Corporation is working on a feasibility study for building a supply chain for clean fuel ammonia from Western⃝	MUFG is the first Asian private financial institution to participate in this international think tank, established with the aim ofAustralia to Japan, to be implemented jointly with government agencies, power companies, and Australian companies.

promoting the global use of carbon capture and storage (CCS) technology.

MUFG participates in financing to support for building ammonia supply chains.

Positive Impact FinanceTransition Bond⃝	MUFG Bank began handling positive impact finance in FY 2021 as part of strengthening engagement. We provided our first⃝	Mitsubishi UFJ Morgan Stanley Securities provides support as the lead manager and structuring agent for the world’s first

positive impact finance to Mitsubishi Heavy Industries, Ltd., a key technology player in the decarbonization field (loantransition bonds in the aviation industry issued by Japan Airlines Co., Ltd.

agreement amount: 2 billion yen).

Leading Practices Overseas

Collaboration with ENGIE SA⃝	First large-scale offshore wind project finance deal in the US (total financing amount: approx. USD 2.3billion) – one of the⃝	MUFG Bank reached an agreement with ENGIE SA, with over 10 years of experiences in low-carbon energy and services, tolargest renewable energy project finance deal closed in 2021. (Awarded 2021 PFI Global ESG Deal of the Year)⃝	First carbon credit backed supply chain finance in EMEA (total financing amount: approx. USD 640million)

collaborate on solutions to help MUFG Bank’s customers mitigate climate change by supporting their decarbonization
strategies. Through this collaboration, we aim to establish a way to provide appropriate carbon credits supplied by ENGIE to
our customers. We will also consider further business development and collaborations in renewable energy as well as in new
fields such as hydrogen.

Consulting service for ESG Rating Evaluation

Introducing fuel cell buses and contributing to the community through the decarbonization concept⃝	Mitsubishi UFJ Trust and Banking has started providing consultations to identify ESG issues and improving evaluations,⃝	MUFG’s supports (donations) help to fund the introduction of fuel cell buses in Tokyo and Osaka, with a view to increasing

based on ESG ratings such as FTSE. This supports engagement activities with investors and other stakeholders.

demand and promoting the use of hydrogen.
⃝	MUFG contributes, including donations, to local communities by helping to create sustainable businesses originating in
Osaka, looking ahead to achieving carbon neutrality goals set by Osaka Prefecture, and presenting and promoting technology
at expositions.

Net Zero GHG from Own Operations

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Decarbonization
through
Responsible
Investment

Net Zero GHG
from Own
Operations

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

14

Contributing to the World by Reducing Our Own GHG Emissions◦ Under the MUFG Carbon Neutrality Declaration, we set the target of achieving net zero GHG emissions in our own operations by 2030.
◦ MUFG will promote initiatives that reduce GHG emissions in more than 50 countries and regions where we operate. Together with stakeholders in each country, we will contribute to decarbonization around the world
while overcoming challenges.

Method for Calculating GHG Emissions

GHG Emission Results◦ Based on the GHG Protocol, we measure energy consumption at all group and global sites,
multiply those figures by the GHG emissions per use for each country and energy type, and thentotal the results.

∑（

Measurement of energy consumption
at each site by energy type×

GHG emission factor◦ GHG emissions totaled approximately 360,000 tCO2e. By energy type, direct GHG emissions (Scope1) were 30,000 tCO2e (8%) and indirect GHG emissions (Scope 2) were 327,000 tCO2e (92%).
◦ By region, the ratios of Japan and overseas were nearly one half each. Japan and APAC accounted
for 86% of total GHG emissions.

Method for Calculating GHG Emissions

Energy consumption◦ For the first time, MUFG has measured and aggregated GHG emissions on a group and global basis.

）

GHG emissions per use
by energy type

◦ We aim to obtain a third-party guarantee for the content of our disclosures in the future.

Scope１

Scope２(direct GHG emissions)
Gas / heavy oil / kerosene / gasoline / light oil(indirect GHG emissions)Electricity / steam / hot water / cold water

30,000 tCO e

327,000 tCO e

2

2

（8%）

（92%）

⃝ Scope of measurement： The companies included in the calculation of GHG emissions are thosethat have management control over their businesses (an operational control approach). At MUFG,
each locations including overseas of the holding company and consolidated subsidiaries are covered.
⃝ Measurement criteria：Scope 2 emissions related to electricity use are not location-based, which is
calculated based on emission factors specified for each region, but market-based, which reflects
the switch to renewable energy electricity, etc. in the emission factors.
⃝ Period in scope：In principle, from April 1, 2020 to March 31, 2021

Japan

EMEA

3,000

188,000

tCO2e

tCO2e

APAC

120,000
tCO2e

Americas46,000tCO2eNet Zero GHG from Own Operations

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

15

Initiatives for Net Zero GHG emissions in our own operations by 2030
◦ Since the Carbon Neutrality Declaration in May 2021, MUFG has reduced approximately 60% of domestic GHG emissions (which is approximately 30% of global GHG emissions).
◦ In addition to our initiatives to reduce energy use through continued energy conservation,*1 we will reduce our gasoline consumption by switching to electric vehicles (EVs) and promote the use of renewable energy
sources for electricity to become net zero for GHG emissions by 2030. We will also work to establish and introduce raw green power*2 to directly contribute to an increase in renewable energy sources.
◦ Overseas, while accumulating expertise from promoting domestic environmental initiatives and introducing renewable energy at our European business locations, we will accelerate implementing specific measures,
taking into account the status of policies and systems to promote decarbonization in each country.
*1 Nagoya Building (completed in 2021): acquired CASBEE S rank, MUFG Park’s two new buildings (to be completed in 2023): plan to acquire BELS/ZEB certifications, relocation to energy-efficient properties and offices, etc.
*2 Green power, generated from renewable energy sources such as wind, solar, and biomass (biological resources), is sent directly from the power plant to the consumer. Customers can use green power directly as electricity for their own use, rather than "deemed" to do so.

Breakdown of GHG Emissions in FY 2020

Progress in Reducing Our Own GHG Emissions and Future Directions
Switch to renewable energy sources（Group and global basis）

Total Emission
in Japan
188,000 tCO2
（53%）

3 Electricity procured bydomestic subsidiaries
8,000 tCO2

2 Overseas GHG emissions(already reduced)
400 tCO2（0.1%）

1 Of this amount,domestic GHG
emissions already
reduced106,000 tCO2
(30%)

6 Overseas
GHG emissions
169,000 tCO2
(47%)

1

 ompletely shift to 100% renewable energy by November 2021 for electricity procuredCdomestically by the Bank, the Trust Bank and the Securities HD

2Some bases in Europe have already switched to renewable energy3 ompletely shift to 100% renewable energy for electricity procured domestically by the end ofC
FY 20224

 ncourage tenants and other owners to switch to renewable energy sources for theirEelectricity contracts⇒Initiatives for introducing raw green power: directly contribute to increasing domestic
renewable energy sourcesSigned a 20-year purchase agreement from a new solar power plant (corporate PPA)

Total Emissions
FY 2020
357,000 tons

Switching to electric vehicles (EVs) for company cars

4 Electricity used
for tenant
occupancy
53,000 tCO2

5

5 Energy other thanelectricity
21,000 tCO2

 iming to switch to 100% EV use in Japan by FY 2030 (by formulating a specific plan that takes intoA
account the expiration of existing lease contracts and the charging environment)

Specific measures in each country and region6

 pecific measures, such as switching to renewable energy sources and purchasing renewableS
energy certificatesDecarbonization throughResponsible Investment

Introduction

Net Zero GHG
Emissions fromthe Financed
Portfolio

Overview—MUFG as an Asset Manager

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

16

Initiatives to Address Material ESG Issues through Responsible Investment◦ MUFG’s subsidiary asset management company is working on the initiatives to continuously enhance value of the investee companies and resolve various ESG issues through managing investment portfolio. In
particular, we believe that "climate change" is not only a manifestation of risk due to the deterioration of the global environment, but also an opportunity for the development of new technologies to solve the problemof our investees and to increase the potential for business expansion.
◦ MUFG has set “material ESG issues” which MUFG prioritizes to address through responsible investment activities, and aims to make a contribution to resolving by engagement activities, etc. For one of these issues,
especially in climate change, we are participating in a global initiative and working with investors around the world to solve the problem.

Positioning Climate Change as a Material ESG Issue

Participation in global initiatives◦In a materiality matrix, ESG issues on asset management are mapped from the perspective ofmateriality in terms of society and MUFG Asset Management. In this context, climate change has been
positioned as one of the most significant issues. (We are the first Japanese asset managementcompany to adopt a materiality matrix)◦ Addressing climate change is essential for improving investment value. We will contribute to thesmooth transition to a decarbonized society through engagement, etc. with our investees.

Joined CDP in August 2018
A project in which institutional investors work together to encouragebusinesses to disclose their climate change strategies and GHG
emissions. MUFG utilizes it as ESG database to evaluate non-financial
disclosures of investees.

highExtremely

Very high

Stakeholders andregional community

High

Materiality in terms of society

Materiality matrix
Circular economy
Pollution prevention and control
Natural capital and biodiversity

UniqueJoined CA100+ in December 2017
An initiative to work on collaborative engagement toward
more than 160 companies that emit high levels of GHG.
MUFG leads dialogue in two Japanese companies.

Governance structure
Information disclosure /Climate change
Human rights and diversity
Health and safety

Supply chain

Scandals and corruption

Risk management

Human capital
Data security and privacy

Companies / Industries / Assets
Materiality in terms of MUFG Asset Management

GeneralSupported TCFD as an asset manager in May 2019
We started measuring GHG emissions of our investment portfolio from2020 and started the disclosure based on TCFD recommendations.
Joined AIGCC in November 2019
An initiative consisting of financial institutions and investors in the
Asia-Pacific region to address climate change. MUFG supports it as aboard committee member.
Joined NZAM in November 2021
An asset management company initiative to achieve net zero GHG emissions by 2050,
in line with international efforts to limit the global temperature increase to 1.5°C. MUFG
will set an interim target for 2030 by October 2022 for the proportion of assets undermanagement consistent with achieving net zero GHG emissions by 2050.

Global Initiatives andStructural Enhancements

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Contributing to Global Initiatives

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

17

Glossary

Asia Transition Finance Study Group (ATFSG)◦ MUFG has participated in initiatives to recognize our position from a global perspective and toreflect a highly-standardized and transparent methodologies when setting GHG emission targets
for our financed portfolio. As a leading financial institution in Asia, we are committed tocommunicating our views.
GFANZ (Glasgow Financial Alliance for Net Zero)
Through the GFANZ working groups, MUFG has been discussing net zero initiatives across financial
sector as well as recommendations from the financial industry to other industries. GFANZ plans to use
these discussions to make policy recommendations to the G20 and COP27.
NZBA (Net-Zero Banking Alliance)
In June 2021, we became the first Japanese bank to join the NZBA and have been contributing as an
Asian representative in the Steering Group. In December 2021, we were appointed Chair of the
Financing & Engagement working group. MUFG leads the development of a global framework fortransition finance.

◦ ATFSG was launched under the Asia Energy Transition Initiative (AETI) with a focus on major financial
institutions active in ASEAN countries. Leading by MUFG, this study group is discussing the common
principles and standards, etc. necessary to have a realistic and gradual energy transition in Asia.

Collaboration with the University of Tokyo – Launching the ETI-CGC◦ In November 2021, the University of Tokyo and 13 major domestic companies launched the Energy
Transition Initiative – Center for Global Commons (ETI–CGC) as an initiative to help with decarbonization.
We advance discussions of pathways to achieve carbon neutrality in Japan.

Carbon Neutral Project Team◦ MUFG has established project teams on a group and global basis to discuss and make decisions
through a steering committee in which the CEO and other key management members participate.

GFANZ

GFANZ working group
Board of Directors

NZBA（Bank）

NZAM（Asset Manager）

Executive Committee

NZAOA (Asset Owner), NZIA (Insurance), etc.

Sustainability Committee
NZBA governance body … 12 banks in the Steering Group and UNEP FI are members.
Carbon Neutral PT Steering Committee
MUFG
Principals Meeting

Representatives Meeting
Steering Group members

Risk management

Improving intelligencegatheringPartner banks

Setting targets, measuring
GHG emissions by sector

Enhancement of disclosure

Our own emissions

Responsible investment

Carbon pricing

Communicating

MUFG
Chair

Financing & Engagement

NEW

SectorOutreach & Recruitment

Decarbonization through Financial Services
Business,client engagement

NZBA working group
Implementation

Nine working groups (group and global basis)

Methodologies & Data

Net zero GHG emissions by MUFG

Initiatives of Partner Banks

Introduction

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary18

In alignments with “MUFG Carbon Neutrality Declaration” and the Carbon Neutrality Declaration made by governments of Thailand and Indonesia, Krungsri and Bank Danamon, our Partner Banksin Asia, have enacted their own measures to achieve a sustainable environmental and social objectives in their respective countries.

Krungsri’s Carbon Neutrality Vision
In alignment with Thailand’s declaration at COP26 to achieve Carbon Neutrality by 2050, Krungsri, as the second commercial bank in Thailand, has announced its pledge to decarbonization
as follows.
◦D ecarbonization of own emissions by 2030
◦D
 ecarbonization of financial services by 2050
◦P
 hasing out exposure to coal-fired power plants within 2030
◦ Social and sustainable finance target of 50-100 billion baht* by 2030

Krungsri, through collaborative efforts with MUFG, has been
instrumental in promoting and advancing ESG finance market
development in Thailand. In 2021 (January to December), theBank ranked number one on the ESG debenture league table,commanding the market share of 29 percent.

*Approx. 160~330 billion yen

Bank Danamon’s Commitment to Sustainability
Bank Danamon recognizes the importance of incubating initiatives in realizing a sustainable environmental and social society, and is participating in Indonesia’s pledge fordecarbonization. Furthermore, Bank Danamon will accelerate its contributions as the Indonesian Presidency leads the G20 of 2022.
◦ Strengthen Management’s Engagement.
⃝ Enhanced committee structure to be directly supervised by Management◦ Sustainable Finance Portfolio*1 Target⃝ Established an aspirational target to increase the Sustainable Finance portfolio to 25% in the next five years◦ Advanced Disclosure among Indonesia Peers⃝ Disclosure of carbon-related assets which aligns with MUFG’s TCFD report
THAILAND⃝ Disclosed policies for Palm Oil sector such as requiring commitment to NDPE*2 and encouraging to obtain certification◦ Contribute to MUFG’s target of achieving net zero GHG emissions on its own operations by 2030

INDONESIA*1: Aligned with local regulations*2: NDPE: No Deforestation, No Peat and No Exploitation

Glossary

Introduction

Terms andabbreviations

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Official name

Decarbonization
through
Responsible
Investment

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

19

Remarks

AETI

Asia Energy Transition Initiative

Japan’s comprehensive support measures for the transition in Asia proposed at the Special Meeting of ASEAN Ministers on Energy and Minister of Economy,
Trade and Industry of Japan, in June 2021.

APS

Announced Pledges Scenario

Scenarios published by the IEA that build on the nationally determined contributions (NDCs) already announced by the Paris Agreement member countries.

BELS ZEB

Building-Housing Energy-efficiency Labeling System Net Zero Energy
Building Certification

A third-party certification system supervised by the Ministry of Land, Infrastructure, Transport and Tourism that oversees the energy-saving performance ofbuildings. The number of stars is determined on a five-point scale. Buildings with excellent energy-saving performance, or with 5 stars, the highest rank, arecertified as ZEB.

CCS/CCUS

Carbon Capture and Storage / Carbon dioxide Capture, Utilizationand Storage

CCS is a carbon-capture and storage technology that separates out CO2 emitted from power plants, chemical plants, etc. from other gases, collects them, thenstores or injects the CO2 deep underground. CCUS is a technology for using the separated and stored CO2.

CASBEE

Comprehensive Assessment System for Built Environment Efficiency

A system for evaluating the environmental performance of buildings, developed in 2001 at the initiative of the Ministry of Land, Infrastructure, Transport andTourism. There are five levels of evaluation: S, A, B+, B-, and C.

CDP-

CDP (a nonprofit organization) run by a coalition of institutional investors and with an office in London that calls on companies with high market capitalization in
major countries to disclose their environmental strategies and greenhouse gas emissions.

CO2e

CO2 equivalent

Carbon dioxide equivalent (examples: methane and nitrous oxide, etc.) figures

COP

Conference of Parties

Conference of the Parties to the United Nations Framework Convention on Climate Change. The 26th Conference (COP26) was held in Glasgow, UK, in Octoberand November 2021.

GHG

Greenhouse Gas

Gas, such as CO2 or Methane, etc., that cause greenhouse effect

IEA

International Energy Agency

International organization within the Organisation for Economic Co-operation and Development (OECD) that publishes scenarios (SDS, APS, NZE, etc.) for
achieving the goal of limiting the increase in global average surface temperature.

NDC

Nationally Determined Contribution

This report, submitted by over 190 countries, shows how much each country will contribute to reducing GHGs under the Paris Agreement. An update to thereport is required every five years.

NZAM

Net Zero Asset Managers initiative

Formed voluntarily in 2020 by asset management companies, this initiative calls for becoming net zero by 2050 as well as limiting, through investments, theincrease in global average surface temperature to 1.5°C.

NZAOA

Net-Zero Asset Owner Alliance

An asset owners’ initiative to commit to the carbon neutrality of their managed portfolios by 2050.

NZBA

Net-Zero Banking Alliance

Established by the United Nations Environment Programme Finance Initiative (UNEP FI) in April 2021, this initiative commits banks to net zero GHG emissions
in their financed portfolios by 2050.

NZE

Net Zero Emissions by 2050 Scenario

A scenario released by the IEA where the increase in global average surface temperature is limited to 1.5°C with a 50% or greater probability of success.

NZIA

Net-Zero Insurance Alliance

An alliance of insurance companies to promote the transition of underwriting portfolios to achieve carbon neutrality by 2050.

PACTA

Paris Agreement Capital Transition Assessment

A tool to analyze the alignment of portfolios with climate change scenarios, led by 2° Investing Initiative, a French thinktank.

Certification

Glossary

Introduction

Terms andabbreviations

Overview

Net Zero GHG
Emissions fromthe Financed
Portfolio

Decarbonization
through Financial
Services

Net Zero GHG
from Own
Operations

Decarbonization
through
Responsible
Investment

Official name

GlobalInitiatives andStructural
Enhancements

Initiatives ofPartner Banks

Glossary

20

Remarks

PCAF

Partnership for Carbon Accounting Financials

Launched in 2015 with the goal of standardizing GHG measurements and the disclosure of financed GHG emissions.

PCAF score

PCAF Data Quality Score

PCAF's own five-point scale scoring system that indicates the quality of the disclosed data. Scores are determined according to the degree of estimation. Score
1 is the highest rank.

SBTi

Science Based Targets initiative

Established by the United Nations and other organizations to encourage the private sector to set GHG emission reduction targets based on climate science.
Certification can be obtained by meeting SBTi’s goalsetting guidelines.

Scope1、2、3-

Scope 1: Direct GHG emissions by the reporting company itself (e.g., fuel combustion, industrial process); Scope 2: Indirect GHG emissions from using
electricity, heat, or steam supplied by others; and Scope 3: Indirect GHG emissions other than Scope 1 and Scope 2 (GHG emissions by others related to thecompany’s activities).

SDS

Sustainable Development Scenario

A scenario released by the IEA in which the increase in the global average surface temperature rise is limited to 1.8°C with a 66% or greater probability ofsuccess.

TCFD

Taskforce on Climate-related Financial Disclosures

Taskforce set up by the Financial Stability Board (FSB) in 2015 to develop a consistent approach to disclosing climate change-related financial risks.

IC-VCM

Integrity Council for Voluntary Carbon Markets(Taskforce on Scaling Voluntary Carbon Markets)

Taskforce with the goal to expand an effective and efficient carbon credit market to help achieve the Paris Agreement goals. Newly launched by Task Force on
Scaling Voluntary Carbon Markets as a governance institution to consider the quality and evaluation system for carbon credits.

What is the PCAF Data Quality Score (PCAF score)?
◦ We score the quality of emission data by each customer/project according to the categories shown below, and aggregate the average score for the sector as a whole by weighted average of loan amount.
QualityCategoryHigh

Summary⃝Verified emissions data of each customer/project

Score 1
Disclosed information⃝Unverified emissions data of each customer/project
Score 2

Score 3

Estimated value(based on physicalmetrics)

Low⃝Estimation based on production data of each customer/project⃝Estimation based on the sales of each customer/project and the sectorial emission benchmarks per sales

Score 4

Score 5

⃝Estimation based on energy consumption data of each customer/project

Estimated value(based on financial
metrics)⃝Estimation based on loan balances of each customer/project and sectorial emission benchmarks per asset⃝Estimation based on loan balances of the each customer/project, sectorial emission benchmarks per revenue,
and asset turnover ratio per sector

Source: created by MUFG based on The Global GHG Accounting & Reporting Standard for the Financial Industry