Climate-related shareholder proposals essential to address gaps in Mitsubishi
Corporation’s midterm strategy | 25 May 2022
Further to the detailed investor briefing dated 13 April 2022, Market Forces, Friends of the Earth Japan and Kiko
Network (‘the co-filers’) present this additional briefing regarding Mitsubishi Corporation (Mitsubishi)’s Midterm
Corporate Strategy 2024 and the Board opinion on the climate-related shareholder proposals.
Mitsubishi’s recent updates are entirely insufficient for investors to conclude the company’s plans andrisk management processes are in line with its stated climate commitments, instead asking investors totrust blindly. The Task Force on Climate-related Financial Disclosures (TCFD), on the other hand, urges
investors to ‘trust but verify,’ and these climate-related shareholder proposals seek Mitsubishi disclose
information to enable investors to do just that.
Mitsubishi is the largest Japanese trading house by assets and is highly exposed to the decarbonisationtransition required in the energy sector, and LNG in particular. Despite the recent updates, Mitsubishi still has:
●No meaningful Scope 3 emissions targets and no short term emissions targets at all,●An incomplete midterm emissions target reliant on unproven technologies and asset sales, and●No capital allocation framework aligned with the company’s own net zero by 2050 commitment.

Mitsubishi is therefore at significant risk of contradicting its own climate commitments by failing to align with acredible pathway to net zero emissions by 2050. This exposes the company to stranded asset risk, reputation
risk and potential regulatory risk as markets and policies shift to meet global climate goals.
Investors are therefore urged to vote FOR proposals numbered 5 and 6 at Mitsubishi’s Annual General
Meeting on 24 June 2022.
1. Mitsubishi has not disclosed targets adequate to meet its net zero by 2050 goal
No meaningful Scope 3 disclosure, let alone targets: As a company heavily involved in the sale of carbon
intensive products such as LNG, which Mitsubishi’s midterm strategy indicates will continue and expand,
Scope 3 emissions represent significant transition risk. Recent research from Columbia University shows Scope
3 can account for around 75% of LNG lifecycle emissions. However, Mitsubishi currently does not disclose theemissions from or have targets related to what it admits would be “the majority of Mitsubishi Corporation’s
Scope 3 emissions category”: Category 11 emissions from use of sold products, such as coal or oil and gas.

Contacts
Megu Fukuzawa: megu.fukuzawa@marketforces.org.au
Sachiko Suzuki: sachiko.suzuki@marketforces.org.au
Ayumi Fukakusa: fukakusa@foejapan.org
Yasuko Suzuki: suzuki@kikonet.org

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No short term targets: Mitsubishi’s target to halve emissions by 2031 only includes Scope 1 and 2 emissions,and a limited subset of its Scope 3 emissions (Category 15: Investments). Mitsubishi has no target set for earlier
than March 2031, although many investors are required to set 2025 interim emissions targets.
Existing targets are inadequate: At present, Mitsubishi’s reduction targets rely in part on asset sales and fuelswitching to blue hydrogen or ammonia, although it is impossible to conclude that this will aid in meeting theglobal goal of net zero emissions by 2050. Asset sales do not ensure emission reductions in the real world,
simply passing on responsibility for emissions to another entity. Peer reviewed research has found “thegreenhouse gas footprint of blue hydrogen is more than 20% greater than burning natural gas or coal for heat,”even assuming effective carbon capture and storage (CCUS), which has not been proven at scale.
2. Mitsubishi says it is making decisions based on net zero aligned assumptions - why won’t itdisclose them?
Mitsubishi’s midterm strategy does not disclose the assumptions which form the basis of its new governanceand risk management framework to ensure its businesses are aligned with a net zero by 2050 scenario. Theseare precisely the assumptions that investors need to understand in order to evaluate the climate risk inherent in
Mitsubishi’s net zero by 2050 plan because:●

Mitsubishi’s risk assessment makes unexplained departures from established net zero by 2050
scenarios, notably by assuming LNG demand in Asia to remain “firm for the time being." LNG faces
increasing transition risk in a decarbonising world. 62% of global net renewable capacity additions in2020 had lower costs than the cheapest fossil fuel source - a share likely to have risen in the intervening
months with surging coal and gas prices. Investors therefore need to understand Mitsubishi'sassumptions to gauge the company's resilience in a low-carbon world.

●

Where Mitsubishi’s proposed emissions reductions are reliant on ammonia co-firing in coal-fired
power plants and CCUS, it is crucial for Mitsubishi to disclose its assumptions if the company wants
investors to believe these technologies are viable to contribute to such reductions.

●The emissions targets and assumptions requested in the proposal are based on investor
expectations as outlined by the TCFD, Climate Action 100+, the Net Zero Framework of the Paris
Aligned Investment Initiative, and Investor Expectations for Paris-aligned Accounts (see details in April
2022 investor briefing, Table 3). Moreover, companies operating in the same markets as Mitsubishi,
are already providing disclosure being sought, such as BP, Shell, and Santos.

3. What is known about Mitsubishi’s current exposure indicates significant climate risk
None of the disclosures in Mitsubishi’s midterm strategy or board opinion change or restrict its plans toincrease transaction risk exposure by pursuing new gas projects.

2The International Energy Agency (IEA) finds in its Net Zero Emissions by 2050 Scenario (NZE2050) there is noroom for new oil and gas fields, significant stranded asset risk for LNG facilities, and that gas use for power
must rapidly decline, even in light of the current energy crisis. Yet Mitsubishi is pursuing new projects tosignificantly expand its LNG operations, and has no policies to rule out or in any way restrict their development.
NZE2050 conclusions

Mitsubishi policiesMitsubishi practice“Beyond projects alreadycommitted as of 2021, there are nonew oil and gas fields approved fordevelopment in our pathway.”.

No policy to rule out orin any way restrict
development of new oiland gas fields.

Along with project partners, Mitsubishi plans todevelop the new Udabari gas field and raise
output at the Vorwata gas field to expand theTangguh LNG project in Indonesia.

“Also not needed are many of theliquefied natural gas (LNG)
liquefaction facilities currently
under construction or at theplanning stage.”No policy to rule out orin any way restrict
development of new
LNG projects.

・Plans to increase LNG liquefaction capacity (onan equity share basis) by roughly 20% from12mtpa currently to 14.6mtpa by the mid 2020s.

Absolute emissions from oil andgas fall by 23% from 2020-2030(oil 27%, gas 17%).

No Scope 3 emissions
target related toemissions from the end
use of its oil and gasproducts.

・Recently received a loan to develop LNG
Canada, a major polluting LNG terminal,
objected to by the First Nations people whose
traditional lands this project would impact.
Currently bidding on or sponsoring two LNG
import terminals in Bangladesh and two
proposed LNG to power projects in Vietnam.
With an expected life of 25 years, these projects
will be emitting carbon and processing
carbon-intensive LNG to 2050 and beyond.

4. Articles of incorporation amendments are the sole legal pathway for climate-related proposals
The opinion of Mitsubishi’s Board of Directors questions whether amendments to the articles of incorporation
are appropriate for these forms of shareholder proposals. However the opinion ignores the fact that suchamendments are the sole legal pathway climate-related resolutions can take to avoid being rejected under theCompanies Act, and the proposals in no way limit the directors’ ability to exercise business judgment enshrinedin Japanese corporate law. The legal effect of these shareholder proposals is the same as “specialresolutions” on climate change filed and passed at UK companies including Barclays, BP (99% support in2019), Royal Dutch Shell, Rio Tinto and Anglo American, which take binding effect as part of the companies’constitutions.
Moreover, if, as the opinion claims, Mitsubishi’s current initiatives meet the requests for disclosure made by theproposal, the company should have no issue adopting the shareholder proposals.
For the reasons above, we urge investors to vote for these proposals at Mitsubishi’s Annual General
Meeting on June 24 for the company to maintain and increase its long-term corporate value.

3Disclaimer
Informational purposes only – This communication is provided solely for informational purposes only and isnot, and should not be construed as, investment advice or investment recommendations for the purposes of
the Financial Instrument Exchange Act of Japan.
No joint-exercise of voting rights – Nothing in this written communication, nor in any related oral discussion,is intended to be, nor should it be construed as, an offer, an acceptance or a consent, to enter into anagreement for the joint exercise of voting rights or any other shareholder’ rights for the purposes of theFinancial Instrument Exchange Act and Foreign Exchange and Foreign Trade Act of Japan. If needs be, it ishereby emphasised that each shareholder exercises its shareholder’s rights independently based upon its owndecision and shall not be held liable for its exercise of its shareholder’s rights in any event or in any result, as abreach of any discussion between the shareholders.
No proxy solicitation – Nothing in this written communication, nor in any related oral discussion, is intended tobe, nor should it be construed as, a “solicitation for proxies” for the purposes of the Financial Instrument
Exchange Act of Japan. The shareholder is not soliciting or seeking any authorization by any other shareholders
to exercise their voting rights or any other shareholders’ rights on their behalf or as their agent at the annual
shareholders’ meeting.

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