INVESTOR BRIEFING
31 May 2023

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Contact: Eri Watanabe, Kentaro Nunokawa, Binbin Mariana, Yasuko Suzuki

Mitsubishi UFJ Financial Group (TSE: 8306) (MUFG)
Sumitomo Mitsui Banking Corporation Group (TSE: 8316) (SMBC Group)
Mizuho Financial Group (TSE: 8411) (Mizuho) (collectively megabanks)

Analysis of megabanks’ updates and board opinions confirms the needfor climate-related shareholder proposals
Further to the detailed investor briefing dated April 10, 2023, this additional brief demonstrates themegabanks’ Board of Directors’ opinions and the recent SMBC Group’s updated announcements
fail to address the core substance of the shareholder climate-related proposals to be voted on attheir upcoming Annual General Meetings.
The megabanks still do not disclose meaningful measures to align their exposures tocarbon-intensive sectors such as power, coal mining, and oil and gas with the megabanks' own net
zero commitments.
This failure leaves the megabanks exposed to unacceptable financial risk. Investors are therefore
urged to vote for these proposals at the megabanks’ Annual General Meetings.
1. Insufficient updates to megabanks’ targets and policies
MUFG, SMBC Group and Mizuho's updated policies1 still lack key and credible short and mid-term targets
for emission-intensive sectors such as power, coal mining, and, most glaring, oil and gas, and remain outof line with the International Energy Agency’s Net Zero Emissions by 2050 scenario (NZE) and therequirements of the Net Zero Banking Alliance (NZBA). Please see the table below for details.
Despite their updates, none of the megabanks have given shareholders confidence their plans would
address the concerns the shareholder proposals seek to address, which have been raised repeatedly
during the proponents’ extensive engagement with the megabanks. MUFG is especially lagging behind
SMBC Group and Mizuho in setting coal mining targets. All the three banks remain well behind peer banks
such as DBS Bank, OCBC Bank, and HSBC, particularly regarding oil and gas sector policies and targets.

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The shareholder proponents held engagement meetings with each megabank regarding these updates.

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Table 1: Comparison of megabanks’ policies and targets with IEA NZE and NZBA guidance2

2. SMBC Group’s Transition Finance Playbook fails to push clients to 1.5 degree-alignedtransition
SMBC Group published the Transition Finance Playbook (the Playbook) on May 24, 20232. However, thePlaybook fails to demonstrate that the framework will ensure SMBC Group clients transition to align with
the Paris Climate agreement’s 1.5 degree goal and, by extension, how the climate-related risk SMBC
Group is facing will be managed.
●●●The Playbook defines gas exploration and production as transition activities, directly
contradicting IEA NZE’s finding that no new gas fields are needed in the pathway to net zero
emissions by 2050, and locking in gas production for multiple decades.
It allows hydrogen and ammonia co-fired with gas and coal power generation up to 2049,inconsistent with the NZE’s requirement of complete decarbonization in the power sector inadvanced economies by 2035.
Other than the entirely insufficient requirement that “the borrower committed to net-zero by 2050”,
SMBC has not disclosed its criteria or methodology to evaluate its customers’ transition plan3.

The Playbook places too much reliance on the Japan Ministry of Economy, Trade and Industry (METI)’s
policy documents, which are not themselves either science-based or 1.5 degree-aligned. Investors
need to be confident that SMBC Group will make its own assessments and manage transition risks
accordingly, rather than placing blind trust in METI’s roadmap.
Although the Playbook fails to demonstrate SMBC Group has a credible plan to meet its net zero goal, weacknowledge that, unlike MUFG and Mizuho, SMBC Group at least discloses its definition of transition
finance and some related decision processes.

3. The megabanks fail to address the substance of the proposals, namely setting anddisclosing credible, science-based transition plans aligning their portfolios with net zero by2050 scenarios
MUFG, SMBC Group, and Mizuho published opinions of the Board of Directors which fail to address core
substance of the shareholder proposals to set and disclose science-based transition plans with credibleinterim targets as described in Table 1.
Also, the banks have argued that amendments to the articles of incorporation are not appropriate for theseforms of shareholder proposals. However, the opinion ignores the fact that such amendments are the sole
legal pathway climate-related resolutions can take to avoid being rejected under the Companies Act, andthe proposals in no way limit the directors’ ability to exercise business judgement enshrined in Japanese
corporate law.

2The proponents held an engagement meeting with SMBC Group on the Playbook.
For example, Australian oil and gas companies such as Woodside Energy and Santos claim they are committed tonet zero by 2050, but are actively undermining that goal by significantly increasing oil and gas production andemissions.
33Moreover, if the megabanks are “earnestly” working on climate action in line with their commitments to net
zero emissions by 2050, as they claim in the Board of Directors’ opinion, there is no reason they should
refuse to add the proposals to their articles of incorporation.
___________For the reasons above, we urge investors to vote for the climate risk-related shareholder proposals
at MUFG, SMBC Group and Mizuho’s Annual General Meetings, in order to maintain and increaselong-term corporate value.

DISCLAIMER:
Informational purposes only – This communication is provided solely for informational purposes only and is not,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, isintended to be, nor should it be construed as, an offer, an acceptance or a consent, to enter into an agreement forthe joint exercise of voting rights or any other shareholder’ rights for the purposes of the Financial Instrument
Exchange Act and Foreign Exchange and Foreign Trade Act of Japan. If needs be, it is hereby emphasised that eachshareholder exercises its shareholder’s rights independently based upon its own decision and shall not be held liable
for its exercise of its shareholder’s rights in any event or in any result, as a breach of any discussion between theshareholders.
No proxy solicitation – Nothing in this written communication, nor in any related oral discussion, is intended to be,
nor should it be construed as, a “solicitation for proxies” for the purposes of the Financial Instrument Exchange Actof Japan. The shareholder is not soliciting or seeking any authorization by any other shareholders to exercise theirvoting rights or any other shareholders’ rights on their behalf or as their agent at the annual shareholders’ meeting.
This is a non-commercial product for public dissemination only. Not for sale.

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