2nd Explanatory Briefing for MUFG Investors:
Shareholder Proposal for 16th Annual General Meeting of Shareholders of
Mitsubishi UFJ Financial Group
June 1 2021
KEY TAKEAWAYS➢ Current financing policies of MUFG, the 6th largest fossil financier globally, are notaligned with the Paris Agreement goals as they allow for continued financing of coal, oiland gas expansion as well as deforestation. Financing of new fossil fuel development
conflicts with a net zero pathway, according to the IEA’s recent Net Zero by 2050 report.
➢ Despite MUFG’s recent net zero announcement, the group has provided no interim
targets or clear metrics that would guarantee a net zero pathway.
➢ This shareholder resolution will ensure MUFG discloses a clear plan, with metrics andshort- and medium-term targets, that demonstrates effective management ofclimate-related financial risks.
This document is the second explanatory briefing1 for investors of Mitsubishi UFJ Financial
Group (“MUFG”) on the content of the shareholder proposal that was co-filed on March 26th
2021 by Kiko Network, a Japanese environmental non-profit organization, and three individual
shareholders (“co-filers”).2 The proposal will be put to a vote at the 16th Annual General Meetingof MUFG on June 29th. This briefing explains the rationale for supporting the resolution in lightof the recent policy reforms and net zero announcement by MUFG.
The proposed resolution requires MUFG to adopt and disclose a plan “including metrics
and short-, medium- and long-term targets” to align its financing and investments withthe goals of the Paris Climate Agreement. The proposal aims to ensure that investors areable to properly evaluate the climate risk of MUFG's financing and investments and makeinvestment decisions accordingly. The ultimate aim is to maintain and improve MUFG’s
corporate value by reducing the bank’s exposure to climate risk.
Despite some recent improvements in MUFG’s approach to climate risk, which includes steps
towards the Paris goals, the co-filers have resolved to continue with the shareholder

1

The first explanatory briefing for investors was published on March 29 2021. See Kiko Network,
Rainforest Action Network, Market Forces, 350.org Japan, Explanatory material for investors.
2
The 3 individual shareholders are the following individuals affiliated with NGOs: Megu Fukuzawa(Market Forces), Toyoyuki Kawakami (Rainforest Action Network), Takayoshi Yokoyama (350.org Japan).

1

proposal due to the absence of a credible and concrete plan by MUFG to align its
financing and investments with the goals of the Paris Climate Agreement.
In particular, in light of MUFG’s present ranking as the sixth largest global banker of all
fossil fuels and a prominent financier of rainforest-destroying commodities, MUFG’s
current policies and commitments fail to address its ongoing and significant financing ofcarbon-intensive sectors and remain highly deficient in its lack of metrics and short- andmedium-term targets, as detailed below. With the lack of clarity on the plan and pathway toshift MUFG’s finance portfolio to decarbonization, adoption of this proposal would ensure MUFG
discloses metrics and targets to demonstrate effective management of climate-related financial
risks in the shorter term, in line with TCFD recommendations and stated investor expectations.
Table: Paris-Alignment Assessment of MUFG’s Policies & Commitments as of May 2021
Indicator

Paris Alignment
expectation3

MUFG
Commitment

Comments

Shortterm
targetNo financing of fossil fuelexpansion

NONE

MUFG’s pledge to not finance newcoal plants or existing plant
expansions still allows forcontinued financing of coal plants
with CCUS, Mixed Combustion andother technologies.
No restrictions on financing oil, gasor coal mining except for exclusionof MountainTop Removal.

From 2021, year on year
reduction and ultimate phaseout of fossil fuel financing on
a 1.5ºC timeline.

NONE

PARTIAL
No financing for any projectthat involves degradation orloss of natural ecosystems, or
any company that fails tocomply with a No
Deforestation, No Peatland,
No Exploitation (NDPE)
policy at a corporate grouplevel.

MUFG’s only relevant target is tophase out coal power project
finance by 2040, but this excludes
financing towards plants with
CCUS and other technologies.
There are no phase out targets foroil and gas or other forms offinancing.
MUFG adopted a NDPE standard
for palm oil producers only, whichfails to cover the entire palm oilvalue chain, or other forest-risk
commodities such as pulp & paper,soy and cattle.

3

MUFG’s activities and policies have been assessed through the lens of the “Principles for Paris-Aligned
Financial Institutions,” a statement endorsed by 60 NGOs. September 2020.

2

Mid-term
targetFinanced emissions at least
halved from FY2010 by
FY2030.

NONE

FY2030 portfolio-wide target(Scope 3) to be set in FY2022,
possibly as late as March 2023
MUFG has pledged a sustainablefinance target increase to ¥35
trillion by FY2030 (of which ¥18
trillion to environmental activities),and an intention to set targets forCO2 reductions from renewableenergy project finance. If this isused to offset total financed
emissions, it risks delaying
necessary climate action.

All financing to the entire coalindustry zeroed out by 2030 at
the latest in OECD and 2040 in
the rest of the world.

PARTIAL

Coal power phase out target of
FY2040 is limited to project
finance, with no distinction
between OECD and rest of theworld. Coal plants with CCUS, mix
combustion or other technologies
will be excluded from this target.
MUFG has pledged to set a
portfolio reduction target forcorporate finance to coal powercompanies, but its compatibility
with Paris goals is unknown.

Longterm
targetNet Zero financed emissions
by 2050 at the latest, without
reliance on discredited
schemes4, carbon intensity
metrics comparing emissions
to revenue, or offsetting withfinancing for renewables.

YES (withreservations)

No clear plan on how MUFG willachieve carbon neutrality by 2050

MetricDisclosure of overall carbon
footprint, encompassing all
direct and indirect emissions
caused by lending,underwriting, investment,
insurance and other financial
services, and inclusive ofland use emissions.
Methodologies for measuringmust be transparent andverifiable.

NONE

No commitment to disclose
portfolio-wide financed emissions
Current metrics forcarbon-intensive sectors arelimited to loans to the energy andutilities sectors; no metrics forunderwriting or investment, or
financing of other carbon-intensive
sectors such as land-use.

4

Discredited schemes include offsets, bio-energy with carbon capture and storage (BECCS), tree
plantations, or other untested “negative emissions” or geoengineering technologies with the potential forcausing large-scale social and environmental harm.

3Explicit requirements offossil fuel ordeforestation-risk clients,
including a clear compliancetimeline andwhat consequences follow
from failing to meet thoserequirements.

PARTIAL

Some policy requirements exist for
coal, palm oil and forestry, but theyremain weak and lack explicit
protocols for non-compliance.
ESG financing policy does not
apply to some MUFG subsidiaries,
i.e. Bank Danamon in Indonesia.

Given these deficiencies, the co-filers believe that the shareholder proposal is imperative toensuring that MUFG shifts its financing and investment portfolio to be aligned with the Paris
goals without delay. Thus, the co-filers request investors to continue to support this shareholder
proposal by:● Voting in favor of this shareholder proposal at the MUFG Annual General Meeting;● Communicating to MUFG your intention to vote for the proposal, and publicly expressing
your support for this proposal;● Engaging with MUFG on the need to strengthen its investment and financing policies
related to fossil fuels, deforestation and other business activities that increase climate
risk, and encouraging further information disclosure on these matters.
The content of the shareholder proposal and reasons for voting in its favor are explained further
below.

1. Content of the Shareholder Proposal
This shareholder proposal grants MUFG the flexibility to realize the proposal’s aims while taking into
account client relationships and corporate interests. It is not intended to be unduly prescriptive,
disclose confidential commercial information, or limit the authority of the company to formulate orchange its business strategy. See Annex (I) for an explanation on the format of the proposal.
The Proposal
Partial amendment to the Articles of Incorporation (disclosure of a plan outlining the company's
business strategy to align its financing and investments with the goals of the Paris Agreement)
Proposal details
The following clause shall be added to the Articles of Incorporation:“The company shall adopt and disclose in its annual reporting a plan outlining its businessstrategy, including metrics and short-, medium- and long-term targets, to align its financing andinvestments with the goals of the Paris Agreement.”
Reasons for proposal
The aim of the proposal is to manage the company’s exposure to climate change risks, andmaintain and increase its corporate value.
The Paris Agreement aims to strengthen the global response to the threat of climate change bylimiting global temperature rise to well below 2 degrees Celsius above pre-industrial levels and4preferably to 1.5 degrees Celsius, and making finance flows consistent with a pathway towards
that goal.
Although the company has enacted environmental, social and governance policies, it continues
to provide significant finance to fossil fuel expansion and deforestation, which falls far short ofaligning with the Paris Agreement goals. Under the Japanese government’s carbon neutrality goalby 2050, this presents a significant financial and reputational risk to the company. Therefore, it is
proposed to add the clause to the Articles of Incorporation.

2. Policy improvements and 2050 net zero declaration by MUFG do
not justify a withdrawal of the shareholder resolution
Since the filing of the shareholder proposal on March 26 2021, MUFG has made a total of three
announcements which further lay out its approach to climate risk. These are:
1. “Establishment of the MUFG Way and new Medium-term Business Plan” on April 1 2021 5
2. “Revision of the MUFG Environmental and Social Policy Framework” on April 26 2021 6
3. “Carbon Neutrality Declaration” on May 17 20217
While welcoming these improvements, the co-filers have determined that MUFG has notadequately outlined or committed to outline a business strategy, with the necessary metrics andshort- and medium-term targets, that would align its financing and investments with the goals of
the Paris Agreement. This is because(1) MUFG’s updated coal policy allows for the prolonged operation of coal;(2) Weak oil & gas policies place no restrictions on oil & gas financing;(3) Updated forest sector policy does not sufficiently prohibit financing of deforestation,
peatland degradation, and rights abuses;(4) There are no clear metrics or short and medium-term targets to assure Paris alignment;and(5) Traditional engagement with MUFG has failed to provide assurance of Paris alignment.

*****(1) Updated Coal Policy Allows Prolonged Operation of Coal
MUFG’s updated policy stipulates that MUFG will not provide financing for the expansion ofexisting coal-fired power generation facilities, adding to its previous pledge to not finance theconstruction of new coal-fired power plants. However, the policy leaves several exceptions,
stating that “coal-fired power generation equipped with carbon capture, utilisation and storage(CCUS), mixed combustion, and other technologies necessary to achieve the Paris Agreement5

https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20210401-001_en.pdf
https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20210426-001_en.pdf
7
https://www.mufg.jp/dam/pressrelease/2021/pdf/news-20210517-003_en.pdf
65

target may be considered on an individual basis.” MUFG’s policy also continues to allow
financing of thermal coal mining, except where it involves Mountaintop Removal. Moreover,
MUFG’s coal policy does not even apply to its subsidiary in Indonesia, Bank Danamon, which isa financier of the Indonesian coal industry.8
MUFG’s assumption that certain technologies make coal power compatible with Paris
Agreement goals is misguided. Neither CCUS nor mixed combustion with ammonia or hydrogenare believed to contribute to the emissions reduction needed by 2030. CCUS is an unproventechnology that may be available for use in the 2030s at the earliest. Furthermore, the Japanese
government and power companies aim to mix ammonia and hydrogen to thermal power
generation in the amount of 10~20% at most by 2030; however, ammonia and hydrogenproduced from fossil fuels are not carbon free. MUFG’s support for these technologies will only
prolong the life of coal-fired power and is therefore inherently inconsistent with the Paris
Agreement.9
MUFG’s weak coal policy is particularly concerning given its ranking as the 3rd largest lender and13th largest underwriter in the world to the global coal industry, as defined by the Global Coal Exit
List,10 with 17.9 billion USD and 18.1 billion USD provided respectively between October 2018 andOctober 2020. (See Annex-II for further explanation on the methodology behind this analysis.)
In a recent statement by the COP26 Presidency, in its “Call For Climate Action Announcements
From Private Finance Institutions”, the Presidency called on banks to “urgently phas[e] out ofcoal.”11 To align with Paris, MUFG must commit to rapid year-on-year reductions in its financefor all coal companies without exceptions so that its exposure to and finance for thesecompanies are reduced to zero by 2030 at the very latest in the OECD and by 2040 in the restof the world. However, MUFG’s current commitment is limited to a phase out of coal power
project finance by FY2040, with no distinction between OECD and other countries and nocoverage of corporate finance. MUFG also intends to exclude from this 2040 coal phase out
target its financing of coal power with CCUS and other technologies, despite the problems
named above.12 MUFG has pledged to set a portfolio reduction target for corporate finance tocoal power companies, but there is no clarity as to what that target will be or when it will takeeffect.
MUFG’s coal sector policy is also in sharp contrast with many of its international peer banks,
many of whom have already committed to stop financing coal power or coal mining projects andhave further restricted corporate financing of companies engaged in the coal sector. Frenchbanks and Italy’s UniCredit currently possess the best-in-class policies.13
8The exclusion of Bank Danamon is based on an explanation by MUFG during a meeting with theco-filers. For Bank Danamon’s coal exposure, see for example, Market Forces, Adaro, Indonesia’s coal
giant, is seeking to refinance its debt
9
Kiko Network, Japan’s Path to Net Zero by 2050, March 2021, see p.17 and p.19 column
10Loans issued between October 2018 to the end of October 2020. Urgewald, Groundbreaking Research
Reveals the Financiers of the Coal Industry, Feb 25 2021.
11
See Regulation Asia, COP Presidency Calls for Ambitious Climate Commitments, May 17 2021
12This is based on the explanation by MUFG at a meeting held with co-filers.
13
See BankTrack, Banks and Coal (accessed May 31 2021)

6

(2) Weak Oil & Gas Policies Place No Restrictions On Oil & Gas Financing
MUFG’s recent announcements have failed to address its substantial financing of oil and gas
sectors, including its financing of extremely carbon-intensive oil and gas expansion.
According to a recent report entitled Banking on Climate Chaos: Fossil Fuel Finance Report
2021,14 MUFG ranked sixth globally in the amount of loans and underwriting provided to all fossil
fuels among 60 of some of the largest private banks around the world that were evaluated forthe study. In the five years between 2016 to 2020, MUFG provided a total of approximately$148 billion to all fossil fuels, exceeding all other major Asian banks. 41% of this financing went
to 100 key oil, gas, and coal companies with the worst fossil fuel expansion plans. Among oil
and gas sub-sectors, MUFG ranked the 6th largest global banker of fracked oil and gas, 8thlargest banker of LNG export and import terminals, 12th largest banker of tar sands, 12thlargest banker of Arctic oil and gas, and 13th largest banker of offshore oil and gas.
MUFG’s lack of restrictions on oil and gas financing pose significant reputational risks as well as
financial risks from stranded assets, as exemplified by its financing of tar sands infrastructuredevelopment in North America. Since the Paris Agreement, MUFG has been the largest Asianbanker of the tar sands industry. MUFG was the largest Asian backer of the Keystone XL tar
sands pipeline, which was cancelled by the Biden Administration in January 2021 due to its
climate impacts. MUFG is currently the largest Asian banker of Enbridge’s Line 3 tar sands
pipeline now under construction, and has been funding Enbridge every year since the Paris
Agreement amidst intense and prolonged public criticism over the pipeline’s impact on the
climate, Indigenous rights, and the local ecosystem. It is said that the construction of the Line 3
pipeline is critical for expansion of the tar sands industry and will unleash an additional GHG
emissions equivalent to 50 coal power plants.15
Potential emissions from coal, oil, and gas already in production would push the world far
beyond 1.5°C, and likely even 2°C, so any expansion of fossil fuel exploration or extraction, or
expansion of infrastructure that drives continued and expanded extraction, is incompatible with
the Paris Agreement. This was recently confirmed by the International Energy Agency, whose
report concluded that there can be no new fossil fuels in a net-zero by 2050 pathway.16 Limiting
global warming to 1.5°C requires that a rapid, managed phaseout of all existing fossil fuelproduction and use begin now. Instead, MUFG ranks as the largest Asian banker of fossil fuelexpansion17 and has failed to make any commitment to restrict or phase out oil and gas
financing.

14

Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change International,
Reclaim Finance and the Sierra Club, Banking on Climate Chaos: Fossil Fuel Finance Report 2021,
March 2021
15
RAN, Who’s Banking Line 3 and Keystone XL, December 2020
16
IEA, Net Zero by 2050: A roadmap for global energy sector, May 2021
17
Banking on Climate Chaos: Fossil Fuel Finance Report 2021

7

(3) Updated forest sector policy does not sufficiently prohibit financing of
deforestation, peatland degradation, and rights abuses
MUFG is a significant global financier of commodities driving tropical deforestation, and ranks as
the world's seventh-largest banker of palm oil, with over $ 1.2 billion in loans and underwriting to
the palm oil sector between 2016 and 2019 alone.18 While MUFG deserves some credit forstrengthening its policies on palm oil and forestry, the limited scope of application allows MUFG
to continue financing deforestation, peat destruction and rights abuses. Given that protecting
and restoring forests, grasslands, wetlands, seas and other natural ecosystems is essential forclimate mitigation, MUFG’s policies remain insufficient.
In April 2021, MUFG newly adopted a requirement that palm oil clients commit to No
Deforestation, No Peatland, and No Exploitation (NDPE). However, this requirement is currently
limited to clients involved in “developing and managing palm oil plantations,” at the exclusion of
third party suppliers as well as palm oil processors, traders and buyers. Furthermore, the newpolicy does not apply to MUFG’s Indonesian banking subsidiary, Bank Danamon, despite Bank
Danamon being a major conduit for MUFG’s palm oil financing in Indonesia.
MUFG’s lack of a commitment to NDPE for other forest-risk commodities such as pulp andpaper is also concerning from a climate perspective. For example, MUFG is a significant
financier of the second largest pulp producer in Indonesia, Royal Golden Eagle group (RGE),19
whose supply chain is highly dependent on woodfibre grown on carbon rich peatland, with 55%(242,465 ha) of its current plantation base located on peat.20 Degraded peatlands are a major
source of GHG emissions, and plantation development on flammable peat is the major driver ofIndonesia’s recurring fire and haze crisis, which has made Indonesia one of the world’s biggest
GHG emitters.21 RGE and affiliate concessions are major contributors to this crisis, with over
65,000 ha having burned inside their concessions (2015-2019).22 None of these risks are
currently addressed by MUFG’s policies or targets.

(4) There Are No Clear Metrics or Short- and Medium-Term Targets to Assure Paris
Alignment
MUFG has yet to present clear metrics for measuring its progress towards achieving net zero by
2050, and has punted the setting of medium-term targets to FY2022. This allows MUFG to wait
as late as March 2023 to set medium term targets for Paris alignment.
18

RAN, TuK Indonesia, Jikalahari, Mitsubishi UFJ Financial Group falls behind banking peers on ESG
policies for forest-risk commodities, exempts Indonesian banking arm from its group standards, March 29
2021
19
Id.
20
Koalisi Anti Mafia Hutan, Perpetual Haze: Pulp Production, Peatlands, And The Future Of Fire Risk In
Indonesia, November 201921
See The Conversation, Peatlands keep a lot of carbon out of Earth’s atmosphere, but that could end
with warming and development, December 7 202022
Greenpeace, Burning Issues: Five Years of Fires, October 20208

Given the science of climate change and MUFG’s enormous climate footprint, MUFG should atleast be cutting its financed emissions by half by 2030 at the latest. According to “pathway 1” inthe 2018 IPCC “Special Report on Global Warming of 1.5°C” (SR1.5), global carbon dioxide
emissions must be more than halved from 2010 levels by 2030 and then reduced to effectively
zero by 2050 to have even a 50% chance of limiting global warming to 1.5°C. In contrast to
MUFG, banks like NatWest and Lloyds have committed to cutting climate impact in half by 2030.
It is concerning that MUFG has provided no clear metrics to measure its reduction of financed
emissions. This compares with 120 financial institutions who have joined the Partnership for
Carbon Accounting Financials (PCAF), the leading finance industry–led methodology formeasuring and disclosing absolute financed emissions.23 While the methodology is currently
limited to loans and investments, underwriting is expected to soon be added, and the coverageof carbon-intensive sectors is also expected to expand.
MUFG’s lack of transparency on its plans to achieve net zero leaves room for the use ofproblematic metrics and approaches. Measurement methodologies that are limited to emissions
intensity are insufficient because they can still allow for increases in absolute emissions andextraction of new fossil fuel reserves. MUFG has also failed to explain whether they intend to
rely on discredited schemes such as offsets, bio-energy with carbon capture and storage(BECCS), or other untested “negative emissions” technologies to meet its net zero goal.
MUFG’s stance contrasts with HSBC, which has proposed to use scenarios "which are notoverly reliant on negative emissions technologies,"24 and Barclays, which has declared that it
aims to not rely on negative-emissions technologies that do not already exist.25(5) Traditional Engagement With MUFG Has Failed to Provide Assurance Of Paris
Alignment
The co-filers have respectively engaged with MUFG over several years on its financing of fossil
fuels and deforestation and its governance of climate-related risks. The co-filers have also
raised these issues through the publication of reports and writing letters to the bank on its
environmental policy and specific carbon-intensive projects and sectors it has financed. The
co-filers have further engaged with MUFG on its disclosure of climate-related risks and other
TCFD reporting. Since the filing of the resolution, the co-filers have engaged with MUFG a totalof four times to explain the resolution and its expectations of MUFG.
While the company has shown a willingness to engage on these issues, the engagement has
not sufficiently raised hopes that the company is committed to strengthening its climate-related
sector policies necessary for Paris alignment as discussed above or to formulating a strategy foraligning its financing and investments with the goals of the Paris Agreement.
23

Partnership for Carbon Accounting Financials, Financial Institutions Taking Action (accessed May 31
2021)
24
HSBC Group, HSBC announces resolution on climate change, March 11 2021
25
Barclays, Barclays Position on Climate Change, April 2020

9

****
While the co-filers of this proposal acknowledge and welcome the recent steps taken by MUFG,
given the lack of sufficient progress by MUFG to present a clear plan on Paris alignment, wehave resolved to continue with this resolution, and ask investors to vote for this proposal at the2021 General Meeting of Shareholders of MUFG and advise MUFG and the broader public of
this intention. At this time, we urge investors to engage with MUFG on its policies and request
the publication of concrete measures to reduce the risks from financing and investments thatare not aligned with the Paris Agreement.
Contacts:
Kiko Network www.kikonet.org
Contact: Kimiko Hirata, E-mail: khirata[@]kikonet.org
Contact: Yasuko Suzuki, E-mail: suzuki[@]kikonet.org
Market Forces www.marketforces.org.au
Contact: Meg Fukuzawa, E-mail: megu.fukuzawa[@]marketforces.org.au
Contact: Sachiko Suzuki, E-mail: sachiko.suzuki[@]marketforces.org.au
Rainforest Action Network (RAN) www.ran.org
Contact: Hana Heineken, E-mail: hheineken[@]ran.org
Contact: Toyoyuki Kawakami, Email: toyo[@]ran.org
350.org Japan https://world.350.org/ja/, https://350.org/
Contact: Takayoshi Yokoyama, E-mail: taka.yokoyama[@]350.org
Contact: Eri Watanabe, E-mail: eri.watanabe[@]350.org

10ANNEX: Supplementary Explanation
I.

Format of the Shareholder Proposal

The format of this shareholder proposal (amendment to the Articles of Incorporation) reflects thesole legal pathway for a shareholder proposal on climate change in Japan. Shareholder
proposals in the form of amendments to articles of incorporation of Japanese companies are
relatively common in Japan and include the proposal filed at Mizuho Financial Group in 2020,
which garnered 34.5% of shareholder support.26 Their effect is the same as the “special
resolutions” on climate change filed and passed at UK companies including Barclays in 2020
and the same as the recent company-proposed resolution at HSBC.27
In Japan, unlike in some countries in Europe and most states in the US, if the target company
has a board of directors, a shareholder proposal can be made only with respect to the mattersregarding which shareholders are entitled to vote and make a resolution at a shareholders’meeting under the Companies Act of Japan (the “Act”) e.g. disposition of retained earnings;
appointment or removal of directors; approval of mergers and divisive mergers; amendments to
the Articles of Incorporation; or other shareholder resolution matters under the Articles ofIncorporation of the target company (Article 295, Paragraph 2 of the Act). If a shareholder
proposal does not fall into any shareholder resolution matter under the Act or the Articles ofIncorporation regarding which shareholders have no voting rights at a shareholders’ meeting
under the Act or the Articles of Incorporation, such shareholder proposal would simply berejected by the company as unlawful (Article 303, Paragraph 1, limitation proviso in theparenthesis, of the Act).
Therefore, in Japan, the formality of a shareholder proposal for a resolution in which ashareholder can specify the contents of its requirement is normally limited to a proposal toamend its Articles of Incorporation in part. It is clearly a shareholder resolution matter under
Article 466 of the Act. Any shareholder proposal that simply states its requirement without using
the form of an amendment to the Articles of Incorporation and calls for a shareholder resolution
would not be placed on the ballot as an agenda item at the shareholder meeting due to its
illegality, unless it falls into a different shareholder resolution matter under the Act or the Articles
of Incorporation of the target company. For the reasons mentioned above, this proposal ismade legally in the form of an amendment in part to the Articles of Incorporation in accordancewith the Companies Act of Japan.
II.

Methodology behind Analysis of MUFG Financing

1. Loans & Underwriting for All Fossil Fuels and Certain Sub-sectors since Paris Agreement

26

Kiko Network, Voting results of shareholder resolution for Mizuho Financial Group (2nd tally), January
21 2021
27
HSBC Holdings, Notice of the 2021 Annual General Meeting, 24 March 2021

11

Analysis of MUFG’s financing of all fossil fuels and certain sub-sectors such as tar sands isbased on Banking on Climate Chaos: Fossil Fuel Finance Report 2021, published on March
24 2021.28 This analysis covered the world’s 60 biggest relevant banks by assets, according to
the S&P Global Market Intelligence ranking from April 2020.
The report assessed each bank’s involvement in relevant corporate lending and underwritingtransactions — including project finance where data were available — from 2016 through 2020
(in U.S. dollars). Each transaction was weighted based on the proportion of the borrower orissuer’s operations devoted to the sector in question. For the league tables measuring financing
for all fossil fuels (approximately 2,300 fossil fuel companies), and the top fossil fuel expanders(100 companies, as a subset of the above), transactions were adjusted based on eachcompany’s fossil fuel-based assets or revenue. For sector financing (30-40 top companies ineach subsector), each transaction was weighted based on the proportion of the borrower orissuer’s operations devoted to the subsector in question. These adjusters were provided by
Profundo. Transaction data were sourced from Bloomberg Finance L.P. (where the value of atransaction is split between leading banks), and IJGlobal.
2. Loans & Underwriting to the Coal Industry At Large
Analysis of MUFG’s financing to the coal industry at large is based on the Global Coal Exit List
(GCEL) financing research, published on February 25 2021.29 The GCEL aims to identify allcompanies that play a significant role in the thermal coal value chain. In contrast to many otherdatabases, the GCEL therefore includes not only coal miners and coal power producers, butalso companies involved in coal exploration, coal processing, coal trading, coal transport &logistics, coal equipment manufacturing, coal-related O&M and EPC services andCoal-to-Liquids as well as Coal-to-Gas production. The GCEL currently provides thermal
coal-related data for 935 parent companies and over 1,800 subsidiaries and joint ventures. It,
however, does not cover coal used for cement or steel production.
Research into corporate loans, credit and underwriting facilities provided to the selectedcompanies utilized financial databases Bloomberg, Refinitiv and IJGlobal. In contrast to otherrankings, this research does not use any adjusters, meaning the full sum a bank is providing toa coal company is taken into account. (However, clear green financing has been excluded.) In
the case of large, diversified companies, it is likely that not all financing will be used for the coalpart of the business.
3. Loans & Underwriting to Deforestation-Risk Commodities in Tropical Forest Regions
Analysis of MUFG’s financing of forest-risk commodities is based on the Forests & Financedatabase, which assesses the financial services received by over 300 companies directly
involved in the beef, soy, palm oil, pulp and paper, rubber and tropical timber (“forest-risk
sector”) supply chains, whose operations may impact natural tropical forests in Southeast Asia,
28
29

Banking on Climate Chaos: Fossil Fuel Finance Report 20201, Methodology FAQ, March 2021
Urgewald, Financial Backers of Global Coal (accessed May 31 2021)

12

Central and West Africa, and Brazil.30 Financial databases (Bloomberg, Refinitiv,
TradeFinanceAnalytics, and IJGlobal), company reports (annual, interim, quarterly) and othercompany publications, company register filings, as well as media and analyst reports were used
to identify corporate loans and underwriting facilities provided to the selected companies for thedesignated period.
This research provides a deal-level dataset of specific relationships between selectedcompanies and any linked financial institution. Of the more than 300 companies researched,
only 230 companies had identifiable financing where the financier, financing amount, and startdate were known within the period of study. Companies with business activities outside of theforest-risk sector had recorded amounts reduced to more accurately present the proportion offinancing that can be reasonably attributed to the forest-risk sector operations of the selectedcompany. Further adjusters were calculated for companies operating in multiple geographies
within the scope of this research.
Disclaimer
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 aconsent, to enter into an agreement for the joint exercise of voting rights or any othershareholder’ rights for the purposes of the Financial Instrument Exchange Act and Foreign
Exchange and Foreign Trade Act of Japan. If need be, it is hereby emphasized that eachshareholder exercises its shareholder’s rights independently based upon its own decision andshall not be held liable for its exercise of its shareholder’s rights in any event or in any result, asa breach of any discussion between the shareholders.
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 Act of Japan. The shareholder is not soliciting or seeking
any authorization by any other shareholders to exercise their voting rights or any othershareholders’ rights on their behalf or as their agent at the annual shareholders’ meeting.
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."30

Forests & Finance, Methodology (accessed May 31 2021)13