Banking on
Climate Change
S U M M A RY BR IEF IN G F O R IN VESTORS, BA NKS, A ND REGUL ATORS IN JA PA N

INTRODUCTION
This is a summary briefing of the 2018 edition of Banking on Climate Change, the ninth annual fossil fuel finance report card, which grades 36
commercial banks from Australia, Canada, China, Europe, Japan, and the United States on their policy commitments regarding extreme fossil
fuel financing and calculates their financing for these fuels from 2015 to 2017. Extreme fossil fuels are some of the most carbon-intensive andfinancially risky fuels and include coal mining, coal power, extreme oil (tar sands, Arctic, and ultra-deepwater oil), and liquefied naturalgas (LNG) export from North America. This summary is supplemented by analysis of bank alignment with the Recommendations of the G20
Task Force on Climate-Related Financial Disclosure (TCFD) and Japanese bank financing of coal-fired power plant development globally. The
full report also details the risks of financing any expansion of the fossil fuel industry, assesses the shortcomings of the Equator Principles withrespect to protection of human rights in the case of project finance, and provides case studies on each of the extreme fossil fuel sub-sectors.
The full report can be found at www.RAN.org/reportcard.

KEY FINDINGS
2017 was a year of backsliding. Financing for extreme fossil fuels overall went from $126 billion in 2015, to $104 billion in 2016, following
adoption of the Paris Climate Agreement, then up to $115 billion in 2017. Assessment of bank policies shows that no banks have yet trulyaligned their business plans with the Paris Climate Agreement, whose goals to limit temperature rise “well below 2 degrees Celsius” requirebanks to cease financing expansion of the fossil fuel sector and the full extraction of reserves from fields and mines that are already operating.
»» Mitsubishi UFJ (MUFG) leads Japanese bankfinancing of extreme fossil fuels, globally ranked #11,
followed by Mizuho (#17), and Sumitomo Mitsui
Financial Group (SMFG) (#23).

Finance for Extreme Fossil Fuels$140 B»» Tar sands financing is the single biggest driver of theoverall increase in extreme fossil fuel financing, growing$105 Bby 111 percent from 2016 to 2017. Tar sands financing
totaled $98 billion, led by Royal Bank of Canada (RBC),
Toronto Dominion (TD), and JPMorgan Chase. MUFG,$70 B

Mizuho, and SMFG are financing all three major tar
sands pipeline companies: Kinder Morgan, Enbridge
and TransCanada.

$35 B»» Coal power financing has stagnated, but remains
one of the more highly funded sectors at $94 billion
from 2015 to 2017. Chinese banks, led by Industrial

0
2015

2016

2017

and Commercial Bank of China (ICBC) and China

TAR SANDSLNG EXPORT

Construction Bank, and MUFG are the biggest backers

ARCTIC OILCOAL MINING

of coal power. Mizuho is ranked #9, while SMFGULTRA-DEEP OIL

COAL POWER

increased its financing by 79% from 2016 to 2017.

METHODOLOGY
The report card calculates three years of bank lending and underwriting to the top 30 companies by reserves, capacity or production in eachof the extreme fossil fuel subsectors, in addition to six tar sands pipeline companies. Financing amounts are weighted based on the fossil fuelcompany’s activities in a given subsector.

Fossil Fuel Bank Policy Ratings:“A” RANGEBank prohibits finance for all projects and companies operating in the sector, with public reporting on implementation.

“B” RANGEBank prohibits and/or phases out finance for some companies in the sector.

“C” RANGEBank prohibits finance for some or all projects in the sector.

“D” RANGEBank conducts due diligence in the sector.

“F” RANGEBank has no public policy.

FOSSIL FUEL FINANCING POLICIES: A Critical Indicator of Climate Risk Management
Japanese and Chinese banks are clear laggards in their management of climate risk from fossil fuel financing. In contrast, the French banks
have recently stepped up their commitments to reduce fossil fuel exposure (see below), a change that has been attributed in part to theintroduction of legislative and regulatory measures, including Article 173 in France.1 However, the lack of comprehensive policies from all banks
on extreme fossil fuels means that last year’s increase in financing could continue and even accelerate in the years to come.

Leading Bank Practices
BNP Paribas on extreme oil and gas:»» Prohibits project financing.
TA R S A NDS
OIL»» Excludes any companies with more than 30% of their business in tar sands.
»» States that the bank will not directly finance the proposed pipelines — Keystone XL,Trans Mountain, or Line 3 — nor some significant tar sands pipeline companies.

A RCTIC»» Prohibits project financing.

»» Prohibits financing of LNG terminals that predominantly liquefy and export gas
LNG

from shale.
»» Prohibits financing for some companies significantly active in this sector.

Crédit Agricole on coal:

COA L
MI NING

COA L
POWER

2

“As an internationalbank, our role isto help drive theenergy transitionand contribute to thedecarbonisation of
the economy”- Jean-Laurent Bonnafé,»» Prohibits direct financing for coal mines.
»» Excludes lending and underwriting for companies with more than 50% of theirrevenue from coal mining.

CEO of BNP PARIBAS,
October 20172»» Prohibits direct financing for coal plants»» Excludes lending and underwriting for companies with more than 50% of theirbusiness from coal power that are not diversifying.

BA NKING ON CLIMATE CH A NGE 2018: SUMMA RY BRIEFING FOR INVESTORS, BA NKS, A ND REGUL ATORS IN JA PA N

FOSSIL FUEL FINANCING: A Critical Indicator of Exposure to Climate Risk
It is environmentally, reputationally, and often financially risky for banks to back extreme fossil fuel projects and companies. The TCFD
recommendations acknowledge these risks and encourage the financial sector to assess and disclose climate-related risks and opportunities,
as well as climate governance and strategy and the metrics used to assess the impact of climate-related risks.3 However, recent analysis of thebanking sector’s alignment with TCFD has shown that many large banks, especially in Asia, are failing to properly assess or manage climate
risks in their portfolio.4 Fossil fuel financing can also give rise to reputational risk and human rights risks, as demonstrated by the controversial
Dakota Access Pipeline (DAPL), which led cities to divest US $4.3 billion in funds from involved banks.5 MUFG and Mizuho were among the leadarrangers for the DAPL project loan, and SMFG was a lender. All three banks currently face similar risks from their financing of the three major
proposed tar sands pipelines — Enbridge’s Line 3, Kinder Morgan’s Trans Mountain, and TransCanada’s Keystone XL (KXL) — which threaten
grave damage to the climate, ecosystems, and local communities, and are facing determined Indigenous-led resistance. Mizuho, MUFG and
SMFG finance Enbridge and TransCanada, and fund the Trans Mountain project directly.6 The full report card includes a case study on Line 3,
which threatens irrevocable and devastating cultural damage to the Ojibwe people, would violate their Treaty rights, and is strongly opposed by
the five directly impacted Ojibwe tribes along the proposed route in Minnesota.

Key ESG Risks in Extreme Fossil Fuel Sub-sectors
Coal Mining

Arctic Oil»» Significant health, safety, and environmental impacts»» In structural decline due to decreasing renewables prices
and surge in national, state and municipal commitments
to go coal-free»» Threatens Alaska Native rights and Indigenous
sovereignty»» Risk of unmanageable oil spill threatens the Alaska
National Wildlife Refuge, one of the world’s most pristine»» Case Study: Adani’s proposed Carmichael coal mine(see full report)

and beautiful ecosystems»» Case Study: Expansion of oil and gas extraction in Alaska(see full report)

Coal Power»» Responsible for 45% of global energy-related CO2 emissions.7

Ultra-deepwater Oil»» Significant source of SO2, NOx and particle pollution,»» Necessitates extreme infrastructure with significant risk

causing premature deaths.8of oil spill»» Among the most water-intensive fuels.

9»» Threatens vulnerable ocean ecosystems»» Case Study: Marubeni’s coal plant expansion (see back page)LNG Export
Tar Sands»» At least twice as carbon-intensive as natural gas, and»» Among the most carbon-intensive types of oil»» 150+ First Nations and Tribes from across Canada andthe US oppose tar sands expansion.10»» Destroys Alberta’s Boreal forest, one of the last wild
forests left in the worldpotentially more carbon-intensive than coal due tomethane leakage»» Drives fracking and pipeline buildout upstream»» Fracked-gas extraction and export infrastructure
threaten health and safety of local communities»» Case Study: Pembina Pipeline’s Jordan Cove LNG
terminal & Pacific Connector Gas Pipeline (see full report)

RECOMMENDATIONS
Banks Should:»» Align their policies and practices with the Paris Climate Agreement goals, by ending all financing for extreme fossil fuels and for
expansion of the fossil fuel industry.
»» Ensure financing fully respects all human rights, particularly the rights of Indigenous Peoples.
»» Report on their actual exposure to climate-related risks in all non-financial sectors identified by the TCFD, how these are managed andhow this will affect their own portfolios.

BA NKING ON CLIMATE CH A NGE 2018: SUMMA RY BRIEFING FOR INVESTORS, BA NKS, A ND REGUL ATORS IN JA PA N

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HOW THE BANKS STACK UP: Extreme Fossil Fuel Finance (2015-2017) and Select Bank Grades
TOTAL

BANK

EXTREME
FOSSIL FUELFINANCING

2017
VS

2016

COA L
MINING

COA L
POWER

TA R
S A N DSA RCTICO IL

ULTR ADE E P WATE R

LN G
E XP O RTOVERALL
GRADE(6 SECTORS)

COA L
M IN IN GC OA LPOW E RTA R
SA N D S

JAPAN
MUFG

$11.170 B$192 M$4.471 B$1.583 B$46 M$1.770 B$3.108 B

F

F

F

F

MIZUHO$8.837 B

$191M$3.310 B$1.020 B$104 M$1.845 B$2.368 B

D-

D-

D-

D-

SMFG

$4.851 B

$79 M$906 M$501 M$39 M$840 M$2.487 B

D-

D-

D-

D-

AGRICULTURAL BANK OF CHINA$14.183 B$5.671 B$7.435 B$681 M-$396 M

-

F

F

F

F

BANK OF CHINA$20.310 B$9.464 B$9.064 B$565 M$110 M$1.088 B

$20 M

F

F

F

F

CHINA CONSTRUCTION BANK

$26.616 B

$12.608 B$13.264 B$465 M-$280 M

-

F

F

F

F

ICBC

$25.158 B

$8.215 B$13.463 B$657 M<$0.1M$1.668 B$1.154 B

F

F

F

F

BARCLAYS$10.927 B

$371 M$3.875 B$3.004 B$306 M$2.444 B$928 M

D+

B-

C

D+

BNP PARIBAS$7.043 B$441 M$2.025 B$995 M$528 M$1.991 B$1.063 B

C+

B

B-

B

BPCE/NATIXIS$1.183 B-$454 M

$22 M

$64 M

$272 M$371 M

C-

B

B-

B-

CRÉDIT AGRICOLE$4.577 B$429 M$1.520 B$322 M$133 M$1.116 B$1.058 B

C

B

B-

C+

CREDIT SUISSE$7.825 B$1.334 B$2.500 B$854 M$36 M$576 M$2.525 B

D+

C+

C

D

DEUTSCHE BANK

$9.974 B$2.581 B$1.549 B$1.451 B$448 M$3.206 B$739 M

D+

B-

C+

D

HSBC

$14.322 B

$483 M$2.141 B$3.907 B$280 M$4.827 B$2.683 B

D+

C+

C

D+

ING

$3.442 B$252 M$576 M$25 M$230 M$479 M$1.881 B

C

B

B

B-

RBS

$1.122 B$141 M$535 M

$47 M

$7 M

$305 M

$88 M

D+

C-

C-

D

SANTANDER$4.241 B$98 M$658 M

$54 M

$33 M

$2.623 B$775 M

D

D

C-

D

SOCIÉTÉ GÉNÉRALE$7.211 B$573 M$672 M$566 M$286 M$1.913 B$3.201 B

C

B-

B-

C+

STANDARD CHARTERED$3.125 B$147 M$823 M$79 M$0.5 M$839 M$1.236 B

C-

C-

C-

D-

UBS

$4.477 B$375 M$2.667 B$222 M$18 M$694 M$502 M

D

C+

C

D+

UNICREDIT$1.917 B$459 M$556 M$29 M$136 M$613 M$125 M

D-

D

D+

D-

BANK OF AMERICA$13.617 B

$447 M$2.788 B$3.014 B$182 M$4.542 B$2.644 B

D

B-

D-

D

CITI

$14.008 B

$1.313 B$3.631 B$2.908 B$241 M$4.479 B$1.436 B

C-

B-

C-

D+

GOLDMAN SACHS$8.987 B$3.003 B$1.730 B$737 M$61 M$1.425 B$2.031 B

D+

C-

C

D+

JPMORGAN CHASE$26.118 B

$1.212 B$3.930 B$10.889 B$299 M$6.870 B$2.918 B

D+

B-

C

D+

MORGAN STANLEY$10.080 B

$291 M$1.795 B$1.240 B$139 M$3.236 B$3.379 B

C-

B-

C

D+

WELLS FARGO$4.651 B

-$3.094 B$1.221 B$55 M$275 M

$7 M

D+

B-

D

D+

BANK OF MONTREAL$8.381 B$244 M-$7.749 B$199 M-$189 M

D-

D-

D-

D-

CIBC

$8.772 B



$35 M

-

$8.113 B$397 M$38 M$189 M

D-

D-

D-

D-

RBC

$26.485 B

$254 M$1.830 B$21.700 B$338 M$292 M$2.071 B

D

D-

D-

D+

SCOTIABANK$9.957 B

$130 M$1.411 B$6.014 B$198 M$316 M$1.887 B

D-

D-

D-

D-

TD

$17.522 B

$125 M$427 M$16.835 B$118 M

-

$17 M

D+

C+

D

D

ANZ

$1.044 B$88 M$405 M

$50 M

$8 M

$93 M

$400 M

D

D

C-

D

COMMONWEALTH BANK

$1.513 B$101 M$165 M$15 M$160 M$112 M$960 M

D-

D

D

D-

NAB

$811 M

$491 M$107 M

-

-

$71 M

$142 M

D

B

D-

D-

WESTPAC$815 M

$110 M$108 M$15 M-$133 M$450 M

D

C-

C-

D-

TOTAL

$345.271 B$51.946 B$93.882 B$97.551 B$5.198 B$51.665 B$45.029 B

CHINA

EUROPEUNITED STATESCANADA

AUSTRALIACASE STUDY: Japanese Bank Financing of Coal Plant Developers
Since the Fukushima nuclear power plant disaster in 2011, Japan’s turn towards coal power has been striking, both domestically and overseas.
Mizuho, MUFG, and SMFG have been significant financiers of Japan’s coal expansion, and the largest beneficiary of their financing has been
the diversified Japanese trading company Marubeni Corporation.
In 2010, coal power accounted for 27 percent of Japan’s domestic electricity generation, jumping to 34 percent in 2014, post-Fukushima.
Japan currently has 42 coal plants in the domestic pipeline — which potentially involve nearly 21 gigawatts (GW) of capacity. Japan’s support
for overseas thermal coal generation has been led by state agencies such as the Japan Bank for International Cooperation (JBIC) and Nippon
Export and Investment Insurance, and is planning to support a staggering 32 GW of coal projects overseas, mainly in Southeast Asia.
Mizuho, MUFG, and SMFG, are joining the rush to build new coal plants and are respectively the first, second, and fifth biggest lenders to coalplant developers globally.

Top 10 Lenders to Coal Plant Developers ( T O T A L L O A N S F R O M J A N 2 0 1 4 - S E P T 2 0 1 7 )MIZUHO FINANCIAL GROUP
MITSUBISHI UFJ FINANCIAL GROUP
STATE BANK OF INDIA
INDUSTRIAL AND COMMERCIAL BANK OF CHINASUMITOMO MITSUI FINANCIAL GROUPBANK OF CHINA
ING GROUP
CITIGROUPHSBC
SOCIÉTÉ GÉNÉRALE

0

$3 B

$6 B

$9 B

$12 B

S O U R C E : “Banks vs. the Paris Agreement,” / B A N K T R A C K , U R G E W A L D , L E S A M I S D E L A
TERRE FRANCE, RAINFOREST ACTION NETWORK, RE:COMMON, DECEMBER 2017

One company seeking to benefit is Marubeni, the world’s 26th largest coal plant developer. The company is intent on building out 13,000
megawatts (MW) of new coal plants in nine countries, despite only deriving 10 percent of its current power production from coal power. Often,
JBIC spearheads the financing and thereby attracts participation and interest from a wide range of global commercial banks. These projects
include:»» As consortium leader, the 1,000 MW Cirebon 2 project in Indonesia: Disbursement of loans totaling over $1.7 billion commenced in
November 2017 from financiers including JBIC, MUFG, Mizuho, SMFG, and ING. This has taken place despite continuing legal challenges
and uncertainty concerning the contested environmental permitting for the plant.
»» In partnership with KEPCO, the 1200 MW Nghi Son 2 project in Vietnam: The company was reportedly seeking to secure financing by theend of March 2018 from banks including JBIC, Mizuho, MUFG, SMFG, and Standard Chartered.11 Nghi Son 2 would generate twice asmuch CO2 per unit of power generated as the average coal plant in Vietnam – at a level that will significantly exceed the emissions
intensity limit above which Standard Chartered rules out financing for new coal-fired power plants.
Mizuho and MUFG have been the biggest lenders to Marubeni by far since 2014. Marubeni’s largest shareholders include the Government
Pension Investment Fund of Japan, BlackRock, and Mizuho. Banks and investors with exposure to Marubeni should be concerned about thestranded asset risk of Marubeni’s coal expansion plans. Institutional investors active in calling for portfolio decarbonization in line with the Paris
Agreement could encourage Marubeni to focus on the renewable energy side of its business and get out of coal.
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REFERENCES
1.

ShareAction, Banking on a Low-Carbon Future: A Ranking of the 15 Largest European Banks’ Responses to Climate Change, December 20172.

BNP Paribas announcement of new oil & gas policy,
http://www.bnpparibas.jp/en/2017/10/11/bnp-paribas-takes-further-measures-to-accelerate-its-support-of-the-energy-transition/

3.

TCFD, Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures, June 2017

4.

Boston Common Asset Management, Banking on a Low-Carbon Future: Are the World’s Largest Banks Stepping Up to the Risks & Opportunities of Climate Change?,
Impact Report 20185.

DefundDAPL.org

6.

Rainforest Action Network et al, Funding Tar Sands: Private Banks vs the Paris Climate Agreement, November 2017

7.

International Energy Agency, CO2 Emissions from Fuel Combustion: Overview, 20178.

Greenpeace & Kiko Network, Air quality and health impacts of new coal-fired power plants in the Tokyo-Chiba and Osaka-Hyogo regions, May 2016

9.

International Energy Agency, World Energy Outlook 2016: Water Energy Nexus

10.

Greenpeace & Oil Change International, In The Pipeline: Risks For Funders Of Tar Sands Pipelines, October 201711.

Market Forces, https://www.marketforces.org.au/research/vietnam/nghi-son-2/

Cirebon coal-fired power plant in West Java Province, Indonesia.

P U B L I CAT I O N DAT E : A P R I L 2 0 1 8

P H O T O : F R I E N D S O F T H E E A R T H J A PA N

C O N TACT :Rainforest Action Network
Japan
3rd Floor, 1-23-16 Shinjuku, Shinjuku-ku | Tokyo 160-0022 | Japan.RAN.org
United States
425 Bush Street, Suite 300 | San Francisco, CA 94108 | RAN.org

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