$1.8trn Japanese ‘megabank’ Mizuho faces country’s first climate resolution

Motion asks financial services giant to disclose climate risk and plan to align with Paris agreement

Japan’s first ever climate resolution has been filed at Mizuho Financial Group – one of the country’s three “megabanks” with a whopping  $1.8trn in group-wide assets – calling on it to disclose its climate risks and publish a plan to align its financial activities with the Paris climate accord.

The NGO that filed the proposal, Kiko Network (Japanese for “climate network”), said Mizuho is “well behind the curve” in managing its climate risk, and called on investors to back the proposal.

“As the world’s largest private lender to coal developers, Mizuho is uniquely exposed to climate risk,” said Kimiko Hirata, International Director of Kiko Network. “However, investors are currently in the dark. They have a right to know if the company has a comprehensive plan to demonstrate how this risk will be managed and how the company will meet the goals of the Paris Agreement.”

Mizuho will receive the resolution today. The date of Mizuho’s 2020 AGM has not been announced yet, but usually takes place towards the end of June.

Hirata told RI the group is going to engage with investors to get their support. While filing resolutions is common internationally it is a "quite new and unknown approach" in Japan, Hirata added.

A BankTrack report from December last year found that Mizuho had provided nearly $16.8bn to coal developers between 2017 and 2019, and the financial behemoth is reportedly considering financing the controversial proposed Vung Ang coal-fired power station in Vietnam.

Kiko Network said Mizuho is falling behind its peers regionally and globally, with Singaporean banks DBS, OCBC and UOB Bank having ruled out all lending to coal power projects. UK bank Standard Chartered, which has significant business in emerging markets, has recently released a policy which seeks to phase out support for coal power with Paris-aligned timelines.

Mizuho is a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) and a signatory of the Principles for Responsible Banking.

Japan doesn’t have a strong history of shareholder engagement. The 2014 Stewardship Code and 2015 Corporate Governance Code are widely regarded as having been game changers for investor-company dialogue in Japan, and for ESG more broadly – but shareholder proposals are still often seen as overly confrontational, with many investors preferring direct engagement.

Last year, the Climate Action 100+ initiative paired domestic Japanese investors with CalPERS and CalSTRS in a bid to bring engagement experience together with domestic market and cultural expertise.

According to Morningstar, Mizuho’s top shareholders are Nomura Asset Management, Vanguard, BlackRock, Daiwa Asset Management, Nikko Asset Management, Northern Trust, Mitsubishi UFJ Asset Management, M&G Investment Management, Fidelity and State Street.

Nomura, BlackRock, Nikko, Mitsubishi UFJ, M&G, and Fidelity are all members of Climate Action 100+, though Mizuho isn’t a target company, as the initiative does not extend to investee firms in the financial sector.