Climate groups want Japan's top banks to have board oversight on green goals while lending

A coalition of climate groups filed shareholder proposals with Japan's top three banks, including Mitsubishi UFJ Financial Group, calling for stricter board oversight of climate-related risk, according to a Reuters report.

Australia's Market Forces, Japan's Kiko Network and a representative of Rainforest Action Network have sent the proposals, which marks the first time when climate groups targeted the boards of the banks to pressure the lenders on climate change.

The proposals focus on board oversight of climate-related business risks and seek to make - Mitsubishi UFJ, Sumitomo Mitsui Financial Group and Mizuho Financial Group - disclose how they evaluate director competency for such oversight, the report said.

Climate groups sought to mandate banks disclose credible transition plans to meet carbon-neutral targets by 2050.

The proposals reflect governance standards set by the International Sustainability Standards Board (ISSB) that require disclosure around how governance bodies oversee sustainability-related risks.

The latest proposals from the climate groups will be voted on at the banks' annual general meetings in June.

Last year, shareholders voted down climate proposals at the banks, with the proposals getting around 20 percent backing, according to the Reuters report.

The climate groups are also calling on the banks to disclose how they assess fossil fuel sector clients' climate change transition plans and what they plan to do in case of faliures to produce credible plans.

Shareholder activism on climate change has gained momentum in Japan since 2020, when Mizuho became the first listed company in the country to face a climate-related vote.