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SMBC Group

Shareholder Resolution

Despite committing to net-zero emissions by 2050 and the goals of the Paris Agreement, Sumitomo Mitsui Financial Group (SMBC Group) has failed to align its policies with these goals.

Market Forces, 350.org Japan, Rainforest Action Network and Kiko Network submitted a shareholder resolution to SMBC Group, asking the group to set and disclose short- and medium-term greenhouse gas emission reduction targets for its financed emissions and measures to ensure no contribution to new fossil fuel development.

The proposals also seek to maintain and improve SMBC Group’s corporate value by reducing the bank’s exposure to climate risk.

We recommend that investors vote in favor of the shareholder resolution filed by Market Forces, 350.org Japan, Rainforest Action Network and Kiko Network.

Download the resolution and the supporting statements here Download the investor briefing here

Although SMBC Group’s commitment to its portfolio-wide net-zero target by 2050 represents a crucial step, it alone does not ensure that the company is on track to achieve it. This long-term target can be only credible when combined with short- and medium-term targets.

UNEP’s Emissions Gap Report 2019 indicated that short- and medium-term targets are crucial. According to the report, we need a 7.6% annual emissions reduction between 2020 and 2030 to stay below 1.5ºC warming. It also emphasized that annual reductions by 2025 are especially crucial because if we delay, “the steeper and more difficult the cuts become,” and “by just 2025, the cut needed will be 15.5% each year, making the 1.5°C targets almost impossible.”

While SMBC Group has made commitments to set interim targets through the Net Zero Banking Alliance, these only apply to lending and include targets from 2030 onwards.

The filers of the resolution has engaged with SMBC Group over several years and more recently about its climate-related risks policies. While SMBC Group has shown a willingness to engage on these issues, the company has failed to propose to disclose its short- and medium-term targets and how they align SMBC Group’s financing and investments with the goals of the Paris Agreement.

While we recognize that SMBC Group has made some progress in strengthening its climate-related targets and policies (including their coal mining sector policy), they do not address the scale and urgency needed to prevent catastrophic climate consequences. The bank’s policies and practices are still far from aligned with the goals of the Paris Agreement.

We believe SMBC Group’s financial risk will remain extremely high if the business is to continue as usual. Therefore it is our recommendation that investors vote in favor of the shareholder resolution filed by Market Forces, 350.org Japan, Rainforest Action Network and Kiko Network.

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