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Japan's Norinchukin Bank and Dai-ichi Life ranks top in latest assessment

Wednesday, December 9, 2020

The latest policy assessment scores of the Japanese Fair Finance Guide are out, and Norinchukin Bank and Dai-ichi Life are among the top scoring financial institutions. They score 3.4 and 3.3 out of ten (10) points respectively. Both financial institutions improved on their climate change policies, but still lag far behind their European counterparts who score at an average of 6.1 points with the Fair Finance Guide.

Among the banks, Mitsubishi UFJ, Mizuho and Sumitomo Mitsui Trust are close in line, but Norinchukin’s clearer disclosure of policies made the difference. Among the insurance companies, Dai-ichi Life notably improved their score by clarifying that they expect investees to comply with the UN Global Compact and the OECD Guidelines for Multinational Enterprises. In addition to utilizing these international standards, Dai-ichi-Life also closely follows Japanese National Action Plan (NAP) on Business and Human rights in investment decisions.

Key points from the scores:

Inhumane weaponry:

Among target financial institutions, all but Meiji Yasuda Life and Tokio Marine disclosed a ban policy regarding cluster munition producers. Regarding nuclear weapons, Resona is the only institution to ban “developing, producing and maintaining” nuclear weaponry. Mitsubishi UFJ, Mizuho, SMBC and Sumitomo Mitsui Trust each have policies banning specifically the production of nuclear weapons. None of the eight insurance companies have policies on nuclear weapons.

Palm oil:

All banking groups except for Japan Post Bank utilize third party certification mechanisms for financing decisions. None of the insurance companies have disclosed policies.

Coal-fired power generation:

Japan Post Bank, Japan Post Insurance, Tokio Marine, MS&AD and SOMPO newly adopted policies to regulate project financing for new coal-fired power plants. With this commitment, all seven banks and eight insurance companies have established policies to limit coal financing. However, Mitsubishi UFJ, Mizuho, SMBC, Sumitomo Mitsui Trust, Japan Post Bank, Meiji Yasuda Life, Tokio Marine, MS&AD and SOMPO all have broad exceptions that puts their commitment into question.

Consistency with the Paris Agreement:

Subsidiaries of Mitsubishi UFJ and Sumitomo Mitsui Trust compared their portfolios with the 2-degree target from the Paris Agreement and disclosed that they will exceed the target GHG emission by 2042 and 2037 respectively. No other companies disclosed such research results and thus further research and disclosure is needed. Meanwhile, all companies are expected to swiftly review their portfolios to keep within the bounds of a 1.5-degree target.

Fair Finance Guide Japan is run by a network of non-profit organizations based in Japan: Alternative Peoples Linkage in Asia (APLA), Japan Center for a Sustainable Environment and Society (JACSES), Japan Tropical Forest Action Network (JATAN) and Pacific Asia Resource Center (PARC). This is a joint press release by these four organizations.

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