A coalition of climate groups are stepping up pressure on Japan's top three banks to cut financing linked to fossil fuels, filing shareholder resolutions to be voted on at the companies' annual general meetings in June, sources said on April 10.

The groups are targeting megabanks Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group — all key to financing oil and gas projects, said the sources, who declined to be identified as the information is not yet public.

The coordinated effort marks a step up from the past three years, when climate groups targeted one megabank each year, now calling simultaneously for action by the Japanese banks, seen as lagging their global peers in efforts to slash carbon emissions.

The fresh push, led by Australia's Market Forces and Japan's Kiko Network, comes as institutional investors are increasingly pressing companies to do more to fight global warming.

Tokyo Electric Power, Chubu Electric Power and trading house Mitsubishi Corp will also face shareholder proposals from the same coalition, which includes representatives of Friends of the Earth Japan and Rainforest Action Network.

Shareholder activism on climate change has been gaining momentum in Japan since 2020, when Mizuho was the first listed company in the country to hold a climate-related vote.

While similar resolutions were voted down last year by shareholders at Tokyo Electric, Chubu Electric, Mitsubishi Corp and Sumitomo Mitsui Financial, pressure from these proposals has prompted some policy changes at the targeted companies.

The megabanks, for example, have pledged to cease funding for new thermal coal projects in recent years amid greater pressure.

Hurdles are high for the climate resolutions because they commonly take the form of proposals to amend the articles of incorporation of a company under Japanese corporate law, which requires a two-thirds majority. In previous votes, climate resolutions have received up to 35% support.

Climate activists are critical of the banks' transition plans that partly rely on technologies, which they say are unproven, such as coal co-firing with ammonia and carbon capture.

Both technologies have been promoted by the Japanese government as ways to reduce carbon emissions from coal- and gas-fired power generation.

Mitsubishi UFJ Financial and Mizuho Financial declined to comment. Sumitomo Mitsui Financial, Chubu Electric and Mitsubishi Corp confirmed they had received the shareholder resolutions and said they would discuss their content.

Tokyo Electric also confirmed it had received the resolution but declined to comment further.

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