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Editorial: Amid global warming threat, Japan's financial sector must help protect planet

Editorial: Amid global warming threat, Japan's financial sector must help protect planet

The Mainichi09-06-2025
Neglecting climate change initiatives to appease the U.S. administration of Donald Trump will create a breeding ground for future problems.
Major financial institutions in Japan and the U.S. have successively withdrawn from the Net-Zero Banking Alliance (NZBA), an international framework aiming for decarbonization. Following the departure of U.S. banks including Citigroup Inc., Japan's three megabanks, including Sumitomo Mitsui Financial Group Inc., followed suit this spring.
The NZBA is a system that encourages financial institutions to select their investment and lending targets based on whether they are contributing to decarbonization, thereby promoting the exit of businesses with a large environmental impact, such as coal-fired power generation. It is expected that the initiative will prove effective in pushing for the realization of a carbon-free society with the power of finance to influence corporate activities.
The tide has changed, however, with the return of Trump, who has dismissed the climate crisis as "fake." Criticism within the ruling Republican Party has grown over financial institutions aligning themselves to restrict investments and loans for fossil fuel businesses. In some U.S. states, there have been moves to exclude NZBA member banks from transactions, on the grounds their stance contradicts the Trump administration's energy policy.
U.S. banks that have left the NZBA are already actively investing and lending for fossil fuel projects. The Japanese megabanks have not provided reasons for their departure, but it is believed that they became wary of the risk of their business in the U.S. being disadvantaged under the scrutiny of the Trump administration. The banks stress that they will strengthen climate change measures, but by following the lead of American banks, they cannot evade being labeled deceptive.
The NZBA was launched in 2021 at the proposal of Mark Carney, former governor of the Bank of England and current Prime Minister of Canada. Leading financial institutions worldwide signed up, pledging to collaborate on decarbonization, aiming for net-zero greenhouse gas emissions by 2050.
European banks that place an emphasis on climate change measures and many in emerging and developing countries have not withdrawn. Within Japan, Sumitomo Mitsui Trust Group Inc. remains a member of the alliance.
The target of keeping the average global rise in temperatures to no more than 1.5 degrees Celsius compared to pre-industrial levels as a measure against global warming is under threat. It is essential to make efforts to keep international cooperation on decarbonization from backpedaling.
Megabanks operating globally bear a responsibility to act with the planet's interests in mind.
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