Climate Financial Group Urges Shareholders to Vote Against Directors at Japan’s Megabanks and Trading Houses
Market Forces Launches “Governance Wakeup Call” Campaign
April 22, 2026 Market Forces
TOKYO — Environmental finance advocacy organisation, Market Forces has sent a briefing to major institutional investors recommending a vote against the re-election of key directors at Japan’s three largest ’megabanks’ and major general trading houses at their upcoming 2026 Annual General Meetings (AGMs).
Companies in our scope:
- Megabanks: Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), and Mizuho Financial Group (Mizuho FG).
- Trading Houses: Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation.
The recommendation includes voting against individuals serving as Chairmen of the Board, as well as heads of Nomination and Audit Committees.
Market Forces has engaged in dialogue with the banks and trading houses over the past several years, conducting analysis on the effectiveness of their board governance. The Japanese and international non-government organisations view risk to the companies as a complex combination of factors, including systemic, physical, and transition risks associated with climate change; combined with rising legal, regulatory, and litigation risks; as well as escalating business risks related to human rights and environmental issues; and the appropriateness of capital allocation.
While some progress has been observed through direct dialogue and shareholder proposals, the fundamental risks remain unresolved. Consequently, this year, we are moving our strategy to the next phase. The focus of this campaign lies at the very core of governance: whether the boards of directors appropriately recognize, oversee, and manage material risks that impact corporate value.
As symbolized by the recent blockade of the Strait of Hormuz, uncertainty regarding investments and loans for resource-related businesses, such as LNG projects, is reaching unprecedented levels due to geopolitical risks, supply chain instability, and price volatility. In this environment, companies and financial institutions investing in these sectors are required to exercise more stringent risk assessment and oversight of capital allocation by their boards, from the perspective of long-term corporate value enhancement.
Structural challenges have been observed in both banks and trading houses regarding whether these risks are being sufficiently discussed and overseen at the board level. There is room for improvement in terms of the reporting systems for risk information to the board, the transparency of escalation processes, the effectiveness of audit and oversight functions, and the assurance of expertise and independence required to respond to changes in the external environment.
In recent years, there has been a growing global trend of litigation and regulatory action holding not only companies but also individual directors accountable for climate change and human rights risks. Given these changes, the effectiveness of the board’s oversight function has become a more critical management issue worldwide than ever before. This trend is expected to intensify further following last year’s Advisory Opinion by the International Court of Justice , which clarified the legal obligations to protect the climate system, including state regulation of the private sector.
In light of these recent circumstances, Market Forces has determined that recommending a vote against re-election — as a means of evaluating the oversight responsibility of directors themselves — is more direct and effective at this juncture than the shareholder proposals requesting additional disclosures that we have historically pursued to drive effective change.
This request is not intended to create conflict with the companies. Rather, it aims to encourage the establishment of systems that allow companies to more appropriately address risks through the exercise of voting rights. Market Forces will continue to collaborate with investors to deepen the discussion on board accountability and governance effectiveness in Japanese companies, urging the strengthening of governance to contribute to the long-term enhancement of their corporate value.
Eri Watanabe, Japan Energy Finance Campaigner, Market Forces said:
“As systemic risks intensify due to the simultaneous occurrence of climate disasters and compounded crises, the boards of Japan’s megabanks are failing in their oversight duties. Failure of duties does not just threaten bank portfolios; it jeopardizes the entire economy and society, inviting severe litigation risks.”
“Given recent failures to oversee internal misconduct, we must question if these boards can manage material risk appropriately. Investors must use their power to demand a ‘Governance Wakeup Call’ by voting against responsible directors.”
Kentaro Nunokawa, Japan Energy Campaigner, Market Forces said:
“The expansion of fossil fuel projects and involvement in human rights violations by trading houses signal poor governance. We are seeing a dangerous disconnection between corporate policies and implementations.”
“Concerns are building that these boards do not accurately recognize the rising financial risks of asset impairments and the increased cost of capital. We demand higher standards of audit and oversight to protect sustainable corporate value.”
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Market Forces
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