Launching the “Governance Wakeup Call”

As spring’s warmth begins to arrive in Japan, we hope this greeting finds you well. At the same time, looking out at the world, the effects of ongoing conflicts, rising prices, shifting investment landscapes, and growing concerns around human rights and the environment continue to cast a shadow over our daily lives. It is with a sense of both unease and responsibility as shareholders that the 2026 AGM season once again arrives.

With your continued support, Market Forces has been engaging Japanese trading companies and biggest banks through shareholder proposals, pressing them to address the financial risks associated with climate change and human rights violations. Yet we remain deeply concerned that fundamental risks continue to go unresolved — including the systemic, physical, and transition risks of climate change; increasing legal and litigation exposure; business risks tied to human rights and environmental issues; and questions around the appropriateness of capital allocation. Furthermore, as illustrated by the recent closure of the Strait of Hormuz, uncertainty has grown significantly around investments in LNG and other resource-related businesses, with geopolitical risks, supply chain instability, and price volatility all intensifying.

This year, rather than filing shareholder proposals as in previous years, we are shifting our focus to Directors’ accountability in governance — the very foundation of effective risk management — and launching a new campaign: “Governance Wakeup Call.” For the 2026 Annual General Meetings, we will recommend that shareholders vote against the reappointment of Directors who fail to fulfill their duties. We believe this is an effective tool for holding directors accountable for guiding companies with an appropriate strategy and for monitoring and supervising executives. This approach is gaining momentum globally.

The individuals in our scope include those serving as Board Chair and the heads of the Nomination and Audit Committees at the following institutions: Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), Mizuho Financial Group, Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation. (Please see “Baseline Governance Expectations” for the details.)

When you hear the words “a trustworthy board of directors,” what comes to mind? We believe it means a board that takes a long-term view and fulfills its responsibility to protect sustainable growth. As investors, you have the right to demand effective governance from the companies you invest in. We encourage you to exercise that right at this year’s AGMs.

Directors who fail to meet their responsibilities must be held accountable. We are calling on shareholders to vote against directors who have disregarded material risks and neglected their duty of effective oversight. For more details about the campaign, please take a look at the video and website below.

We are convinced that now is the time to bring fresh wind to corporate governance in Japan. If you would like to share your views or discuss next steps, please don’t hesitate to reach out. Thank you for your continued support.