MUFG is a market leader in issuing, underwriting and arranging Green, Social, Sustainability and ESG loans and bonds, alongside our work in Project and Export Financing in sustainable sectors, both in our own name and for our clients.
We take part in global initiatives to drive the adoption of the best environmental and sustainability practices. These include the United Nations Global Compact, the United Nations Environment Programme Finance Initiative and Principles for Responsible Investment. MUFG is an accredited entity with the Green Climate Fund, which was set up by the countries that are parties to the United Nations Framework Convention on Climate Change. We also support the Task Force on Climate-related Financial Disclosures.
MUFG adopted the Equator Principles in 2005 to ensure that the projects we finance and advise on are developed in a socially responsible manner and help establish good environmental management practices. Additionally, we are a Steering Committee member of the Equator Principles Association.
In May 2019 MUFG announced our aim to provide a cumulative total of 20 tn yen (c. US$189bn) in sustainable finance (including loans, equity investment in funds, arrangement of project finance and syndicated loans, underwriting of equities and bonds, and financial advisory services) between 2019 and 2030 to help build a sustainable society and attain the UN's Sustainable Development Goals, through the provision of financial services to our clients.
Additionally in May 2019 MUFG revised the MUFG Environmental and Social Policy Framework in response to the international community's plea for climate change actions and reflecting various stakeholders' opinions and ideas on environmental and social issues.
In August 2019 MUFG announced the establishment of a Sustainable Business Office, specialising in ESG-oriented financing and investing. It will work with teams globally to mitigate mid- to long-term ESG risks, develop financial products that meet our client's needs, and help them to achieve sustainable business growth.
MUFG Carbon Neutrality Declaration, a commitment to achieve net zero emissions in our finance portfolio by 2050 and our own operations by 2030, was announced in May 2021. As part of this commitment, MUFG will become the first Japanese bank to join the Net-Zero Banking Alliance (NZBA).
MUFG has an active CSR programme across its EMEA and global offices. MUFG's Inclusion and Diversity networks explore relevant topics, raise awareness and drive change across the organisation.
MUFG and Sustainable Finance
Green, Social and Sustainability Bonds
MUFG has invaluable experience from both sides of the Green Bond issuance process, having been both an issuer and underwriter. Given this, as well as our thorough knowledge of the Sustainable Financing market, we provide unrivalled expertise, strong support and innovative solutions to our clients.
Since 2016, MUFG has issued nine Green, Social and Sustainability Bonds, totalling the equivalent of US$3.4 billion across three markets.
MUFG's initial Green Bond Framework included the development, construction, operation or expansion of renewable energy projects, and was subsequently expanded to also include financing for Eligible Green Properties owned by J-REITs.
In 2019 MUFG published a Green, Social and Sustainability Bond Framework, which also included new social project categories. MUFG updated this Framework in May 2020 to include Use of Proceed categories targeting MUFG's efforts to address the COVID-19 pandemic. MUFG's inaugural Sustainability Bond in June 2020 was the first from Japan to channel funds specifically into the fight against the virus.
MUFG has been involved in the Sustainable Financing market since its inception, and from the start of 2018 we have underwritten 58 Green, Social and Sustainability bond issues in each of the US, European and Asian markets, totalling the equivalent of over US$33 billion.
Sustainability linked Corporate Loans
Green and Sustainability Linked Loans are a fast-developing sustainable financing instrument in the corporate finance market. We have been working with and arranging a number of deals for clients who are committed to sustainability. These loans allow borrowers to achieve lower margins if they achieve sustainability performance targets, such as a third party ESG score, or ratios reported in their annual accounts. Conversely if the targets are missed there may be a margin increase, and there will be some costs associated with reporting on their performance. Sustainability linked loans will be attractive to a wider variety of investors, as there is an increasing focus on the attractiveness of sustainable linked loans.
Structured Loans for Sustainable Assets
MUFG is a leading provider of project finance for renewable energy globally. MUFG has been an active lender to renewable generation projects for nearly two decades across the Americas, Europe, the Middle East, Asia and Australia.
We have financed over 450 transactions representing more than 75GW of renewables generation capacity, including providing finance to over 30 offshore wind farms.
MUFG has experience across all key renewable technologies, including onshore wind, offshore wind, solar PV, solar thermal, biomass, geothermal and hydro.
In addition to renewables, many other project-financed infrastructure assets can be considered sustainable, such as hospitals, smart meters, and public transport, together with desalination and waste water schemes. MUFG is also financing housing associations in the UK to build much needed new housing, including the provision of social housing which supports the more vulnerable members of society.
We also provide Export Credit Agency supported loans to sustainable projects, often in developing countries, including working with local governments to improve the public infrastructure and provide valuable services to the community.
MUFG advises ABInBev on largest ever Sustainability Linked Revolving Credit Facility