Sumitomo to face shareholder resolution at its AGM over climate inaction

A representative of environmental finance group Market Forces has today filed a shareholder resolution with Sumitomo Corporation, calling on it to adopt and disclose a plan outlining its business strategy to align its business with the Paris Agreement’s goal of limiting global temperature increases to 1.5 degrees Celsius.

“By aiming for carbon neutrality, Sumitomo acknowledges its destination. Unfortunately, it appears to have no plan for how to get there, and its current targets are out of line with the latest scientific findings. Indeed, its current practices, such as the on-going construction of coal-fired power stations, indicate it is still heading in the wrong direction,” said Market Forces Campaigner Megu Fukuzawa.

“When it comes to managing climate risks, the time for feel-good statements is over. Investors are judging companies on what they do, not what they say. And today, Sumitomo is not matching words with action.”

Although Sumitomo is committed to achieving carbon neutrality by 20501, its latest disclosure2 shows that it:

  • has not set any interim targets to achieve net zero emissions by 2050;
  • has not conducted scenario analysis for transition risks aligned with 1.5 degrees warming, or for physical risks associated with beyond 2 degrees warming;
  • has no coal, oil and gas decarbonisation or phase out plans.

This is in addition to the fact that the latest science regarding the world’s remaining carbon budget points to a net-zero economy being necessary by 2040, a decade earlier than Sumitomo’s commitment.

Furthermore, loophole-filled policies mean Sumitomo is supporting the construction of at least five new coal power plants in four countries, including the controversial 1.32GW Van Phong 1 Coal Power plant and the 1.2GW Matarbari 1 Coal Power Plant in Bangladesh. Sumitomo is also acquiring new thermal coal assets, and in FY2019 Sumitomo’s equity share of thermal coal production increased.

“Sumitomo’s failure to pivot from fossil fuels should be a major concern to shareholders, especially since its competitors’ transitions are gathering pace,” said Fukuzawa.

Internationally, General Electric (GE)3 and Siemens4 announced they would stop bidding in tenders for new coal power plants. While in Japan, Mitsui announced it would sell all its coal power plant stakes by 20305 and Itochu that it would be selling its stakes in 3 coal mines by 2024.6 In March 2021, Sojitz Corporation (Sojitz) also stated that it would reduce its thermal coal project stakes by more than half by 2025 and to zero by 2030.7

“Sumitomo appears to believe the laws of gravity only apply to other companies,” said Fukuzawa. “This is a dangerous attitude at any time, but most of all in a period of rapid change such as today. Investors will rightfully be concerned and we expect a vote at Sumitmo’s AGM which reflects this.”

[1] Sumitomo Corporation, “Response to Climate Change”, online
https://www.sumitomocorp.com/en/jp/sustainability/environmental-management/climate.
[2] Sumitomo Corporation, ESG Communication Book (2020), online:
https://www.sumitomocorp.com/en/jp/sustainability/report.
[3] General Electric. “GE to pursue exit from new build coal power market,” online:
https://www.ge.com/news/press-releases/ge-pursue-exit-new-build-coal-power-market
[4] Reuters. Siemens Energy stops bidding for coal-fired power tenders,
online: https://www.reuters.com/article/siemens-energ-results-idINF9N28000R
[5] Reuters. “Mitsui Co to sell all stakes in coal fired power plants by 2030,” 12 October 2020, online: https://www.reuters.com/article/japan-trader-mitsui-co/exclusive-mitsui-co-to-sell-all-stakes-in-coal-fired-power-plants by-2030-ceo-idUKL4N2GY2OT?edition-redirect=uk
[6] Reuters. “UPDATE 1-Itochu books $843 mln loss from selling stake in Colombian coal mine,” 4 February 2021, online: https://www.reuters.com/article/itochu-results-idUSL1N2KA0C1
[7] Argus Media. “Japan’s Sojitz targets complete exit from coal, oil,” 5 March 2021, online: https://www.argusmedia.com/en/news/2193173-japans-sojitz-targets-complete-exit-from-coal-oil