Mitsubishi Corporation’s (MC) current climate targets and disclosures are entirely insufficient for investors to conclude it has a viable pathway to meet its own net zero by 2050 commitment. Despite major investors’ clear expectations and repeated requests for improved climate disclosure and target setting, Mitsubishi has made little progress in this regard. Two shareholder proposals have been lodged requesting:
- emission reduction targets aligned with the Paris Agreement; and
- disclosure of how the company evaluates the consistency of each new material capital expenditure with a net zero by 2050 pathway.
We urge investors to vote for these climate-related shareholder proposals.
Despite massive Scope 3 emissions, MC lacks targets to guide a pathway to net zero by 2050
In February 2023, MC disclosed its Scope 3 category 11 emissions (use of sold products): 381 million tons, a number larger than either the UK or France’s annual fossil emissions. This massive Scope 3 emissions figure represents significant transition risk to the company. However, it currently has no Scope 3 emission targets to ensure a reduction in line with a net zero by 2050 pathway. MC’s current target covers less than 6% of its total reported emissions.
MC lacks disclosure required to demonstrate a viable pathway to net zero by 2050
MC’s own 1.5 degree scenario analysis, FY 2022 1.5°C Scenario, published in February 2023, lacks any quantitative assessment of potential impacts on key financial variables related to transition risk. Without the disclosure of quantitative analysis, investors are unable to understand the potential impact of a net zero by 2050 pathway on the company’s financial performance, such as changes to earnings, cash flow, retirement schedules and assets values.
MC’s LNG plans ignore lowered LNG demand in emerging Asia
MC’s LNG expansion plans are financially risky as LNG demand projections in key markets have been cut due to limited availability and high prices, which are expected to continue for years. From 2021 and 2022, Bloomberg New Energy Finance (BNEF) significantly revised down its LNG demand forecasts in South and Southeast Asian countries. To reduce its exposure to financial risk, MC must evaluate its material capital expenditures in the energy sector for consistency with a credible net zero emissions by 2050 scenario.
At the upcoming MC AGM in June 2023 investors are encouraged to vote for the ‘Emission Reduction Targets’ and ‘Capital Expenditure’ shareholder proposals which seek disclosure of how MC plans to align its strategy with its own net zero by 2050 commitment.