I am Takase, Chief Strategy Officer of MUFG. Thank you very much for today. Please turn to page 3. I will first explain MUFG's initiatives for sustainability, and then Chief Sustainability Officer Zeniya will explain MUFG's opinions on the shareholder proposal this time. Please turn to page 5. Let me explain MUFG's sustainability management. MUFG has placed sustainability management as one of the most important initiatives for the current medium-term business plan, or MTBP, and has been implementing group-wide measures, especially after launching the carbon neutrality declaration in 2021 to respond to climate change. I was appointed CSO, Chief Strategy Officer, in April of this year, and I am responsible for the business strategy of the entire group. CSUO, Chief Sustainability Officer position, had been held concurrently by CSO, but in October last year, we welcomed Ms.
Zeniya, who has expertise in the field from outside the company as full-time CSUO. Under this structure, I, as CSO, ensure that the business strategy synergizes with each sustainability initiative, while Ms. Zeniya, as CSuO, deals with the broad issues related to sustainability. Both of us lead MUFG's sustainability management in cooperation with business divisions. We have begun discussing the next MTBP starting in FY24, and in the process of development and deeper discussion, sustainability management will remain as a key strategy. Please turn to page 6. This is MUFG's approach for climate change. MUFG aims to achieve its biggest goal of net zero GHG emissions by 2050 or the 1.5 °C target by supporting a smooth transition to a decarbonized society and contributing to a virtuous cycle between the environment and economy.
To realize this goal, not only net zero GHG emissions of our own operations, but also the decarbonization of our clients are necessary. We will understand the characteristics of each region and sector, share the issues through client engagement, and move toward decarbonization together. This is MUFG's approach. Please turn to page seven. This is our management commitment to climate change. Our CEO and the management team are addressing climate change as the most important issues of management. As shown on the left, carbon- neutral project team was established two years ago, which has been working across the entire company on themes such as business promotion, risk management, and interim target setting by sector.
As shown on the right, we have held a number of steering committees and review meetings at the management level below the CEO to enhance our knowledge and to make prompt decisions on strategies and policies related to climate change. Important decisions are discussed and supervised by the board of directors. Please turn to page 8. This shows our progress since the carbon neutrality declaration in May 2021. We have worked with speed to set interim targets for our financing and investment portfolio to disclose the results of these targets and to reduce emissions of our own operations toward net zero. In addition, we have actively contributed to the external dissemination of opinions and policy recommendations by leading the formulation of guidelines for global initiatives such as NZBA and by publishing the MUFG Transition Whitepaper. We will continue our efforts in FY23 without slowing down.
Please turn to page 9. These are our key future initiatives. In preparation for COP28, we will formulate and publish the Transition Whitepaper 2.0 by October. We will also participate in GFANZ's Japan, which will kick off in June and contribute to rulemaking. We have already published interim targets for 5 sectors and will set additional sector-level targets to complete the NZBA's interim target setting by sectors. As already announced in the progress report issued in April this year, we will develop and release the transition plan for MUFG's decarbonization within FY23 in line with GFANZ's guidance. Please turn to page 10. This page is on the MUFG Transition Whitepaper published last October. MUFG has focused on our dialogues with basic materials and electricity customers, which are considered carbon-intensive sectors, in addition to our efforts in the renewable energy sector.
In Whitepaper 1.0, we summarized Japan's pathway toward carbon neutrality, taking into account regional characteristics and other factors. Communicated this information to global stakeholders centering on European and U.S. government authorities. The key takeaways of this report are, first, the starting point and direction of carbon neutrality differs from region to region. Second, it is necessary to work interdependently among industries, and carbon neutrality of power and heat is an important lever, especially in Japan. Third, in order to maximize the introduction of renewable energy, it is important to take an approach based on regional characteristics. Please turn to page 11. This slide shows our ongoing initiatives on Whitepaper 2.0.
We conducted a taxonomy analysis of four regions, Europe, the U.S., China, and ASEAN, to gain a better understanding of the background and intent of each region's decarbonization policies, as well as their institutional design. Based on this, Whitepaper 2.0 will present the list of technologies and supply chains that play a role as important levers in promoting carbon neutrality in Japan's power and heat industries, and also present the need to extend broad financial support for them. In particular, we plan to highlight six technologies related to carbon neutrality for power and heat, as shown in the lower half, including next- generation fuels, CCUS and renewable energy. Through the publication of the Whitepaper, we hope to improve the predictability of investment opportunities in Japan from overseas. This concludes my presentation on MUFG's initiatives for sustainability.
Lastly, let me explain the board of directors opinion on the shareholder proposal submitted in April. Please turn to page 12. The shareholder proposal requests that the articles of incorporation be partially amended to additionally provide for the development and disclosure of a transition plan to align our financed portfolio with the 1.5 °C target of the Paris Agreement. We have resolved to oppose to this proposal for the following three reasons. First, MUFG has made steady progress toward net zero GHG emissions from our financed portfolio by 2050. Second, MUFG will disclose our transition plan in FY23, and also plan to disclose our progress toward the targets in our integrated report in other media.
Third, in Japan, articles of incorporation provide for the basic matters of the organization and operation of the company, and it is not appropriate for the articles of incorporation to provide for specific matters concerning the execution of business. This is the summary of the board's opinion. Ms. Zeniya, Chief Sustainability Officer, will explain the details of the shareholder proposal and MUFG opinions, including the background.
I am Zeniya, Chief Sustainability Officer. Thank you very much for today. Please turn to page 14. We recognize the key points of argument in this shareholder proposal to be 4 points as follows. This also includes the investor briefing released by the shareholder proposer. 1. C oncepts to set the GHG emissions target.
The proposal asks that we set portfolio-wide targets and short-term sector level targets in addition to interim targets for 2030 by sectors that have already been set, and that we consider GHG emissions from all value chains from Scope 3, especially in the oil and gas sector, and that we set absolute emissions target for power sector interim target. 2. Policies and targets of investment and lending. The proposal asks that we establish stricter investment and lending policies and targets for the coal-fired power generation, coal mining, and oil and gas sectors. 3. Direction to support new technologies.
The proposal argues that the coal power use not be prolonged by supporting unreliable ammonia, hydrogen, coal combustion and CCUS, and that unproven technologies are not only financially risky, but also questionable in reducing GHG emissions and would potentially lock in ongoing usage of fossil fuels, and asks that the reliance on these technologies in the financed emissions trajectories be disclosed. 4, client engagement initiatives. The proposal asks that the evaluation of clients' alignment with climate goals be disclosed, and that the explicit conditions and processes for withdrawing financial support from clients that are lagging behind the transition be disclosed. I will explain each of these in more detail on the next slide. Please turn to page 15. Regarding the first point, target setting, we recognize that we received 4 opinions.
First, the proposal mentions that we need portfolio-wide target setting, but MUFG's approach emphasizes effective client engagement based on an accurate understanding of regional and business characteristics. For this reason, we set sector-level interim targets rather than portfolio-wide targets, which have data quality issues and overlapping GHG emissions scopes. We already set interim targets for five carbon-intensive sectors and plan to disclose additional interim targets for the automotive, aviation, and coal sectors in FY24. Portfolio-wide target setting is not mandatory in the NZBA guidance, and many financial institutions set sector-level targets. Second, the proposal pointed out that we should set short-term targets, but many clients have set targets for 2030, and we think effective engagement is possible if we set our targets on the same time frame. Therefore, MUFG is not currently considering setting short-term targets.
Interim targets prior to 2030 are not mandatory in NZBA guidance either. Please turn to page 16. The third point is on the value chain in the oil and gas sector. The target cover all Scope 1 through 3 of clients whose main business is upstream. All emissions, not only from mining but also to final consumption, are included. In addition, many of the clients whose main business is upstream are integrated operators who own the value chain covering upstream, midstream, and downstream. GHG emissions from these clients' midstream and downstream businesses are covered in the targets. Therefore, we do not think that significant midstream and downstream emissions are excluded as was pointed out. The fourth point is on interim target indicators for the power sector.
Although it makes sense to target absolute emissions in the future, electricity demand is expected to increase due to economic growth in developing countries and electrification in the industrial sector at least until 2030. MUFG believes it is appropriate to target emissions intensity, which indicates the efficiency of GHG emissions because it is necessary to switch to renewable energy and low- carbon fuels while maintaining a stable supply of power. The NZBA guidance also considers the target setting based on emission intensity as an option. Please turn to page 17. The second point of argument is on the financing policy and targets. As shown in the upper half, we formulated MUFG Environmental and Social Policy Framework as our financing policy that appropriately identifies and manages risks to the environment and society. Since its establishment in 2018, the policy, including fossil fuel sector, has been reviewed and strengthened annually.
We will continue to promptly respond to the external environment that is accelerating in order to realize a decarbonized society. In coal-fired power generation, for example, the policy said carefully consider in 2018, but prohibited financing for new construction in 2019, and most recently in 2021, prohibited financing of new construction and expansion of existing generation facilities. In addition to the policy framework, credit balance targets for coal-fired power generation are established as shown in the lower half. Both project finance and corporate finance are targeted to be zero in FY40. As you can see, the outstanding balance is steadily decreasing. Please turn to page 18. Regarding the claim on our financing policy for the fossil fuel sector, let me explain MUFG's response and our thinking.
For the coal-fired power generation sector, we understand that the proposal asks for a blanket ban on financing for companies that are expanding their facilities. As explained earlier, MUFG already prohibits corporate finance, where the funds are used for new construction and expansion. We do not expect to prohibit financing for general working capital, including salaries and wages, in view of the employment of our business partners. Regarding the coal mining sector, we understand that the proposal asks for a prohibition on financing companies and related infrastructure that expand thermal and metallurgical coal mining. MUFG already prohibits corporate finance for new thermal coal mining projects for power generation. We do not expect to prohibit general working capital, including salaries, as in the case of coal-fired power generation. The policy regarding financing for expansion of thermal coal mining and related facilities is now being reviewed for revision.
Regarding oil and gas, we understand that the proposal asks for prohibition on financing new and expansionary oil and gas projects or companies. From perspectives of stable energy supply and security, we are not assuming to set a policy prohibiting financing at this moment. Please turn to page 19. The third point of argument is on the policy of support for new technologies. The claim was that coal combustion and CCUS are unreliable technologies. Maximizing the introduction of renewable energy is the most important factor for Japan to achieve carbon neutrality. Since renewable energy supply is variable depending on weather conditions, a certain amount of zero-emission thermal power generation is also required as a coordination to ensure a stable power supply. At this point, we believe that co-combustion technology and CCUS are important for future mono-combustion to realize this goal.
The role of these new technologies is expected in METI's roadmap and the Japanese government's basic policy for realization of GX. Policy responses are underway. We have started a dialogue with our clients regarding the progress towards the practical use of these new technologies. We'll continue to monitor the progress and support them. Please turn to page 20. The fourth claim is the engagement initiatives. First is on MUFG's approach to engagement. We will identify emerging needs and challenges by providing solutions while making policy recommendations in collaboration with industries and government agencies. While strengthening our relationship with clients, local governments, and industry associations, MUFG will provide feedback to the industry and government on emerging needs and challenges for decarbonization, and will accompany clients in a responsible manner in their efforts to decarbonize. Please turn to page 21. Next is on our client engagement practices.
The left side shows the framework to evaluate each client, and the right side shows our efforts to verify individual projects. We started a pilot operation on the framework in 2021 to evaluate clients' transitions in terms of strategy, feasibility, viability, and governance, and plan to incorporate risk quantification and management models in the future. For carbon-intensive sector projects, we have structure in place to understand and verify our clients' decarbonization strategies based on the MUFG Transition Whitepaper and other documents. The two initiatives are deepening our client engagement and support. Please turn to page 22. This slide shows our progress on decarbonization support. Decarbonization support is steadily expanding through client engagement. For example, as shown on the upper left, sustainable finance has steadily built up to a cumulative total of JPY 24.6 trillion and JPY 9 trillion in the environmental sector.
As shown on the right side, wide range of transition support is also accumulating. The initiatives are highly recognized by externals, and we will continue to accelerate our support. Please turn to page 23. Lastly, let me explain our transition plan, starting from our current initiatives. While the shareholder proposal calls for the development of a transition plan, MUFG already formulated a roadmap for the transition to net zero by 2050, and discloses the information in its annual progress report, including sector targets, results, and engagement progress. Please turn to page 24. This shows our future initiatives on the transition plan. As explained earlier, we have been promoting the transition and plan to develop and publish a transition plan during FY23, in line with GFANZ's guidance framework published last November.
The transition plan framework consists of five elements: foundations, governance, implementation strategy, engagement strategy, and metrics and targets, and 10 detailed items. MUFG will accelerate its efforts in FY23, particularly in risk management, engagement, and human resource development. In risk management, MUFG plans to incorporate risk quantification and management models in addition to the qualitative framework to assess the transition. In engagement, we plan to strengthen the structure for integrated management of business and risks and incorporate escalation policies, et cetera. In human resource development, we will strengthen ability and skill development at each level and accelerate culture building toward net zero. In addition to further accelerating these initiatives, we will strengthen the various initiatives we have been pursuing to achieve carbon neutrality and finalize them as MUFG's transition plan in FY23. That concludes my explanation.
MUFG will continue to place importance on the dialogue with our stakeholders, so I kindly ask you for your further understanding and support going forward.
Thank you very much.