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Reasons for Opposing the Amendment of the Articles of Incorporation While Adopting a Management Plan
Incorporating Climate Change Response
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Generally speaking, the Articles of Incorporation are designed to specify the name of a
company, its objectives, form of its organization, the total number of shares authorized, and other fundamental matters necessary to operate the company in accordance with the Companies Act (reference: MUFGs Articles of Incorporation:
https://www.mufg.jp/dam/profile/overview/pdf/incorporation1807_en.pdf).
On the other hand, it is not considered appropriate in the Articles of
Incorporation to state a companys detailed policies on the formulation of management strategy, including managements response to such specific issues as climate change and its stance on specific agreementsthe Paris Agreement, for
example. MUFG believes that stating such details in the Articles of Incorporation may inhibit its ability to flexibly adjust its policies and swiftly execute such policies. Moreover, as the Company is positioned to handle a wide variety of
management challenges, it believes that amending its Articles of Incorporation in a way that places sole focus on climate change will impair the overall balance of its management strategies, which should otherwise encompass the stable provision of
financing and settlement functions and response to such social issues as the low birth rate and graying population. MUFG thus believes that such a move could hinder the effective implementation of its management strategies and lead to a decline in
its corporate value.
The draft of the revised version of Japans Corporate Governance Code, which is expected to take effect by the end of June
2021, requires that businesses undertake proactive and autonomous initiatives under the leadership of their boards of directors to address climate change and other sustainability-related issues. With this in mind, the Company has positioned
implementing these initiatives as an important management matter, with its Board of Directors fully committed to engaging in ongoing discussion and disclosing policies on its response to such issues. Also, the Company has already updated the MUFG
Environmental Policy Statement, which provides its policies for environmental initiatives, in addition to redefining the authorized body allowed to amend this statement from the Executive Committee to the Board of Directors. Under the updated policy
statement, MUFG also intends to step up its efforts to assist customers in their initiatives to contribute to the realization of a sustainable society while proactively enhancing the content of relevant information disclosure.
Although the aforementioned proposal takes the form of an amendment of the Articles of Incorporation in light of restrictions imposed by Japans
Companies Act, it effectively demands direct intervention by shareholders into the Companys handling of a specific management challenge. The Board of Directors believes that the handling of such a management challenge must be conducted
flexibly by directors, who are entrusted with management matters by shareholders as part of their duties. In light of possible changes in various external conditions, such as social circumstances, we believe that the Company should tackle climate
change issues in this manner, rather than specifying detailed policies in its Article of Incorporation, the amendment of which results in strictly binding legal effects and requires a special resolution by the General Meeting of Shareholders.
Taking these factors into account, the Company is opposed to the aforementioned agenda item requiring the amendment of the Articles of Incorporation. At the
same time, the Company reiterates its Board of Directors commitment to achieving its stated goals stipulated by the MUFG Carbon Neutrality and other documents, which it believes already incorporate the essential content of the shareholder
proposal. Accordingly, we hereby ask our shareholders to take these factors into account and prudently examine this proposal before exercising their vote.
Circumstances surrounding climate change issues are rapidly evolving, while multifaceted discussion is now under way to address these issues. With this in
mind, the Company is determined to carefully identify its path toward carbon neutrality and specify its short-, medium- and long-term targets through engagement with stakeholders, including shareholders, in addition to disclosing these matters to
them. Also, we aim to secure robust shareholder understanding by periodically disclosing progress in the pursuit of these targets.
Moreover, the
Companys Board of Directors includes several outside directors equipped with extensive knowledge and experience on par with other global specialists in terms of handling environmental, human rights and other issues. Taking full advantage of
insights offered by these individuals, the Board of Directors is currently engaged in active discussion. Therefore, the Board of Directors will responsively oversee the Companys future initiatives to address climate change issues in a way that
employs the diverse expertise possessed by its members in their areas of specialty. Lastly, we hereby ask for your understanding of our management policies and initiatives, including those defined under the MUFG Carbon Neutrality Declaration.
Reference: MUFGs Sustainability-Oriented ManagementTackling Climate Change, material distributed at a June 3, 2021 seminar
(Japanese only)
https://www.mufg.jp/dam/ir/presentation/2021/pdf/slides210603_en.pdf
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