Japan’s largest bank blinked, and then peatlands burned

MUFG’s lack of due diligence raises questions about its zero-deforestation commitments

Japan’s largest bank, Mitsubishi UFJ Financial Group (MUFG), adopted a policy against peatland destruction, yet one of its bank subsidiaries continues to finance firms that, well…destroy peatlands.

Recently, we raised questions about the credibility of MUFG’s zero-deforestation commitments given that it had provided hundreds of millions of US dollars in “green” financing to Royal Golden Eagle (RGE), an Indonesian palm oil and pulp & paper conglomerate with concealed control over companies responsible for some of Indonesia’s very worst cases of deforestation. RGE denies these connections.

MUFG renewed our suspicions about its greenwashing when it acquired one of Indonesia’s largest banks, Bank Danamon, yet seemingly failed to apply its environmental policies to Bank Danamon’s client list, which includes Tunas Baru Lampung (TBLA), an agribusiness responsible for egregious acts of peatland destruction and fires in Indonesia. TBLA denies these allegations.

In the years following MUFG’s majority acquisition of Bank Danamon in 2019, two companies controlled by TBLA converted around 11,000 soccer fields-worth of peatlands in South Sumatra for palm oil and sugarcane production. Peatland destruction is particularly destructive as it releases vast amounts of carbon into the atmosphere. Degraded peat is flammable, so it also turns the ground itself into a tinderbox.

In 2023, these two TBLA concessions saw huge peatland fires, releasing a carbon bomb of planet-warming gases into the atmosphere. The Indonesian government filed a civil suit against a company controlled by TBLA in connection to these fires for environmental damages and economic losses. Despite this, TBLA remains a client of MUFG and Bank Danamon.

If MUFG were indeed serious about its zero-deforestation policies, it would have done a basic risk assessment of Bank Danamon’s clients back when it acquired the bank. Unfortunately, they didn’t dig very deep—or maybe didn’t even dig at all. Instead, they closed their eyes as irreplaceable peatlands burned.