Important Issues Concerning Value Creation
Initiatives for Addressing ESG Issues toward Sustainable Growth
MUFG aims to help create a sustainable society and realize United Nations Sustainable Development Goals (SDGs) through its business activities. To this end, we have identified a number of environmental and social issues of concern at home and abroad and determined priority issues to be addressed by MUFG.
Currently, each business group has incorporated these priority issues into their business strategies and is pushing forward with initiatives to address them.
Priority Issues MUFG Must Address
Business incubation Social infrastructure & Aging population & low birth rate 1 2 & job creation 3 town planning
P.41 P.53 P.45 P.73 P.72-73 P.73
4 Global warming & climate change 5 Financial innovation 6 Workstyle reforms
P.49 P.59 P.66-71 P.72 P.76-77
Important Issues 7 Cross-sectoral environment and social issues Concerning Value P. P. Creation P. How MUFG Addresses ESG Issues Endorsement of International Sustainability Initiatives
*1
*1 *2 *3
*1 Endorsed by the Bank *2 Endorsed by the Trust Bank and Mitsubishi UFJ Kokusai Asset Management *3 Endorsed by the Trust Bank
64 MUFG Report 2019 MUFG Report 2019 65 Important Issues Concerning Value Creation Environment / Social / Governance Initiatives for Addressing ESG Issues toward Sustainable Growth
Aware of both opportunities and risks arising from ESG issues, MUFG is striving to help resolve environmental and social issues through its business activities.
As part of our mission as a financial institution, we have set Sustainable Finance Goals to contribute to the realization of international goals specified by the Paris Agreement* and those identified by United Nations SDGs. Moreover, we established the MUFG Environmental and Social Policy Framework aimed at providing guidance to our business activities.
*A multilateral international agreement on climate change that was adopted in December 2015 in Paris, where the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) was held
Setting a Sustainable Finance Goals
Aiming to facilitate the creation of a sustainable society and realization of SDGs via its financial services, MUFG has committed to extending a total of ¥20 trillion for sustainable Applying the MUFG Environmental and Social Policy Framework finance over a period spanning from fiscal 2019 to fiscal 2030 (of this, ¥8 trillion will be used for environmental finance). MUFG recognizes environmental and social risks international community’s call for more robust Primary business fields eligible for financing arising from operations undertaken by its Group climate change countermeasures and stakeholders’ companies as important management issues feedback on environmental and social issues. The ● Businesses contributing to the popularization of renewable energy and the enhancement of energy efficiency requiring serious attention. Based on the “MUFG revised policy framework includes more stringent Environmental ● Businesses contributing to the alleviation of climate change Environmental Policy Statement” and “MUFG Human restrictions on financing for the coal fired power impact, such as green building projects Rights Policy Statement,” the MUFG Environmental generation sector. ● Businesses contributing to the development of startups and job creation and Social Policy Framework is designed to ensure ● Businesses contributing to the alleviation of poverty Extend a total of ¥20 trillion that due consideration is given to environmental and Going forward, we will regularly review this policy ● Businesses contributing to the energizing of local communities Social and regional revitalization by the end of fiscal 2030 social issues in the course of its financing.* framework and upgrade it in a way that conforms ● Fundamental service businesses, including those involved in basic (Of this, ¥8 trillion will be used with changes in business activities and the operating infrastructure such as public transport, waterworks, and airports, and for environmental finance) essential services such as hospitals, schools and police In May 2019, we revised the policy framework, taking environment.
into account various external concerns, such as the * Including the provision of credit and the underwriting of bonds and equities
Promotion and Popularization of Renewable Energy
Outline of the Revised Environmental and Social Policy Framework MUFG is acting as project finance arranger and Thanks to these efforts, in 2018 we ranked first on the lender for solar, hydroelectric, wind and geothermal global private finance lead arrangers league table in MUFG will not provide financing for new coal-fired power generation projects once the revised framework takes effect. power generation projects. In these ways, we serve the field of renewable energy project financing. We ● Exceptions may be considered where we will take into consideration the energy policies and as a driving force behind the dissemination of have held this position for three consecutive years. Revised Coal-fired power generation circumstances of the host countries, international standards and the use of other available renewable energy around the world. sector technologies when deciding whether to provide financing. We will achieve our Sustainable Finance Goals ● We also support the adoption of advanced technologies for high-efficiency power generation and Carbon Dioxide Capture and Storage (CCS) technologies that contribute to through these efforts. the reduction in the emission of greenhouse gases (GHGs).
MUFG’s Track Record and Ranking as a Finance Arranger in the Renewable Energy Sector In addition to the coal-fired power generation sector and the cluster munitions manufacturing sector, forestry, palm oil and mining (coal) will be newly added to Ranked first for a third consecutive year “Restricted Transactions”. Revised Restricted transactions (Billions of US＄) 1st 1st 1st ● When financing is considered, we request our clients to certify the relevant operations according to internationally recognized certification organizations. 1st 2nd 2nd In its asset management business, MUFG has established the MUFG AM Responsible Investment Policy concerning environmental and social initiatives. 4.3 3.9 Newly Asset management business 2.6 2.9 ● The policy was prepared in accordance with the six principles of the Principles for 2.1 2.0 included Responsible Investment (PRI), based on our fiduciary duty to clients who entrust their capital to us. 2013 2014 2015 2016 2017 2018 (CY) (Source: Bloomberg New Energy Finance ASSET FINANCE/Lead Arrangers LEAGUE TABLE) Please also refer to a news release issued by MUFG on May 15, 2019 to see details regarding revisions to the MUFG Environmental and Social Policy Framework.
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4 Global warming & climate change In response, MUFG aims to carry out the quantitative Risk Management Initiatives to Counter Global Warming assessment of climate change-related risks and, to this end, is working to assess carbon-related assets We implemented MUFG Environmental and Social associated with its lending portfolio based on the Policy Framework to manage environmental and and Climate Change TCFD recommendations. Furthermore, we social risks associated with our financing. formulated the MUFG Environmental and Social Acutely aware of the importance of climate-related financial disclosure, MUFG has declared its support of Policy Framework to accurately evaluate and manage In May 2019, we revised this policy framework relevant recommendations formulated by the Task Force on Climate-related Financial Disclosures (TCFD), environmental and social risks arising from our to live up to the growing call for climate change a special taskforce established by the Financial Stability Board (FSB). In line with these recommendations, business operations. countermeasures from the international community. we are working to enhance the content of information disclosure. Specifically, we strengthened the policy on financing Status of Carbon-Related Assets (as of March 31, 2019)* for the coal-fired power generation sector while adding forestry, palm oil and mining (coal) sectors as Sector Proportion in overall portfolio value restricted transactions. From July 2019 we will not on the revisions to the MUFG Environmental and Energy 3.0% provide financing for new coal-fired power Governance Social Policy Framework and the status of Utility 3.6% generation projects. As a result, we expect our credit MUFG’s Governance Structure for Countering environmental financing initiatives. balance associated with coal-fired power generation Total 6.6% Climate Change projects to decrease over the medium to long term. Strategy Note: Total value of lending amounts to ¥96.5 trillion. At MUFG, the Corporate Social Responsibility * Based on the TCFD recommendations, MUFG has categorized the value of lending Committee operating under the Executive MUFG recognizes climate change countermeasures for the energy and utility sectors other than lending for renewable energy projects as Metrics and Targets constituting carbon-related assets. Committee regularly engages in the deliberation of and other environmental initiatives as important Setting Sustainable Finance Goals the Company’s policies on and the status of initiatives management issues. In line with this recognition, we We have committed to extending a total of ¥20 to manage opportunities and risks arising from established the MUFG Environmental Policy Scenario Analysis trillion for sustainable finance by the end of fiscal environmental and social issues, including climate Statement, which includes MUFG’s policies on MUFG has started scenario analysis with the 2030 (of this, ¥8 trillion will be used for change. Furthermore, the Risk Management, Loan climate change. Moreover, we have positioned global objective of assessing the impact of climate change- environmental finance). and Investment and Credit committees also discuss warming & climate change among our environmental related risks on its credit portfolio.
specific themes associated with climate change. and social priorities. We are thus endeavoring to Reducing CO2 Emissions Attributable to Our Conclusions reached by these committees are address these issues while giving due consideration Based on the New Policies Scenario and the Business Activities reported to the Executive Committee and, on an as to both opportunities and the risks arising from them. Sustainable Development Scenario (2°C Scenario) To reduce the environmental burden attributable to necessary basis, to the Board of Directors. published by the International Energy Agency (IEA), our business activities, we are working to assess and In fiscal 2018, the Board of Directors received reports Opportunities—Supporting the Transition to a we are working to quantitatively assess the financial reduce the environmental footprints of our Low-Carbon Society impacts of transition risks. The scenario analysis operations, such as GHG emissions. In addition, the
Deliberation and Reporting on Environmental and Social We serve as a finance arranger and lender for methods used reference those applied in a pilot Bank has succeeded in reducing CO2 emissions Issues (fiscal 2018) renewable energy projects while actively providing project led by the UNEP Finance Initiative in which beyond its reduction target (reduced energy intensity Board of Directors consulting services aimed at assisting clients in their 16 member banks participated with the aim of index* in fiscal 2017 to 26.0% below the fiscal 2009 climate change countermeasures as well as discussing and developing methods for climate level). ● Reviews revisions to the Environmental and Social Policy assistance in the issuance of Green Bonds. By doing change-related financial information disclosure for Framework and monitors the status of relevant discussions Please also visit MUFG's website to see its initiatives to reduce environmental burdens. ● Reviews environmental finance initiatives credit portfolios so, we support the transition to a low-carbon society the banking industry. URL: https://www.mufg.jp/english/csr/environment/effort/
from the aspect of finance. *Energy intensity index = Energy consumption /Total floor space Executive Committee In addition, MUFG is a participant in Phase II of a pilot Risks—Transition Risks and Physical Risks project launched in 2019 by the UNEP Finance ● Finalizes revisions to the MUFG Environmental and Social Policy Clients to whom MUFG has provided credits may be Initiative. Framework ● Reviews the conclusions of the Corporate Social Responsibility exposed to risks arising in the course of the transition Committee to a low-carbon society, such as stricter regulation MUFG Bank’s CO2 Reduction Target GHG Emissions* (Unit: Thousand t-CO2) and the introduction of low-carbon technologies CO2 reduction target CO2 emissions/Measured items FY2018 Committees under the Executive Committee (transition risks). They can also be exposed to risks arising from physical damage due to the growing Reduce energy intensity index by Scope1 Direct emissions 11 ● Monitor initiatives addressing environmental and social issues FY2020 10.5% from the fiscal 2009 level by ▶ Achieved Scope2 Indirect emissions 187 prioritized by MUFG occurrences of climate change-induced natural the end of fiscal 2020 ● Determine Sustainable Finance Goals disasters and abnormal weather (physical risks). If Scope3 Other indirect emissions 10 ● Conduct detailed examinations of the content of the revised Reduce energy intensity index by Emission volume offset by CDM credits 0 Environmental and Social Policy Framework these risks were to impact the clients’ businesses or FY2030 19.0% from the fiscal 2009 level by ▶ Achieved ● Oversight of the response to the TCFD recommendations financial conditions, MUFG’s credit portfolio would the end of fiscal 2030 Total 208 (calculation and disclosure of carbon-related assets) also be exposed to substantial risks. * Domestic total for MUFG, the Bank, the Trust Bank, MUMSS, and NICOS
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4 Global warming & climate change
2 Introducing an ESG Evaluation System for of a syndicated loan totaling ¥14 billion for Nippon Leveraging Our Financing Functions to J-REITs* Yusen Kabushiki Kaisha and Nagoya Railroad Co., Ltd. MUFG has developed a system for evaluating the This syndicated loan is certified by JCR as being in asset management companies of J-REITs and J-REIT conformance with the Green Loan Principles. Promote Environmental Initiatives properties from an ESG-centered viewpoint. Taking advantage of this system, we began striving to 3 Consulting Services on Climate Change Drawing on its solid track record, abundant know-how and extensive global network, MUFG is acting as expand the J-REIT market. Specifically, Mitsubishi UFJ Countermeasures project finance arranger and lender in a way that helps curb the impact of climate change. Moreover, we Research and Consulting carries out comprehensive MUFG supports the Joint Crediting Mechanism (JCM) provide consulting services while assisting clients with the issuance of Green Bonds. assessments of ESG initiatives undertaken by J-REITs a carbon credit system designed to supplement the and the asset management companies, and rates Clean Development Mechanism (CDM) based on the them based on a five-grade scale. Loans to J-REITs Kyoto Protocol. With the Japanese government MUFG’s Contribution to ESG-Oriented Investment and Financing Corporations, etc., that that received sufficiently high ratings will be acting as an international advocate for this pursue environmentally MUFG friendly operations prioritized in the allocation of proceeds from MUFG mechanism, MUFG provides consulting services Green Bonds. In fiscal 2018, MUFG has extended a aimed at supporting the formulation and ESG-centered ESG investment the Trust Bank dialogue/ESG-centered Investees total of ¥6.6 billion to J-REITs since the introduction commercialization of financing schemes for asset management of this system. initiatives undertaken in developing countries to curb
1 * Japanese-Real Estate Investment Trusts global warming. Drawing on its leading track record The net proceeds from the issuance 2 Eligible green and experience in the field of CDM consulting, MUFG the Bank Financing projects Issuance of Green 2 Environmental and Social Risk Management assisted a total of 12 JCM projects in fiscal 2018. Bonds Investors Based on the Equator Principles Going forward, we expect these initiatives to help As a signatory to the Equator Principles (EP), MUFG realize a total reduction in GHG* emissions of MURC* Climate change 3 Bank supports its clients’ environmental and social approximately 55,000 t-CO2/year. countermeasure Corporates and consulting public agencies risk management by identifying, assessing and the Securities Business 4 managing environmental and social risks and In addition, MUMSS has been commissioned by the Underwriting Issuance of Green impacts associated with large-scale projects by Ministry of Economy, Trade and Industry (METI) to and marketing Bonds Issuers Structuring undertaking due diligence in accordance with EP. 46 conduct a study on and act as a secretariat for transactions were subject to EP review and reached climate change adaptation businesses for the third * Mitsubishi UFJ Research and Consulting Co., Ltd. financial close in fiscal year 2018 (preliminary figure). consecutive year since 2016. MUMSS also helped
Please visit MUFG’s website for further information. upgrade METI’s Climate Change Adaptation Good 1 2 4 Contributing to the Expansion of the Green MUFG amounts to approximately US$1.7 billion (as of https://www.mufg.jp/english/csr/environment/equator Practices by Japanese Private Sector while hosting a Bond Market March 31, 2019). climate change adaptation forum. In this way, MUMSS Green Bonds refer to a type of bond that limits the is contributing to the promotion of adaptation use of proceeds from its issuance to funding for The net proceeds from MUFG Green Bonds have businesses in the Japanese private sector. renewable energy and other projects deemed to be been allocated to Eligible Green Projects via the Bank helping preserve the global environment. MUFG is (examples of such projects are described on the Major Projects Supported by MUMSS in Fiscal 2018 for JCM Procedures (Unit: t-CO2/year) contributing to the expansion of the Green Bond facing page). These efforts have contributed to both Estimated volume market as an investor, underwriter, issuer and lender. MUFG and MUMSS being chosen to receive awards Country Outline of JCM Projects of reduction in GHG* emissions from the Minister of the Environment at the Japan Introduction of technologies aimed at Indonesia 23,509 In addition, the Trust Bank is a leading institutional Green Bond Awards in the categories of Japan Green optimizing power plant operations, etc. investor in Asia as well as one of Japan’s top Green Impact and Japan Green Contributor respectively. Introduction of high-efficiency street lighting Cambodia 4,190 Bond investors. Meanwhile, in fiscal 2018 MUMSS 2 ESG Management Support Loan employing LEDs Allocation of Funds and Environmental Impact (As of March 31, 2019) handled 18 domestic Green Bond public offerings as MUFG offers corporate loan products designed to The Balance of Eligible Green Projects funded through the Introduction of solar power generation systems at parts factories, etc. 2,821 a lead manager and thereby commanded 29% of issuance of MUFG Green Bonds evaluate and support clients’ ESG initiatives. Philippines shares in terms of the underwriting amount. Among (The figure in parentheses represents the number of Specifically, Mitsubishi UFJ Research and Consulting Introduction of high-efficiency transformers renewable energy projects) Vietnam 5,143 other domestic financial institutions, MUMSS thus evaluates clients’ initiatives and scores them in to power distribution networks (two projects) US$2,191 million (43) boasts an unparalleled track record in this field. tandem with Japan Credit Rating Agency, Ltd. (JCR), Laos Introduction of high-efficiency data centers 567 Total annual energy generation thereby providing clients with feedback on the As an issuer, MUFG has issued Green Bonds on a 13,650 million kWh challenges they must address. Supply of electricity via solar power Mongolia generation 18,438 total of four occasions since the first issuance of U.S. dollar-denominated Green Bonds in 2016. Today, the Total annual CO2 emissions avoided Employing these products, the Bank collaborated Fiscal 2018 Total 54,668
cumulative total value of such bonds issued by 6.9 million tons with regional financial institutions in the development * GHG: greenhouse gas
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3 Social infrastructure & town planning 1 Aging population & low birth rate Promoting Regional Vitalization Financial and Economic Education Facilitating Social Development The Bank launched “MUFG Regional Revitalization Given a graying society accompanied by a declining Fund” aimed at providing customers with smooth birthrate, a growing number of people are expected financing for facility procurement and working capital to face the need for solutions that ensure the stable through Financing as well as advice to help them get their projects on accumulation of assets. With this in mind, MUFG is track. Our efforts focus on helping customers meet providing various educational programs and MUFG aims to contribute to social development through financing, the primary function representing its four basic targets under Japan’s plan for the Dynamic seminars tailored to meet the interests of audiences business operations. Engagement of All Citizens,* covering community, from different age groups, helping them better people and employment. Every year, this fund understand what it takes to begin investing. In particular, we provide services unique to MUFG to address such issues as the “aging population & low provides finance for a number of customers, with a birth rate,” “business incubation & job creation,” and “social infrastructure & town planning.” total of ¥35.7 billion being extended in fiscal 2018. In August 2018, the Trust Bank established MUFG Financial Education Institute, a body charged with The Bank also engages in financing that draws on the undertaking a study on bottleneck factors hindering Accordingly, MUFG optimizes its services to fit their government’s subsidized interest payment program young people from initiating asset building, preparing Supporting Corporate Growth individual needs, whether they are startups, growing for regional revitalization, extending a total of ¥6.8 various educational content and providing advice to Acting as a partner for its corporate customers, corporations, mature companies or companies billion in fiscal 2018 under this program. financial institutions with regard to product MUFG is well aware of the fact that their needs may undergoing corporate rehabilitation. development. Via a website, the institute is * A comprehensive strategic plan formulated by the Headquarters for Overcoming vary widely due to differing levels of development. Population Decline and Vitalizing Local Economy in Japan (established by the Cabinet publicizing its paper and reports survey and research Secretariat in September 2014). In response to the rapid decline in and aging of the country’s population, this plan aims to help create an autonomous and sustainable results. In addition, it hosts symposia, delivering a regional society in a way that takes advantage of characteristics of each region. Startup Stage Growth Stage Maturation Stage Revitalization Stage broad range of information aimed at helping people
Supporting up-and-coming Offering smooth financing while Supporting smooth business Assisting corporate rehabilitation 2 Business incubation & job creation lead an affluent life after their retirement. businesses with growth potential creating new business succession in collaboration with external 3 Social infrastructure & town planning “Rise Up Festa” opportunities expert organizations Educational Initiatives by Age Group 4 outstanding companies Approximately 23,000 Approximately 4,400 Approximately 80 Investment in 3D-Mapping Technology for Elementary, junior high and high school students 6 excellent companies The number of business The number of corporate clients The number of in-house Autonomous Driving ● Domestic and overseas branches welcome local elementary, junior Number of award-winning matching cases* in fiscal 2018 that received visits by specialist specialists* in corporate In April 2019, Japan Infrastructure Initiative (JII)* high and high school students, offering them workplace experience corporations included in the * The sum of business matching cases teams during fiscal 2018 rehabilitation programs. We also provide on-demand lectures at local schools. fiscal 2018 Rise Up Festa conducted by branches and those * The total number of specialists at invested ¥2.0 billion in Dynamic Map Platform Co., established at business matching domestic headquarters at the Bank Ltd. (DMP), a company aimed at providing high- ● MUFG Union Bank helps students at public high schools establish events held in Japan and overseas and run “High School Branches,” providing them with opportunities definition (HD) 3D roadmaps, an essential component to learn about finance and economics through hands-on supporting autonomous driving and other cutting- experience of banking operations. 2 Business incubation & job creation 2 Business incubation & job creation edge driving assistance technologies. DMP is ● We have been running an educational program aimed at helping 5 Financial innovation junior high and high school students learn about stock investment. Rise Up Festa expected to expand into North America while rolling To date, a total of 4,000 students from 50 schools have completed this program. Rise Up Festa is a business support program aimed Assisting Startups in Their Pursuit of Growth out its technology to applications other than at assisting SMEs and other growing companies Strategies autonomous driving, with the aim of contributing to University students engaged in novel and creative segments as well as MUFG is rallying the Group’s entire strength to the realization of a safe and secure society with higher living standards. ● We present lectures aimed at enhancing basic financial literacy with those trying to extend the boundaries of existing provide promising startups with various assistance regard to managing loans, credit cards and household budgets. businesses. Through this program, MUFG engages ranging from business advisory and lending to IPO- with them as business partners over the medium- to related financing. Looking ahead, JII will continue to assist in the Businesspersons long-term, taking full advantage of its extensive development of infrastructure businesses via ● For our corporate clients’ employees, we provide seminars dealing business network and abundant know-how in As part of these efforts, Mitsubishi UFJ Capital launched investment in promising Japanese companies. with such topics as life planning and asset management. In addition, our website provides a broad range of articles aimed at management support. Mitsubishi UFJ Capital , Limited Partnership and * JII was established in January 2017 via a business alliance between MUFG, Mitsubishi encouraging viewers to develop their interest in asset building in Mitsubishi UFJ Life Science II, Limited Partnership in UFJ Lease & Finance Company Limited, MUFG Bank, Hitachi, Ltd. and Hitachi Capital addition to quizzes and cartoons. Corporation to serve as an open financial platform. In April 2019, MUFG conducted a final screening for February 2019. These limited liability partnerships boast the sixth round of this program, with four outstanding robust funds totaling ¥15 billion and ¥10 billion, companies and six excellent companies being respectively. While the former is aimed at financing chosen from among the many candidates. Award- promising companies in a range of sectors, including winning companies may benefit from various support digital and FinTech firms, the latter is expected to programs aimed at helping them achieve growth. finance up-and-coming players in the life science field.
We also provide assistance for the launch of new businesses in FinTech and other cutting-edge technological fields through the MUFG Digital Accelerator Program. An example of a high-definition map An educational program themed on stock investment
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employees, encourages their self-development, and training based on an “assessment & coaching” Nurturing Professionals Who Pursue creates an environment where employees are approach aimed at helping candidates embrace a satisfied with their daily work and able to continually new mode of behavior and acquire other traits challenge themselves in pursuit of innovation. necessary for corporate management. Meanwhile, Innovation in Challenging Environments the latter course takes on personnel holding the Securing Future Top Management position of Managing Directors, deputy general Candidates As we aim to deliver greater value to customers and society as a whole, we are striving to nurture manager or branch manager, providing a liberal arts professionals equipped with distinctive strengths in their areas of specialty as well as human relations MUFG aims to practice a group-based, integrated education aimed at enriching comprehensive ability skills to ensure that they are capable of succeeding on the global stage. In doing so, we encourage them management approach in regions around the globe and widening perspectives while implementing to take on the challenge of driving innovation. and, to this end, seeks future candidates for top global leadership training. management who can lead its businesses With this in mind, under the Medium-Term Business Plan (MTBP) we will step up the integrated accordingly. Having positioned securing such human Going forward, we will enhance the content of management of our Group’s human resources around the world. resources as an important management issue, in training programs aimed at helping participants fiscal 2018 we established MUFG University to acquire coaching and organizational management provide special training programs for those in skills as we aim to nurture managers capable of framework for securing candidates from a broader managerial positions or above. aiding their staff members in realizing their full MUFG Human Resources Principles range of sources. With the purpose of helping highly potential. Moreover, we will incorporate training for The MUFG Human Resources Principles provide the skilled individuals pursue greater career success, this MUFG University offers two different courses, namely, instilling digital literacy, which has become essential basis on which the Group has built a human framework is designed to provide them with salaries the “Next-Generation Leader Course,” which aims to to today’s corporate management. In these ways, we resources management platform that aligns with its in line with labor market benchmarks unconnected secure the future leaders of MUFG, and the will secure future top management candidates Corporate Vision. These principles are: to our conventional pay systems. “Management Course,” which aims to help managers capable of leading MUFG’s corporate development. ● Shared Values enhance their skills. The former welcomes Nurturing Human Resources Leading in ● HR Mission Currently, revisions of human resources system are candidates from among general managers and Enacting Reforms ● HR Vision under way at key Group subsidiaries in Japan. This branch managers and instills practical viewpoints for ● HR Philosophy move is intended to nurture a greater number of corporate management while nurturing concept- Securing Human Resources Who Drive Digital
For the full text of the MUFG Human Resources Principles, please also visit our corporate professionals and ensure human resources building capabilities for developing novel financial Transformation website. URL: https://www.mufg.jp/english/csr/policy/ management with performance-based assignment. businesses. This course also provides hands-on We will recruit and nurture tech specialists who can For example, the Bank overhauled its human spearhead digital transformation. resources system in April 2019, introducing evaluation Programs Offered by MUFG University Human Resources Strategy under the MTBP and training frameworks designed to support growth Next-Generation Leader Course Specifically, we will expand the lineup of job-level To overcome the harsh environment, we will engage and employees’ ability to overcome challenges. Also, Eligible attendees: General managers and branch managers based training programs aimed at helping employees Number of attendees (fiscal 2018): 133 in human resources management aimed at the Bank’s new human resources system is acquire practical experience and enhance their Program name Objective supporting groupwide integrated efforts to achieve thoroughly focused on ensuring performance-based digital literacy while proactively hiring digital experts New Corporate Executive Acquire practical viewpoints for corporate the objectives of the MUFG Re-Imagining Strategy. appointment and position-based pay. This is Training management equipped with sophisticated skills. expected to achieve more transparent and fair Executive Candidate Acquire concept building capabilities to Specifically, we are focusing on ensuring optimal human resources management that is acceptable to Training develop financial businesses for the future Enhancing Managers’ Coaching Skills
staffing in order to match the competencies of our Embrace a new mode of action in daily Today, MUFG is striving to create a sustainable and Assessment & Coaching workforce to jobs while promoting staff exchanges Objectives of MUFG Bank’s Human Resources System operations open minded organizational culture that encourages that transcend the boundaries of Group entities, Revisions employees to take on the challenge of realizing Management Course thereby assisting in the execution of business Eligible attendees: Managing Directors, deputy general innovation and renovation. To this end, MUFG’s strategies under the MTBP. Furthermore, we are Nurturing genuine professionals managers and deputy branch managers managers must be good at drawing out the creativity Number of attendees (fiscal 2018): 72 managing employees in Japan and overseas in an of their team members and helping them realize their Program name Objective integrated manner, practicing more sophisticated Helping them pursue personal growth and take on challenges potential so that they can proactively take on higher human resources management on a global basis. Global Leaders Forum Develop leadership for global operations goals. With this in mind, we will initiate a special Ensuring competency-based promotion and job allocation Enhance prediction capabilities necessary program for general or branch managers to help for making policy judgments through Liberal Arts Session Taking advantage of the great breadth of operations increased exposure to liberal arts them enhance their coaching skills. Looking ahead, handled by the MUFG Group, we introduced the concepts we will roll out coaching education to existing
Groupwide Posting System, which offers employees Enhance concept building capabilities via training systems for coverage of an even broader Design & Digital Thinking opportunities to take on their desired duties in a way Overhaul training policies, conventional human resources exposure to digital thinking methods range of job levels. that transcends the boundaries of Group entities. management practices and the entire human resources Coaching Capability Acquire coaching skills to help staff The holding company also instituted a new recruiting platform to support autonomous career development Improvement members realize their potential
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Support for Balancing Work and Life Events Promoting Inclusion & Diversity Nurturing Global Human Resources MUFG is working to create environments that enable MUFG aims to ensure that all its employees, who both men and women to continue career Today, the MUFG Group has expanded into more than of global business strategies. By doing so, we also help boast a diverse range of backgrounds, work as one development regardless of whether they are on 50 countries around the globe, with approximately 53% them develop career track records encompassing a team and are allowed to maximize their individual prenatal leave, parenting, or providing nursing care. of its entire workforce being accounted for by overseas broad range of fields. potential and fulfill their career goals. To that end, we In Europe, for example, we hold seminars through employees (as of May 31, 2019). As a result of the aforementioned initiatives, we have are helping raise their awareness while developing our employee network to help employees balance With this in mind, we are employing a globally unified seen improved motivation among individuals hired various programs to support them. life events. The number of employees taking human resources platform to nurture professionals overseas, and their drive is helping to facilitate positive childcare leave is increasing year on year, and we with diverse backgrounds and offer them greater competition among employees while expanding the These efforts are focused on facilitating an hope that all employees will become more aware of career opportunities. This approach is expected to pool of candidates. In short, our approach is creating a appreciation of each other’s uniqueness and creating efficiency and productivity. In this way, we support enhance our organizational strength. In taking this positive feedback loop, boosting our organizational an inclusive workplace in which everyone can work the participation of men in childcare. For example, in approach, we promoted a growing number of those strength. Today, a growing number of individuals hired hired overseas to managerial posts while preparing a overseas have been promoted to managerial posts. For in confidence regardless of religion, disability, sexual the Bank and the Securities Business, the percentage multinational list of key managerial candidates, that is example, 13 of these individuals, including four women, orientation or gender identity. of men taking childcare leave is high, 84% for the being periodically reviewed to preclude any biases. have assumed executive officer positions at the Bank Bank and 100% for the Securities Business. However, (as of March 31, 2019). MUFG Union Bank was selected by Diversity Inc. as since men tend to take only short periods of In addition, we regularly hold the Global LEAD Program, one of the Top 50 U.S. Companies for Diversity in childcare leave, we strongly recommend that men mainly for those in department head positions. Hosting diverse participants coming from the Bank, the 2018, and for the sixth consecutive year, MUFG take childcare leave for about one month. In addition, Securities Business, Krungsri, MUFG Union Bank and Proportion of Overseas Employees* earned a 100 percent score on the Human Rights the ratio of male employees among MUAH other Group entities serving various regions, the forum (%) Campaign Corporate Equality Index. Inclusion & employees who took childcare leave stood at 36%.* provides training aimed at helping them acquire 52.9 Diversity will remain important principles at MUFG, as * As of fiscal 2017 essential leadership knowledge, embrace global 42.4 37.8 38.5 40.5 we continue to embrace the unique perspectives of perspectives and develop other fundamental global 37.3 our colleagues, communities, and clients. MUFG also believes that raising managers’ awareness leadership traits. 24.0 26.3 is key to effectively facilitating the creation of an Also, the Bank and the Securities HD have taken In Japan, the Bank’s Marunouchi Head Office has in inclusive working environment and provides special advantage of the globally unified human resources 2012 2013 2014 2015 2016 2017 2018 2019 (FY) place a prayer room that accommodates various training to achieve this end. We are therefore management platform to appoint managing director * Proportion of overseas employees in the number of employees (consolidated basis), religious needs. Also, the Bank has distributed tablet endeavoring to increase the number of managers candidates from among those hired overseas. including part-time and temporary employees, presented in the financial reports. However, the number of employees at Bank Danamon is as of December 31, 2018. terminals equipped with voice recognition software who place sufficient focus on staff training, strive to Regardless of the place of their hiring, promising Note: Total headcount is as of May 31, 2019, reflecting the inclusion of Bank Danamon for employees with hearing disabilities. ensure that their staff members feel their job candidates are assigned leading roles in the execution into the scope of consolidation. rewarding and extend generous support to help Assisting Women with Career Development them enhance performance. In Japan, the Bank, the Trust Bank and MUMSS 6 Workstyle reforms Please also refer to the Diversity Report for the detail of these initiatives. identified a mutual goal: raising their ratios of female URL: https://www.mufg.jp/english/csr/employee/diversity_report/ employee can find his/her job rewarding. To this end, employees in managerial positions to 24% by March Promoting Workstyle Reforms we implement annual Awareness Surveys 31, 2021. Moreover, we aim to identify top MUFG is striving to develop a working environment encompassing all Group members and assess management candidates from among this employee that allows employees to thoroughly focus on challenges they are now confronting. Findings from group. Our measures to this end include training assessing customer needs and deliver greater value. these surveys are widely utilized in the formulation sessions designed to help candidates inspire one To this end, we are promoting workstyle reforms on and execution of human resources management another, round-table meetings with executives and various fronts. policies. the provision of a mentoring system. We are thus striving to raise their awareness of corporate Reducing Overtime Working Hours To help realize more flexible workstyles, we management. encouraged location-free operations via, for In Japan, efforts are steadily under way to reduce example, the utilization of satellite offices while overtime working hours. The Bank, for example, Overseas, we set a goal of raising the ratio of female allowing a greater number of employees to work succeeded in reducing the ratio of employees who managers in the Group’s workforce in the United from home. In fiscal 2018, approximately 1,000 more worked overtime of more than 60 hours per month Kingdom by 10% by 2022 as part of our ongoing Group employees began working from home (sum of from 4.3% in fiscal 2014 to 2.9% in fiscal 2018 by, for efforts to ensure gender equality and support figures for the Bank, the Trust Bank and MUMSS). example, encouraging employees to stagger their women’s career development. working hours. In order for the MUFG Group to realize innovation, the Group must create a workplace in which each
76 MUFG Report 2019 MUFG Report 2019 77 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
more effective governance. In June 2017, two foreign Due to these appointments, nine out of the current Enhance Our Corporate Governance nationals were appointed as directors. In June 2018, 16 members of the Board of Directors are the total number of directors was decreased, with independent outside directors and include three outside directors accounting for the majority of the women as well as two foreign nationals (from the Structure Board of Director membership. United States and Thailand). With their backgrounds ranging from corporate managers, financial experts In line with the succession plan formulated by the and lawyers to CPAs, the composition of outside Nominating and Governance Committee, in April directors are well-balanced in terms of specialty, Fundamental Concepts Steps to Improve Our Governance 2019, MUFG appointed a Group CEO and, in June region and gender. Structure MUFG will aim for sustainable growth and the 2019, three outside directors and one director. increase of corporate value over the medium- to Since its establishment, MUFG has worked to build a long-term, in consideration of the perspectives of its stable and effective corporate governance structure, stakeholders, including shareholders as well as putting emphasis on ensuring external oversight. In Management Structure customers, employees and local communities. MUFG June 2015, MUFG transitioned to the “company with will aim to realize effective corporate governance three committees” governance structure. The General Meeting of Shareholders through fair and highly transparent management functions of oversight and execution in the holding based on the guidance provided by MUFG Corporate company are separated, thereby strengthening the Governance Policies. oversight function of the Board of Directors and the Mitsubishi UFJ Financial Group committee system has also been reorganized for
Oversight Corporate Governance Development Board of Directors Statutory Committees Outside Directors Nominating and October 2005～ June 2015 June 2016 June 2017 June 2018 June 2019 (Nine) Governance Committee
Governance 2015 Directors (Seven) Compensation Committee Company with a Board of Corporate Auditors Structure Company with Three Committees 2014 Governance Committee 2015 Audit Committee Nominating and Governance Committee 2005 2008 (Statutory Nominating Committee) Nomination Committee Nomination and Compensation Committee Director Outside Director Committees 2005 2015 Risk Committee U.S. Risk Committee* Compensation Committee Compensation Committee (Statutory) under the Non-Executive Chairperson Board 2005 2015 Director * Established based on the U.S. Prudential Regulations of Directors Internal Audit and Compliance Committee Audit Committee (Statutory) 2013 2015 Risk Committee Risk Committee 2016 U.S. Risk Committee 2013 Board of Evaluation of Board of Directors Directors 2015 Execution Operations Independent Outside Directors Meeting/ Executive Committee Global Advisory Board Appointment of Lead Independent Outside Director 2015 President & Group CEO Policy MUFG Corporate Governance Policies Eight Eight Nine Outside Six Seven (Two foreign Directors (To make up the majority) nationals) C-Suite Officers in Charge
Planning and Administration Divisions Business Groups Independence and Diversity of Directors
Non-executive directors Independent outside directors
Securing 11/16 9/16 Female directors 3/16 independence MUFG Bank, Ltd. General Meeting of Shareholders 68.7% 56.2% Foreign nationals 2/16 Mitsubishi UFJ Trust and Banking Corporation and diversity Audit & Supervisory Cooperation Board of Directors Mitsubishi UFJ Securities Holdings Co., Ltd. Committee
Membership includes outside directors and committee members (As of June 27, 2019)
78 MUFG Report 2019 MUFG Report 2019 79 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
deliberation of specific subjects, allowing for more Audit Committee Fiscal 2018 Initiatives Outline of Committees and Their Fiscal vigorous debate in the Board room. Also, since the The Committee is composed of outside directors 2018 Initiatives Following the transition to the “company with three June 2017 inclusion of foreign national outside and non-executive directors, with an outside director committees” governance structure in June 2015, directors, all meeting materials have been translated Nominating and Governance Committee as Chairperson. The Committee examines the there was a significant decrease in the number of into English, while all Board of Directors meetings are The Committee is composed of outside directors and execution of business by directors and corporate agenda items and the volume of materials for Board attended by simultaneous interpreters. the CEO, with an outside director as Chairperson. The executives and prepares auditing reports. It also of Directors meetings. This was thanks to a review of Committee discusses matters related to the Chairman, examines the business and financial situation of the agenda items and the Board of Directors’ operations Main agenda items discussed by the Board of Deputy Chairman, President, and other major holding company and subsidiaries, conducting as a whole, including meeting frequency. Directors in fiscal 2018 are listed at the bottom of this management positions in the holding company or fieldwork where necessary. page. At one meeting with the theme “acquisition of major subsidiaries, as well as corporate governance Specifically, over the course of a period spanning the CFSGAM Group,” the Board of Directors policies and frameworks in place at these entities, and Risk Committee fiscal 2015 through fiscal 2018 the number of agenda benefited from input from outside directors with makes recommendations to the Board of Directors. Of The Committee is composed of corporate items was cut approximately 36%. Over the same regard to post-acquisition management focused on these, the Committee met seven times to discuss the executives, outside directors and outside expert period, the total page count with regard to materials identifying extant decision making processes at the appointment of the Group CEO candidate. members, with an outside director as Chairperson. It provided to members was reduced by 282. Thus, the acquired company and how to assess other key mainly examines important risk factors, such as time allocated for discussing single agenda items management information. They also contributed Compensation Committee foreign currency liquidity risk, that may impact on has increased. As a result, the average length of opinions on how to identify significant issues based The Committee is composed of outside directors business operations while paying close attention to regularly scheduled Board of Directors meetings has on business-specific due diligence findings and and the CEO, with an outside director as cyber attacks and other significant IT risks in almost doubled from three hours 16 minutes in fiscal suggested how to resolve them. Thanks to outside Chairperson. The Committee decides on matters anticipation of Tokyo Olympic games, and submits 2015 to six hours 19 minutes in fiscal 2018. In addition, directors who contributed their specialist expertise, associated with the compensation of directors and its recommendations to the Board of Directors. more than half the time spent in Board of Directors discussions by the Board of Directors were quite corporate executives at the holding company and its meetings held in fiscal 2018 was allocated to the active. subsidiaries and makes recommendations to the In addition, the U.S. Risk Committee has been in Board of Directors. place from 2016 and operates under the Risk Committee.
Number of Agenda Items/Page Counts of Materials Provided Length of Board of Directors Meetings (hours) Fiscal 2018 Status of the Board of Directors and Committee Meetings Number of agenda items (left axis) Presentations on agenda items Deliberation (left axis) Nominating and (Items) Page count of materials provided (right axis) (Pages) (Hours) (Hours) Board of Directors Compensation Audit Risk Average length of one regular meeting (right axis) Governance ： 1:29 2:15 2:09 3:16 5:26 5:00 6:19 310 Number of meetings 9 13 7 17 4 300 34:44 33:18 Attendance ratio 100% 98% 97% 99% 87.5% (all members) 1,358 ： 28:32 Attendance ratio 26% 32% 100% 98% 97% 100% 87.5% 26:26 (outside directors) 25:16 210 1,614 20:27 24:29 36% 6% Committee Membership* Nominating and Governance Compensation Audit Risk 170 ： 39% 43% 56% Mariko Fujii Outside director ◯ ◯ ◎ 959 74% 68% Kaoru Kato Outside director ◯ 109 99 94% Haruka Matsuyama Outside director ◯ ◎ 730 83 ： 573 64% Toby S. Myerson Outside director ◯ 429 448 61% 57% 44% Hirofumi Nomoto Outside director ◯ ◯ Tsutomu Okuda Outside director ◎ ◯ ： 2012 2013 2014 2015 2016 2017 2018 (FY) 2012 2013 2014 2015 2016 2017 2018 (FY) Yasushi Shingai Outside director ◯ ◯ Tarisa Watanagase Outside director ◯ Examples of Agenda Items Discussed by the Board of Directors in Fiscal 2018 Akira Yamate Outside director ◎ Tadashi Kuroda Non-executive director ◯
● ● Business planning for fiscal 2019 Revisions of MUFG Corporate Governance Policies and Junichi Okamoto Non-executive director ◯ ● Reporting from C-Suite constituents Committee Charters and Rules Kanetsugu Mike Director, President & Group CEO ◯ ◯ ● Review of fiscal 2018 MUFG Group employee awareness survey ● Revisions of Roles for the Board of Directors and Rules on Naomi Hayashi Managing corporate executive, Group CSO results (including reporting on corporate culture-related initiatives) Staffing ◯
● Reporting on progress of strategic investment in Bank Danamon ● Measures for enhancing shareholder returns and financial Naoko Nemoto Outside expert ◯ ● The acquisition of the CFSGAM Group performance targets Kenzo Yamamoto Outside expert ◯ * ◎ represents Chair of each committee (As of June 27, 2019)
80 MUFG Report 2019 MUFG Report 2019 81 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
to handle a pivotal issue with thoughtful discussion Roles Outside Directors Are Expected to Fulfill Evaluation Framework of the Working that employs a broad perspective and exemplifying At MUFG, outside directors are expected to fulfill the following six roles. Practices of the Board of Directors’ good governance in terms of how governance ● Exercise the oversight of conflicts of interest that may occur between Operation ● Supervise executives’ duties from an independent and objective MUFG and top management executives or MUFG and controlling systems should actually function. standpoint Since 2013, MUFG has employed external shareholders ● Provide advice and other assistance to top management executives ● Contribute to sustainable corporate development and medium- to long- consultants to evaluate the working practices of its On the other hand, the evaluation also identified based on their experience and expertise term growth in MUFG’s corporate value Board of Directors. Each director is asked to fill in a following issues needing to be addressed to improve ● Engage in timely and appropriate decision making in the course of ● Sufficiently discuss matters reported or proposed by top management deliberating investment and other management judgments via the questionnaire and is interviewed on such subjects as the effectiveness of the Board of Directors’ executives by requesting supplementary explanation where necessary careful examination of the reasoning behind the proposals and other and by contributing their opinions the composition of key committees, the quality of operations: (1) agenda items must be clearly ranked information presented to them the preparatory materials assembled prior to each by priority, (2) the corporate governance structure meeting, the content of discussions, the operations must be strengthened on a groupwide, cross- Current position at MUFG and Name Specialty Reasons for appointment of the Board, the Board’s contributions, and the regional basis, for example, by stepping up the committee-related duties performance of executive members. The results of coordination of governance functions in place at Having worked for the Ministry of Finance, Ms. Fujii has been serving Member of the Board of Directors these questionnaires and interviews are reported to Group companies at home and abroad, (3) the Board as a professor at the University of Tokyo’s Research Center for Chair of the Risk Committee Advanced Science and Technology and ambassador extraordinary Member of the Nominating and Finance and discussed at the Nominating and Governance of Directors must incorporate external input from Mariko Fujii and plenipotentiary of Japan. She has thus accumulated specialist Governance Committee and the expertise in finance and economics while boasting extensive Committee and the Board of Directors. specialists in its discussions of strategic areas, and Compensation Committee experience in these fields. (4) corporate culture reform initiatives currently In the course of the fiscal 2018 evaluation, interviews under way must be monitored more closely. Mr. Kato has fulfilled a number of key management positions, were undertaken in January and February 2019 and Kaoru Kato Member of the Board of Directors Corporate including President & CEO of NTT DOCOMO, Inc. and is equipped Member of the Audit Committee management with extensive experience as a corporate manager and invaluable completed questionnaires collected. According to Facing a business environment and management expertise. the evaluation, MUFG was successful in steadily challenges that are ever more complex, MUFG is upgrading its corporate governance structure, formulating measures to address the aforementioned Member of the Board of Directors making ongoing progress despite the major issues. By doing so, MUFG will enhance the Board of Chair of the Compensation Haruka Legal Ms. Matsuyama boasts extensive experience as a lawyer and is Committee challenges it is confronting as a global financial Directors’ quality of discussion, enabling it to affairs equipped with specialist expertise in a broad range of legal affairs. Matsuyama Member of the Nominating and institutions. In addition, the execution of the process speedup decision making and thereby resolve these Governance Committee leading up to the appointment of the Group CEO challenges. was evaluated as a best practice demonstrating how Mr. Myerson boasts extensive experience as a lawyer and is Toby S. Member of the Board of Directors Legal equipped with specialist expertise in corporate legal affairs and Member of the Risk Committee affairs Myerson M&A. Fiscal 2018 Evaluation of the Working Practices of the Board of Directors Fiscal 2017 evaluation Fiscal 2018 initiatives Fiscal 2018 evaluation Having fulfilled a number of key management positions, including Member of the Board of Directors that of President & Representative Director of Tokyu Corporation, Evaluation Hirofumi Corporate Member of the Nominating and Inc., Mr. Nomoto is currently serving as Chairman& Representative management Improvement in actual governance Nomoto Governance Committee and the Director of this firm and boasts extensive experience and invaluable functions Compensation Committee expertise as a corporate manager. Issues to be addressed Evaluation
● Reduced the total number of directors ● Satisfied formal requirements regarding governance Member of the Board of Directors Need to improve the Board of Directors’ Mr. Okuda has fulfilled a number of key management positions, and secured independent outside ● Foreign national outside directors brought fresh perspective on global Chair of the Nominating and composition Tsutomu Corporate including President and CEO and Chairman & CEO of J. Front directors, who now make up the majority Governance Committee finance and helped invigorate discussion by the Board of Directors management Retailing Co., Ltd., boasting extensive experience and invaluable Okuda Member of the Compensation expertise as a corporate manager. Committee ● CEO of each operating company reports ● Viewpoints from each operating company were shared by the Board of Need to clearly rank agenda items by on progress under the Medium-Term Directors, which was able to engage in in-depth discussions from a Group priority from a Group perspective Business Plan perspective Mr. Shingai has fulfilled a number of key management positions, including Corporate Senior Vice President & CFO of Japan Tobacco Inc., Executive Vice Member of the Board of Directors ● Group employee awareness survey Yasushi management/ President and Deputy CEO of JT International S.A., and Representative results are reported to and discussed by ● Viewpoints from each operating company were shared by the Board of Member of the Audit Committee Need to monitor MUFG’s corporate Shingai Finance & Director and Executive Vice President of Japan Tobacco Inc., boasting the Board of Directors Directors, which was able to engage in in-depth discussions from a Group and the Risk Committee culture reform initiatives more closely accounting extensive experience as a corporate manager as well as specialist ● Executive officers at the Bank discuss perspective initiatives to reform its corporate culture expertise in corporate finance and accounting systems and M&A.
Issues to be addressed Having served as Governor of the Bank of Thailand, Ms. Watanagase Tarisa Member of the Board of Directors ● Need to clearly rank agenda items by priority Finance boasts extensive experience as an economist and is equipped with Member of the Risk Committee Watanagase specialist expertise in finance and economy. ● Need to strengthen corporate governance structure on a groupwide, cross- regional basis
● Need to incorporate specialist expertise into Board of Directors’ discussions
● Need to monitor initiatives to reform MUFG’s corporate culture on an Akira Member of the Board of Directors Finance & Mr. Yamate boasts extensive experience as a CPA and is equipped ongoing basis Yamate Chair of the Audit Committee accounting with specialist expertise in accounting and auditing.
82 MUFG Report 2019 MUFG Report 2019 83 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
Group’s business strategies and issues. Moreover, we Outline of Compensation System Utilizing Insights Offered by Outside Compensation System strive to secure robust communication between Underlying Concepts and Objectives Directors outside directors and MUFG’s managerial positions MUFG has adopted a performance-based stock MUFG’s stance on the determination of We believe that insights offered by outside directors by holding special meetings on multiple occasions. compensation plan for all directors, corporate compensation is focused on ensuring the steady are essential to enhancing the content of discussions Our efforts to increase opportunities for outside executives and executive officers (hereinafter implementation of its management policies as well at the Board of Directors meetings. MUFG is striving directors to understand MUFG’s business operations referred to collectively as “recipients”) who serve at as securing sustainable corporate expansion and to ensure that outside directors are given sufficient resulted in the enhancement of the quality of the holding company, the Bank and the Trust Bank as medium- to long-term growth in corporate value. information about agenda items by providing them discussions at Board meetings, leading to a number well as the Securities HD. The introduction of this Accordingly, MUFG aims to better motivate recipients with materials and giving presentations before of improvements in actual corporate governance plan is intended to provide greater incentives for to contribute to growth in business performance not meetings. In addition, outside directors have functions. In fiscal 2018, we held Board Educational those individuals to maintain an awareness of the only in the short term but also over the medium to opportunities outside the Board and committee Sessions themed on subjects listed in the chart Group’s overall corporate performance, stock price long term while discouraging an excessively risk- meetings to intensively deliberate on the MUFG below. and capital efficiency over the medium- to long-term taking approach. MUFG also determines when pursuing their duties. compensation by giving due consideration to the Subjects Addressed at Board Educational Sessions Held in Fiscal 2018 operating results, financial soundness and domestic In May 2018, MUFG carried out a partial revision of and overseas regulatory requirements associated Internal ● Cyber security threats and countermeasures against ● Digital transformation strategies Control such threats this plan, incorporating ROE and the expense ratio with these recipients. In addition, MUFG mandates Digital ● MUFG Payment Network ● MUFG’s settlement strategies (domestic) into evaluation indices for determining stock that a highly objective and transparent system must ● Development of an asset management value chain compensation and bonuses for directors. This be in place for the determination of compensation. aimed at promoting the wealth management business revision was intended to increase the proportion of The level of compensation may be adjusted in light ● Human resources exchange and development on a Business ● Strategies for GCIB performance-based compensation and is expected of prevailing economic, social and industrial trends, global basis ● Business planning for fiscal 2019 (presentations by to better harmonize our compensation system with the business environment surrounding the MUFG ● Overview of MUFG’s businesses in Asia heads of six business groups) Global ● Status of inorganic strategies being considered ● Upgrading methods for subsidiary management shareholders’ interests while incentivizing recipients Group, its consolidated business performance and ● Overview of MUFG’s businesses in Europe to contribute to medium- to long-term improvement the status of employment markets in the place where ● Exchanges of opinions to which MUAH and MUFG ● Revisions of the human resources management in corporate performance. hiring is taking place. In the course of determining Union Bank directors are invited Other system compensation, MUFG also refers to data gleaned via objective research undertaken by external specialists with the intention of setting it at a level appropriate Conference Regarding U.S. Operations to maintaining competitiveness.
MUFG maintains key subsidiaries in the United States. In fiscal 2018, these meetings addressed global issues Compensation System Overview Thus, it is quite important to ensure that we share the faced by MUFG. Attendees engaged in lively Ratio*1 Type Evaluation method Payment same understanding of the managerial challenges discussion over topics such as compliance with anti- across entities. In order to achieve this, the company financial crime regulations and other regulations. emphasizes multi-directional communications and mutual understanding. Going forward, in an effort to facilitate mutual Basic Compensation Determined by the position and place of residence of individual officers, etc. Monthly in cash understanding and develop an even stronger 1 (fixed) To further this goal, MUFG convenes periodic meetings governance structure, we pledge to maintain robust attended by MUAH and MUFG Union Bank communications. 5.5 independent directors, outside directors from MUFG
and the Bank, C-Suite of MUFG Group Companies, and Stock Compensation At the time of Corresponding to the base amount determined depending on position other domestic officers. (non-performance-based) retirement*7
3 MUAH Risk Committee Chair presentation on Performance factor* [medium/long-term evaluation] 1 Base amount Session 1 financial crime-related issues and various risks Stock Compensation 1) Consolidated ROE 2) Consolidated expense ratio Upon the determined associated with operations in the Americas (mid-to-long-term termination of depending on Performance factor*4 [single FY evaluation] performance-based*2) MTBP*7 Joint presentation session with independent the position 1) Consolidated net business profits Session 2 directors, risk committee members, and audit 2) Profits attributable to owners of parent committee members from MUFG and MUAH 3 Performance factor*5 Theme-specific discussions led by MUFG executive 1) Consolidated NOP members Base amount 2) Profits attributable to owners of parent Officers’ Bonuses determined 3) Consolidated ROE 4) Consolidated expense ratio 1 (short-term performance- Annually in cash Session 3 Exchanging opinions with regard to Group strategies, 2 based* ) depending on IT and digitalization, human resources management, the position compliance, audits and other key issues that must be 1.5 Status of the execution of the duties of the Officers, etc.*6 addressed by MUFG
FY2017 FY2018 *1 As for the case of the president of MUFG *2 Range: 0-150% *3 Rate of attainment of targets of the indicators in the MTBP *4 Comparison of the rate of increase in the indicators from the previous fiscal year with that of competitors *5 Rate of increase/decrease of the indicators from the previous fiscal year and the rate of attainment of targets of these indicators *6 Determined exclusively by independent outside directors at the Compensation Committee *7 Subject to claw-back clause, etc.
84 MUFG Report 2019 MUFG Report 2019 85 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
● Type and Number of MUFG Shares Owned as of March 31, 2019 (Dilutive Shares: The number of corresponding vested points in the stock Board of Directors compensation system using a trust structure.) ■ Attendance at Board of Directors Meetings (FY2018) As of July 1, 2019
Member of the Board of Directors (Outside Director) Member of the Board of Directors (Outside Director) Member of the Board of Directors (Outside Director) Member of the Board of Directors Mariko Fujii Toby S. Myerson Yasushi Shingai Audit Committee Member ● Ordinary Shares: 0 ■ － ● Ordinary Shares: 368*1 ■ 9/9 ● Ordinary Shares: 0 ■ 8/8*2 Tadashi Kuroda Former Ambassador Extraordinary and Plenipotentiary Chairman & CEO, Longsight Strategic Advisors LLC Former Executive Deputy President and Representative ● Ordinary Shares: 124,600 Dilutive Shares: 69,981 ■ 9/9 of Japan to the Republic of Latvia Director of Japan Tobacco Inc. Emeritus Professor of The University of Tokyo
April 1977 Joined Ministry of Finance of Japan September 1977 Registered as an attorney at law, admitted in States of California April 1980 Joined Japan Tobacco and Salt Public Corporation (current Japan July 1997 Director, International Affairs and Research Division, Customs and and New York in the United States Tobacco Inc.) Tariff Bureau, Ministry of Finance October 1981 Joined Paul, Weiss, Rifkind, Wharton & Garrison LLP July 2001 Vice President of Finance Planning Division of Japan Tobacco Inc. April 1999 Associate Professor, Research Center for Advanced Science and June 1983 Partner of Paul, Weiss, Rifkind, Wharton & Garrison LLP June 2004 Senior Vice President, Head of Finance Group of Japan Tobacco Inc. Technology, the University of Tokyo April 1989 Managing Director of Wesserstein Perella & Co. Inc July 2004 Senior Vice President, Chief Financial Officer of Japan Tobacco Inc. Member of the Board of Directors Audit Committee Member March 2001 Professor, Research Center for Advanced Economic Engineering, November 1990 Partner of Paul, Weiss, Rifkind, Wharton & Garrison LLP June 2005 Member of the Board, Senior Vice President, and Chief Financial the University of Tokyo June 2014 Outside Director of MUFG Union Bank, N.A. (current) Officer of Japan Tobacco Inc. Junichi Okamoto April 2004 Professor, Research Center for Advanced Science and Technology, December 2016 Retired from Paul, Weiss, Rifkind, Wharton & Garrison LLP June 2006 Member of the Board of Japan Tobacco Inc., ● Ordinary Shares: 182,800 ■ 9/9 National University Corporation, the University of Tokyo January 2017 Chairman & CEO of Longsight Strategic Advisors LLC (current) Executive Vice President and Deputy CEO of JT International S.A. June 2014 Outside Director of Electric Power Development Co., Ltd. February 2017 Outside Director of MUFG Americas Holdings Corporation (current) June 2011 Representative Director and Executive Vice President of Japan October 2015 Retired from the University of Tokyo June 2017 Member of the Board of Directors (Outside Director), MUFG (current) Tobacco Inc. Retired from Outside Director of Electric Power Development Co., Ltd. January 2019 Independent Director, TRU (UK) Asia Limited (current) June 2014 External Board Director of Recruit Holdings Co., Ltd. Ambassador Extraordinary and Plenipotentiary of Japan to the January 2018 Member of the Board of Japan Tobacco Inc. Republic of Latvia March 2018 Outside Director of Asahi Group Holdings, Ltd. (current) June 2016 Emeritus Professor of The University of Tokyo (current) June 2018 Member of the Board of Directors (Outside Director), MUFG (current) January 2019 Retired from Ambassador of Japan to the Republic of Latvia Member of the Board of Directors (Outside Director) June 2019 Outside Director of Dai-ichi Life Holdings, Inc. (current) Member of the Board of Directors June 2019 Outside Director of NTT DATA Corporation (current) Hirofumi Nomoto Chairman (Corporate Executive) Member of the Board of Directors (Outside Director), MUFG (current) ● Ordinary Shares: 25,000 ■ － Nobuyuki Hirano Chairman & Representative Director, Tokyu Corporation Member of the Board of Directors (Outside Director) ● Ordinary Shares: 80,400 Dilutive Shares: 625,577 ■ 9/9 Member of the Board of Directors, MUFG Bank, Ltd. Member of the Board of Directors (Outside Director) Tarisa Watanagase Kaoru Kato ● Ordinary Shares: 0 ■ 9/9 Former Governor, the Bank of Thailand ● Ordinary Shares: 0 ■ － April 1971 Joined Tokyu Corporation April 2003 Executive General Manager of Media Business Headquarters of Corporate Advisor, NTT DOCOMO, INC. Tokyu Corporation April 2004 President & Representative Director of its communications Inc. June 2007 Director of Tokyu Corporation June 1975 Joined the Bank of Thailand Member of the Board of Directors Executive Officer of Real Estate Development Business Unit of Tokyu January 1988 Economist, International Monetary Fund (On the Secondment) Deputy Chairman (Representative Corporate Executive) April 1977 Joined Nippon Telegraph and Telephone Corporation (NTT) Corporation October 2002 Deputy Governor of the Bank of Thailand Mikio Ikegaya July 1999 General Manager of Plant Department of NTT Kansai Mobile January 2008 Managing Director of Tokyu Corporation November 2006 Governor of the Bank of Thailand ● Ordinary Shares: 75,630 Dilutive Shares: 304,796 ■ 9/9 Communications Network, Inc. June 2008 Senior Managing Director of Tokyu Corporation September 2010 Retired from the Bank of Thailand April 2000 General Manager of Plant Department of NTT DoCoMo Kansai, Inc. April 2010 Executive Officer & Senior Executive General Manager of Urban Life March 2013 Outside Director of the Siam Cement Public Company Limited President and CEO, Mitsubishi UFJ Trust & Banking June 2002 General Manager of Corporate Strategy and Planning Department, Produce Business Unit of Tokyu Corporation (current) Corporation Member of the Board of Directors of NTT DoCoMo Kansai, Inc. June 2010 Senior Managing Director & Representative Director of Tokyu June 2017 Member of the Board of Directors (Outside Director), MUFG July 2005 Representative Director and Senior Corporate Executive Officer of Corporation (current) Sumitomo Mitsui Card Co., Ltd. April 2011 President & Representative Director, Tokyu Corporation July 2007 Executive Vice President, General Manager of Corporate Strategy April 2018 Chairman & Representative Director, Tokyu Corporation (current) and Planning Department, Member of the Board of Directors of June 2019 Member of the Board of Directors (Outside Director), MUFG (current) Member of the Board of Directors NTT DoCoMo Kansai, Inc. Member of the Board of Directors (Outside Director) Deputy Chairman (Representative Corporate Executive) June 2008 Executive Vice President, General Manager of Corporate Strategy Akira Yamate and Planning Department, Member of the Board of Directors of Saburo Araki ● Ordinary Shares: 0 ■ 9/9 NTT DOCOMO, Inc. Member of the Board of Directors ● Ordinary Shares: 210,980 Dilutive Shares: 61,520 ■ 8/8*2 June 2012 President and Chief Executive Officer, Member of the Board of (Lead Independent Outside Director) Certified Public Accountant President & CEO, Mitsubishi UFJ Securities Holdings Co., Ltd. Directors of NTT DOCOMO, Inc. Tsutomu Okuda President & CEO, Mitsubishi UFJ Morgan Stanley Securities June 2016 Corporate Advisor, Member of the Board of Directors of NTT Co., Ltd. DOCOMO, Inc. ● Ordinary Shares: 26,100 ■ 9/9 June 2018 Corporate Advisor of NTT DOCOMO, Inc. (current) Special Advisor, J. Front Retailing Co., Ltd. June 2019 Member of the Board of Directors (Outside Director), MUFG (current) November 1977 Joined Price Waterhouse Japan March 1983 Registered as Certified Public Accountant in Japan July 1991 Representative Partner of Aoyama Audit Corporation April 1964 Joined The Daimaru, Inc. Partner of Price Waterhouse Member of the Board of Directors President & Group CEO (Representative Corporate Member of the Board of Directors (Outside Director) September 1991 Managing Director of Daimaru Australia Pty. Ltd. April 2000 Representative Partner of Chuo Aoyama Audit Corporation May 1995 Director of The Daimaru, Inc. Partner of PricewaterhouseCoopers Executive) Haruka Matsuyama May 1996 Managing Director of The Daimaru, Inc. September 2006 Representative Partner of PricewaterhouseCoopers Aarata Kanetsugu Mike March 1997 President of The Daimaru, Inc. June 2013 Resigned from PricewaterhouseCoopers Aarata ● Ordinary Shares: 3,300 ■ 9/9 ● Ordinary Shares: 49,055 Dilutive Shares: 356,140 ■ 9/9 May 2003 Chairman and chief executive officer of The Daimaru, Inc. External Audit & Supervisory Board Member of Nomura Real Partner, Hibiya Park Law Offices September 2007 Chairman of The Daimaru, Inc. Estate Holdings, Inc. President & CEO, MUFG Bank, Ltd. President and Chief Executive Officer of J. Front Retailing Co., Ltd. External Audit & Supervisory Board Member of Nomura Real March 2010 Chairman and Chief Executive Officer of J. Front Retailing Co., Ltd. Estate Development, Co., Ltd. April 2013 Director and Senior Advisor of J. Front Retailing Co., Ltd. June 2015 Retired from External Audit & Supervisory Board Member of April 1995 Assistant Judge, the Tokyo District Court May 2014 Senior Advisor of J. Front Retailing Co., Ltd. Nomura Real Estate Development, Co., Ltd. July 2000 Registered as an attorney at law, Member of the Daini Tokyo Bar June 2014 Member of the Board of Directors (Outside Director), MUFG (current) Member of the Board of Directors (Outside Director), MUFG (current) Association May 2018 Special Advisor of J. Front Retailing Co., Ltd. (current) External Director of Nomura Real Estate Holdings, Inc. Member of the Board of Directors Joined Hibiya Park Law Offices External Member of Board of Statutory Auditors, Prudential Deputy President (Representative Corporate Executive) Group COO & Group CDTO January 2002 Partner of Hibiya Park Law Offices (current) Holdings of Japan, Inc. (current) June 2012 Outside Corporate Auditor of Vitec Co., Ltd. June 2019 External Director of Nomura Real Estate Development, Co., Ltd. (current) Hironori Kamezawa June 2013 Outside Director of T&D Holdings, Inc. (current) ● Ordinary Shares: 25,500 Dilutive Shares: 251,725 ■ － June 2014 External Audit & Supervisory Board member of MITSUI & CO., LTD. Member of the Board of Directors, Deputy President, (current) *1 Ownership substantially in the form of American Depositary Receipts (ADRs) MUFG Bank, Ltd. Member of the Board of Directors (Outside Director), MUFG (current) *2 For Mr. Yasushi Shingai and Mr. Saburo Araki, their “attendance at Board of Directors June 2015 Outside Director of Vitec Co.,Ltd. (currently Restar Holdings Meetings” represents the number of meetings attended/the number of meetings held Corporation) (current) following their assumption of the office as director at MUFG in June 2018.
86 MUFG Report 2019 MUFG Report 2019 87 Important Issues Concerning Value Creation Environment / Social / Governance Upgrading the Governance Framework
Global Advisory Board
MUFG has established the Global Advisory Board to function as an advisory body to the Executive Committee, and the Board holds regular meetings. The Global Advisory Board is made up of members from Japan, Europe, Asia, and the Americas who are external experts in areas such as corporate management, financial regulation, and government policy. They provide advice and recommendations on groupwide management, global governance, business strategy and other management issues from an independent standpoint.
Dr. Victor K Fung Professor Merit E. Janow Group Chairman, Fung Group, Hong Kong Former Honorary Chairman, the Dean, School of International and Public International Chamber of Commerce Affairs, Columbia University Fomer Member of Appellate Body, World Trade Organization Outline of Annual Meetings In December 2018, MUFG held its sixth annual Global Advisory Board meeting. In addition to Global Advisory Board members, attendees included Ambassador Lord (James) MUFG officers, directors, outside directors and John V. Roos Sassoon, Kt representatives from overseas partner banks. Participants engaged in active discussion on a broad Former United States Ambassador to Director, Jardine Matheson Holdings range of themes. Topics included risk factors that Japan Limited may impact MUFG’s business strategies and portfolio, Former Commercial Secretary to the Treasury, United Kingdom U.S.-China trade tensions, the growth potential of and risks associated with emerging nations, European politics such as Brexit and the EU’s future, digitalization and the data business.
Mr. George Yeo Mr. Toshio Iwamoto
Former Singapore Minister for Foreign Principal Executive Advisor, MUFG Global Partnership Conference Affairs, Trade & Industry, Health, NTT DATA Corporation Information and the arts We held the third round of the MUFG Global Partnership Conference to facilitate the sharing of expertise and collaboration among partner banks and MUFG. Attendees included chairpersons, CEOs and other executives from partner banks. The conference focused on four themes, namely, “channel strategy,” “data-driven marketing,” “consumer finance risk” and “cybersecurity.” Attendees were able to discuss issues Mr. Akio Mimura each is now confronting while exchanging insights.
Honorary Chairman, In addition, a digital-themed breakout session was held NIPPON STEEL CORPORATION with representatives from each partner bank. They discussed the priority measures they’ve taken and shared their know-how and case studies.
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