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Green deposits sprouting in the US

MUFG Union Bank has announced that it has launched Green Deposits for commercial and corporate clients, to support sustainable projects that benefit the environment.

Available in the US, Green Deposits aim to give the bank's clients the opportunity to invest their deposits in environmental, social and governance (ESG) projects. MUFG will use the deposited funds to finance ESG projects such as energy efficiency, renewable energy, green transport, sustainable food, agriculture, and forestry, waste management, and greenhouse gas reduction, among others.

"Our new Green Deposits offering aligns with our clients' commitment to the environment by embracing social responsibility and sustainable investing," said Ranjana Clark, head of Global & Americas Transaction Banking and Bay Area President of the bank. "MUFG is focused on developing innovative products and services that support our clients' objectives and that leverage our business strengths, such as Project Finance and Liquidity Management."

Developing a workable framework

MUFG partnered with Sustainalytics, an ESG research, ratings and data firm, to develop the bank's Green Deposit Framework to capture and account for qualifying green activities within the MUFG portfolio, and ensure alignment with industry best practices and standards.

"Liquidity vehicles such as this Green Deposit product meet many clients' needs who want to ensure their surplus cash deposits are being used for the greater good," said managing director Olu Adebiyi, Liquidity Product head, Transaction Banking Americas at MUFG. "We are proud to be at the forefront of our clients' focus on environmentally beneficial initiatives by adding a bank deposit option to accompany the growing number of non-bank ESG investment vehicles in the market."

An environmental commitment

MUFG has committed to participating in CDP (formerly the Carbon Disclosure Project). CDP is a project through which institutional investors from around the world work together and urge corporations to disclose their strategies on climate change as well as detailed data on their greenhouse gas emissions. MUFG has participated in the project since 2004.

On 1 July 2020, MUFG began applying the Equator Principles 4, which includes due diligence on the impact of physical and transition risks posed by climate change on projects and enhanced engagement with indigenous peoples. MUFG has also committed to gradually decreasing the balance of MUFG's exposure to coal-fired power generation projects with a target reduction of 50% from FY2019 to FY2030 and down to zero by FY2040.

In the Americas, MUFG is on track to exceed its five-year, US$41bn Community Service Action Plan sustainable finance goals announced in 2016, surpassing a cumulative US$50bn during 2020, including more than US$40bn for environmental finance, for projects including green affordable housing, solar and wind energy, agricultural operations that conserve natural resources, green and social bonds and sustainability linked bonds and loans, mass-transit systems, and public water infrastructure.

MUFG says it intends to commit ¥8 trillion (approximately US$72bn) of finance in the environmental field, including initiatives to counter climate change. It says it promotes renewable energy through project finance, issues MUFG Green Bonds (which ensure that the net proceeds are allocated to eligible Green Projects), provides commodities and services aimed at mitigating environmental loads, and encourages the climate change countermeasure consulting business.

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