SMBC board opposes proposals to amend articles on financial and climate risk

The board said that the proposals are inappropriate.

The board of directors of Sumitomo Mitsui Banking Corporation (SMBC) has opposed shareholder proposals to amend the Articles of Incorporation on financial risk and clients’ climate change transition plans.

A shareholder had proposed adding a new clause that asks the audit committee to include an assessment of “the appropriateness of [SMBC]’s strategy, policies, and processes to mitigate financial risks associated with identified material issues.”

The proposal also asked that the committee include the reasons for their assessment, and framework for auditing oversight of the company’s risk controls related to the issues.

Whilst the audit committee’s FY2023 report identified no issues, the proposal claimed that shareholders were not advised of the basis of the assessment.

However, the board said that SMBC already carries out initiatives “in an appropriate manner” and that it already discloses information to an extent necessary.

“Given that audit reports are statutorily prescribed disclosure documents, the particular disclosure demands referred to in the shareholder proposal are not appropriate for inclusion in such audit reports,” the board stated in a published opinion on the shareholder proposals dated 14 May 2025.

Climate-related risk management
A second proposal sought to add a new clause requiring companies to disclose how they will assess high-emitting clients’ climate change transition plans for alignment to the 1.5°C goal of the Paris Agreement.

It also seeks disclosure on consequences for clients not producing credible Paris-aligned transition plans, including restriction of new finance; and assessment of financial risk of clients not having credible Paris-aligned transition plans.

The SMBC board stated that it is inappropriate to stipulate matters concerning individual and specific business execution in the Articles of Incorporation, according to a statement published on the SMBC website.

The board claims that approving the added provision would make it difficult for SMBC to respond and adjust flexibility in the event of changes in rules and frameworks concerning sustainability; or major changes in social conditions, such as wars or large-scale natural disasters.

The board also listed its overall risk management framework, where it said that it is “appropriately addressing” SMBC’s climate-related risks for alignment to the 1.5°C goal in its risk management framework.

It also reportedly already has an “environmental and social due diligence” as an assessment framework for their customers.

“Accordingly, we have in place a system for risk assessment based on assessments of our customers’ transition plans,” the board said.