JAKARTA/TOKYO — An explosive new investigation by Rainforest Action Network (RAN) has uncovered that Japanese banking giant Mitsubishi UFJ Financial Group (MUFG) has been financing one of Indonesia’s worst environmental offenders, in violation of its own sustainability commitments.
Between 2020 and 2022, MUFG’s Indonesian banking subsidiary, Bank Danamon, provided $281 million in credit to Tunas Baru Lampung (IDX: TBLA)—a palm oil and sugarcane conglomerate with a notorious record of peatland destruction and devastating fires in its concessions.
Despite MUFG’s adoption of a group-wide No Deforestation, No Peatland, No Exploitation (NDPE) policy in 2021, Bank Danamon’s financing enabled TBLA to convert nearly 7,800 hectares of peatland in South Sumatra—driving massive carbon emissions and setting the stage for catastrophic fires that raged across more than 14,500 hectares in 2023 – an area the size of 20,000 football pitches.
In response to the fires, the Indonesian Ministry of Environment and Forestry has filed a civil lawsuit for US $41.5 million against one TBLA subsidiary for ecological and economic damage. TBLA remains a client of MUFG to this day, with outstanding loans in place until 2026.
“MUFG is violating its own environmental policies and commitments,” said Alex Helan, Senior Researcher with Rainforest Action Network. “As TBLA became one of the bank’s largest clients in the palm oil sector, it continued to destroy vast areas of peatlands, igniting a carbon bomb. The fires in 2023 show the catastrophic impacts of peatland degradation, and highlights the enabling role of bank finance.”
The investigation indicates critical weaknesses in MUFG’s approach to governance of its foreign banking subsidiaries. Despite having policies that prohibit peatland expansion, neither MUFG nor Bank Danamon appear to have implemented these safeguards.
“Banks need to be financing the restoration of key carbon sinks like peatlands, not financing their destruction,” Helan continued. “MUFG must demonstrate its commitment to its environmental and social policies by closing loopholes and disclosing how it will implement its NDPE commitment.”
Key Findings:
- $281 million in credit provided to TBLA by Bank Danamon between 2020-2022, with loans due to mature in 2026.
- Over 7,800 hectares of carbon-rich peatland were destroyed between 2020-2023, during this financing period.
- Fires spread across 14,500 hectares of TBLA’s concessions in 2023 alone- around the size of 20,000 football fields
Indonesian government filed a civil suit filed in 2024 against TBLA’s subsidiary for US $42 million in damages linked to the fires