TOKYO (Reuters) - Mizuho Financial Group will stop financing new coal power projects and end all loans for coal by 2050, bowing to pressure from a group of leading investors for climate concessions ahead of the bank’s annual shareholders’ meeting in June.

FILE PHOTO: Mizuho Financial Group logo is seen at the company's headquarters in Tokyo, Japan August 20, 2018. REUTERS/Toru Hanai/File Photo

The policy change leaves Japan’s third-biggest bank by assets plenty of wriggle room on lending to projects planned or under construction, while the 2050 cutoff was dismissed by activists as too late for an exit from the dirtiest fossil fuel.

Mizuho, among the world’s biggest lender to coal power plant developers, said in a statement on Wednesday it would cut its outstanding balance of 300 billion yen ($2.8 billion) in loans to coal power projects as of March this year in half by 2030 and reduce it to zero by 2050.

A shareholder resolution sent to Mizuho management last month calls on the bank to outline a plan and set targets so that its business practices are more in line with the Paris Agreement, the global pact to fight climate change.

It was the first time a publicly traded Japanese company had been sent a shareholder climate change resolution. The resolution was sponsored by Kiko Network, a Japanese activist group that focuses on coal and also hold shares in Mizuho.

“Climate change is one of the most important global issues that can affect financial market stability,” Mizuho said. “Responding to the environment and climate change is a key issue in our business strategy.”

Kiko Network’s international director Kimiko Hirata welcomed the move but questioned the exceptions that would allow some projects to go ahead.

PHASE OUT

“I hope they will stick to a basic policy and stop all coal financing,” Hirata said, adding: “Coal power needs to be phased out before the 2040s globally. That means reaching zero by 2050 is too late.”

Climate campaigners have recently focused on Mizuho, including with a full-page advert in the Financial Times in March calling on the bank to exit coal financing.

Japanese banks are among the few major lenders who have stuck to backing coal projects even as others such as JPMorgan have cut lending to the business.

Mizuho is the world’s third-biggest lender to coal power and mining over the last five years, according to Refinitiv SDC Platinum data. Japan’s two other biggest banks - Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group - are also in the top five.

Yet pressure on Japanese banks may be working. A source at Sumitomo Mitsui told Reuters its banking unit would change its financing guidance to one of not lending to coal-fired power plants in principle.

A Sumitomo Mitsui spokesman said the bank is considering updating its policies “based on international circumstances and revision of the guidelines” on disclosing climate risks.

Investment funds with nearly $200 billion in assets and holding shares in Mizuho said last month they would back the Kiko Network motion.

“This new coal restriction policy is an important and valuable move by Mizuho which other banks, insurers and financiers in Japan will surely follow, as the tide turns further away from extremely risky coal projects,” Jeanett Bergan, head of responsible investment at KLP, Norway’s largest pension fund and life insurance company, told Reuters.