Shareholder Spotlight : Sumitomo Mitsui Trust – Tokyo’s Climate Saint Backing The Diesel Sinner

Sumitomo Mitsui Trust wants you to think “calm Japanese stewardship with a conscience”. In reality it is a giant, overfed landlord of other people’s money that has decided Cummins defeat devices and fossil expansion are perfectly compatible with a flourishing future.

The Whale We Were Supposed To Respect

This is not some boutique fund accidentally tripping over a few Cummins shares.

Sumitomo Mitsui Trust Group runs well over 170 billion dollars in reportable US securities across roughly 1,050 holdings. Cummins sits in that book as a meaningful position, not a rounding error – around 380,000 shares in recent filings, worth roughly 120 million dollars and sitting there year after year while the emissions scandal and disability stories pile up.

This is how Cummins survives reputationally. Not because anyone believes the ethics page. Because dry, respectable whales like Sumitomo Mitsui Trust quietly keep it in the portfolio and call it long term value.

“Trust” Is Doing A Lot Of Work Here

The branding is almost offensive on its own.

“Sumitomo Mitsui Trust”. “Trust for a flourishing future”. They have entire web pages about how they integrate environmental, social and governance risks and help build a better society through investment. They pump out stewardship reports and sustainability booklets like confetti.

And then you scratch the surface:

they are one of Japan’s biggest institutional investors
they have been named in reports as part of the core group pouring tens of billions into companies expanding coal, oil and gas
their main trust bank arm has already worn an insider-trading fine in Japan for playing with leaked information while still talking about integrity and governance

This is the outfit that has chosen to be a long term backer of Cummins Inc. The diesel cheat with the record Clean Air Act penalty. The disability cases. The whistleblowers. The lot.

“Trust” here does not mean what you think it means.

Net Zero On PowerPoint, Diesel In The Portfolio

Market Forces and allied campaigners pulled the numbers together earlier this year. Japan’s five largest institutional investors – including Sumitomo Mitsui Trust – are collectively ploughing over 40.6 billion dollars into companies expanding coal, oil and gas, while holding only a slightly larger amount in clean energy names. The ratio is about 1.07 to 1. What is actually needed for a 1.5°C pathway by 2030 is around 4 to 1 in the opposite direction.

In other words, these so-called stewards are effectively cancelling out their own climate progress by backing the expansion of fossil supply at the same time.

Now drop Cummins into that picture.

Diesel engines by the million
Generators for data centres and heavy industry
A historic emissions fraud that ended in the largest Clean Air Act penalty on record
A fresh line of investor litigation saying the board misled the market about defeat devices

If you were genuinely worried about climate risk, regulatory risk and governance risk, Cummins would be one of the first names on the review list. Sumitomo Mitsui Trust has apparently decided it belongs in the “fine, keep it” pile.

The Last “Net Zero” Bank Still Backing The Fire

Most of Japan’s big banks have already backed away from the Net Zero Banking Alliance. One remains in the club: Sumitomo Mitsui Trust Group.

The Financial Times spells it out. Of the Japanese institutions that joined NZBA, only SMTG is still there, even as Japanese lenders show up near the top of global fossil fuel financing league tables. So SMTG gets to play the role of the good one – the last Japanese member clinging to the banner of net zero while its peers walk out.

On paper, that looks noble. In reality, the same group is:

flagged in reports as a major financier of fossil fuel expansion
still happily long Cummins, the diesel cheat
still churning out polite stewardship language while the actual emissions curve barely bends

If this is what remaining in the alliance looks like, you understand why activists talk about net zero as branding rather than constraint.

Stewardship As Spiritual Bypass

Have a look at Sumitomo Mitsui Trust Asset Management’s stewardship material and try not to gag.

They describe themselves as responsible institutional investors. They promise to:

engage in dialogue with management
integrate ESG factors into investment decisions
expand long term value for beneficiaries
contribute to solving social and environmental issues

What you do not see is any sign of teeth. No named examples of them going to war with boards. No public escalation against serial polluters. No visible pressure on Cummins to do anything beyond the bare legal minimum after its defeat device scandal.

The whole thing reads like a spiritual bypass for finance. You do not change what you hold. You change the language you wrap around it. You turn engagement into a box-ticking exercise and vote with management almost every time. Then you file the PDF and tell yourself you have done your bit for the planet.

Cummins Is Not A “Whoops”

Let us be clear: Cummins is not something that somehow slipped past this machinery by accident.

Sumitomo Mitsui Trust has all the tools it says it needs:

ESG analysis
climate scenario work
stewardship frameworks
access to management
a trophy cabinet of bought “ethical” and “sustainable” badges it can wave around instead of doing anything that actually hurts a balance sheet

With all that apparatus in place, they have still landed on a simple conclusion:

It is fine to be long a company that cheated emissions tests on a massive scale, paid a record penalty, fought disabled workers, bought itself ethics awards and is now pivoting to “green” diesel and hydrogen talk while selling the same old kit.

That is not oversight. It is endorsement. Every quarterly 13F that rolls in with Cummins still in the holdings list is another quiet vote of confidence.

If This Is A “Flourishing Future” Check The Definition

Sumitomo Mitsui Trust loves the phrase “flourishing future”. It crops up all over their sustainability and UK stewardship material. They want you to imagine that by investing with them, you are helping to build a better world as well as grow your pension.

Here is what that future actually contains in this case:

a diesel manufacturer that poisoned the air with defeat devices on almost a million trucks
billions paid out only when regulators and prosecutors pinned it to the wall
shareholder suits, EEOC cases and tribunals about the way it treats people
a steady stream of dividend cheques and capital gains for polite global investors who do not want to look too closely

Clients get carefully designed ESG diagrams and engagement statistics. Cummins gets patient capital and cover. Communities get whatever drops out of the tailpipe.

If that is flourishing, the word has lost all meaning.

Why This Whale Matters

You can laugh at a QRG or a Jump Trading as obvious villains. Sumitomo Mitsui Trust is more dangerous precisely because it looks dull and respectable.

When a giant “trust” bank with stewardship committees and PRI logos decides Cummins belongs in a long term portfolio, it normalises everything that has happened. The defeat devices. The penalty. The disability fights. All of it becomes just another risk line item that can be washed away with a bit of engagement and some green graphics.

If you have money with Sumitomo Mitsui Trust in any form – pension mandate, fund, wrap – this is your capital. Ask them, explicitly, why they are still backing Cummins and what they have actually demanded of the board since the emissions scandal blew open.

If the answer is a wall of ESG buzzwords and no concrete actions, you have your proof. The Tokyo climate saint is just another whale, and Cummins is one more dirty fish it is happy to keep in the tank.

Lee Thompson – Founder, The Cummins Accountability Project