Energy transition as an important topic
As the world’s fifth-largest producer of greenhouse gases, the country continues to rely on fossil fuels and nuclear power. In April 2021, the new government under Kishida Fumio announced its intention to increase the share of renewable energy to 36–38% by 2030.
Sustainable investment in Japan
According to the results of the Japan Sustainable Investment Forum’s (JSIF) Sustainable Investment Survey 2020, Japan’s sustainable investment balance was 310.0 trillion yen, a decrease of 26.0 trillion yen compared to the 2019 survey.
The share of sustainable investments in assets under management was 51.6%, a decrease of 4.3%. The number of institutions included in the calculation of these figures increased to 47 from 43 in 2019.
However, when the balance sheet is viewed using a sustainable investment strategy, the picture is different. Compared to the previous year, ESG integration increased by ¥27.4 trillion to a total of ¥204.9 trillion. To keep up with developed markets in Europe and North America, the Japanese sustainable finance sector still needs to grow. Momentum can be maintained and climate and ESG investments can be expanded by building on the policy initiatives and education efforts described above. The aim is to reduce funds and investments in energy-intensive technologies and projects, both at home and abroad. Many Japanese pension funds, insurers, asset managers, and banks are lagging behind in reducing or disclosing their carbon-intensive assets. This is particularly true for fossil fuel activities.
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“Green” divisions as a duty
Until now, companies in Japan have not been required to report on sustainability. Since 2014, companies above a certain size in Europe have been obliged to report on their corporate social responsibility (CSR). This will also change in Japan from fiscal year 2023 (1 April to 31 March). The Financial Services Agency (FSA), which is responsible for regulating the Japanese capital market, has introduced a new disclosure requirement. From fiscal year 2023 on, all listed companies will have to disclose ESG-related information. The FSA does not explicitly use the term ESG, but refers to evidence of sustainability and efficient corporate governance.
Through this measure, Japan has driven the country’s “green transformation” and made the ESG criteria an important issue. Although awareness of environmental and climate protection is slowly increasing in Japan, it is still necessary to act quickly and decisively to achieve the 17 targets in a timely manner.
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Sustainable investing represents a paradigm shift in the business world. It recognises the importance of responsible corporate behaviour and sustainable development alongside profit generation. Rather than focusing solely on financial returns, ESG investing gives equal weight to a company’s environmental impact, social responsibility and governance structure. In essence, it’s a way for investors to make […]
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