Japan Sustainable Finance Policy Update May 2022 – August 2022

This IGES Issue Brief is an update on policy developments related to sustainable finance in Japan between May 2022 and August 2022.

The Expert Panel on Sustainable Finance under the Financial Services Agency (FSA) published the ‘Second Report by the Expert Panel on Sustainable Finance,’ outlining the progress of developments over the past year and identifying emerging issues. The FSA also committed to providing updates on sustainable finance related policy developments across the different ministries in an effort to present a more comprehensive view of Japan’s policy undertakings. The Technical Committee for ESG Rating and Data Providers, etc. under the FSA published the ‘Report of the Technical Committee for ESG Evaluation and Data Providers’ and recommended that the FSA issue a ‘Code of Conduct’ for ESG evaluation and data providers based on a set of principles outlined in this Report. Finally, the FSA’s Working Group on Corporate Disclosure of the Financial System Council delivered the ‘Report by the Working Group on Corporate Disclosure of the Financial System Council’ which made recommendations regarding statutory sustainability disclosure.

At the Ministry of Economy, Trade and Industry (METI), the Study Group on Disclosure Policies for Non-financial Information published the ‘Opinion Paper on ISSB Drafts.’ On transition finance, METI established a Study Group on Financing for the GX (Green Transformation) of Industry and held its first meeting. On carbon credits, the Study Group on Operational Environment to Ensure proper Use of Carbon Credit toward Achieving Carbon Neutrality held its 4th meeting, and issued the ‘Carbon Credit Report.’

The Ministry of the Environment (MOE) revised and published the ‘Green Bond and Sustainability-Linked Bond Guidelines 2022’ and ‘Green Loan and Sustainability-Linked Loan Guidelines 2022.’

The work of the Sustainability Standards Board of Japan (SSBJ) Preparation Committee was officially handed over to the Sustainability Standards Board of Japan (SSBJ). Discussions at the SSBJ during this period focused on draft comments on the Exposure Draft on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft) and the Exposure Draft IFRS S2 Climate-related Disclosures (Climate Exposure Draft).