Japan Sustainable Finance Policy Update February 2022 – April 2022

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This IGES Issue Brief is an update of policy developments related to sustainable finance in Japan between February 2022 and April 2022.

In this period, policy work pertaining to sustainability-related disclosure continued on multiple fronts. At the Financial Services Agency (FSA), the ‘Working Group on Corporate Disclosure of the Financial System Council’ deliberated on the way forward for sustainability-related disclosure. Further discussion on the details were taken up through the Sustainability Standard Board of Japan (SSBJ) Preparation Committee, newly established under the Financial Accounting Standards Foundation (FASF). The ‘Study Group on Disclosure Policies for Non-financial Information’ under the Ministry of Economy, Trade and industry (METI) continued its work and published the paper, ‘Preliminary Thoughts on the Technical Readiness Working Group (TRWG) Sustainability Disclosure Prototypes.’ The paper summarises the position of the Working Group, with expectations for it to contribute to the discussions at the SSBJ and the International Standards Board (ISSB).

The FSA also established the ‘Technical Committee for ESG Rating and Data Providers, etc.’ under the Expert Panel on Sustainable Finance, which held five meetings during this period. The Expert Panel on Sustainable Finance convened for its 11th meeting, provided an overview of Japan’s sustainable finance initiatives, reviewed research results on the status of ESG funds and discussed the draft discussion paper on financial institutions and climate change. FSA’s ‘Social Bonds Study Group’ provided feedback for the draft ‘Examples of Impact Indications for Social Projects,’ while the FSA began its second phase of the ‘Impact Investing Roundtables.’

METI continued its work on transition finance through its ‘Taskforce Formulation Roadmaps for Climate Transition Finance,’ publishing roadmaps for the electric power, gas, oil, cement and paper/pulp sectors.

Under the Ministry of the Environment (MOE), the ‘Green Finance Review Committee’ held a public consultation on its draft (revised) guidelines on green and sustainability-linked instruments. The MOE also hosted the 3rd Annual ESG Finance Awards Japan and the 5th ESG High Level Panel, which shortly followed with the ‘Declaration on the Roles and Actions of Finance in Supporting the Transition to a Decarbonized Society.’