Japan Sustainable Finance Policy Update June 2021 – September 2021

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This IGES Issue Brief is an update of policy developments related to sustainable finance in Japan between June 2021 and September 2021.

SUMMARY

Notably for this period, the Expert Panel on Sustainable Finance under the Financial Services Agency (FSA) issued ‘The Report by the Expert Panel on Sustainable Finance’ in mid-June. Building on the recommendations of this Report, the FSA published the ‘Japan FSA Strategic Priorities July 2021 – June 2022,’ outlining measures to address its policy priorities. On sustainable finance, the document outlines planned work on furthering corporate disclosure, work to create a platform for sustainability-related data, and work to support the climate risk analysis of financial institutions. The document also emphasises the importance and intention to actively participate in ongoing international discussions and developments related to sustainable finance. The work on sustainable finance in the coming year by the FSA is expected to broadly follow this document.

On the aforementioned work on corporate disclosure, discussions began under the Disclosure Working Group, a subgroup of the Financial Systems Council of the FSA. Disclosure related deliberations are taking place simultaneously in multiple fronts, including in the newly established ‘Study Group on Disclosure Policies for Non-financial Information’ under the Ministry of Economy, Trade and Industry (METI). The Disclosure Working Group will focus on legal disclosure requirements, while the Study Group will focus more on strategic input into the process of the proposed International Sustainability Standards Board (ISSB).

The Bank of Japan (BoJ) announced its strategy on climate change, where it indicated its intentions to begin disclosing in line with the Task Force on Climate-related Financial Disclosure (TCFD) recommendations, while also introducing a fund-provisioning measure for financial institutions against their green investment and loans.  

METI continued to move forward with its work on transition finance. METI established the ‘Taskforce Formulating Roadmaps for Climate Transition Finance,’ which will produce industry transition roadmaps complimenting the Basic Guidelines for Climate Transition Finance (METI, FSA, and MOE) published earlier this year. The Taskforce aims to produce roadmaps for the electricity, gas, oil, steel, cement, chemicals and paper/pulp industries this fiscal year. Also in this line of work, METI introduced related financial support measures to promote ‘transition’ labelled financial instruments.

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