Sustainable finance in Japan. (2nd April 2020)

• Record Type: Journal Article
• Authors: Schumacher, Kim; Chenet, Hugues; Volz, Ulrich
• Is Part Of: Journal of sustainable finance & investment. Volume 10:Number 2(2020)
• Page Start: 213
• Page End: 246
• Publication Date: 2020-04-02
• Subjects: Sustainable finance and investment -- ESG -- Japan -- climate-related risks -- TOPIX -- TCFD; G2 -- G3 -- Q5; Social responsibility of business -- Periodicals; Sustainable development -- Finance -- Periodicals; 332
• DOI: 10.1080/20430795.2020.1735219
• Languages: English
• ISSNs: 2043-0795

Abstract

ABSTRACT: This article examines the role of sustainable finance and investment in Japan and how the Japanese financial sector can mitigate growing climate risks and support Japan's transition towards a zero-carbon, sustainable economy. It first illustrates Japan's exposure to physical and transitional climate risks before reviewing emerging practices in sustainable finance. These include the growing importance of environmental, social, and governance (ESG) criteria in financial decision-making; more rigid reporting and disclosure standards; and the development of green bond and sustainable investment markets. The article also assesses the role of policies and regulations in scaling up sustainable finance and low-carbon infrastructure investments. Subsequently, it analyses transitional climate risks via scenario analysis, applying the Paris Agreement Capital Transition Assessment (PACTA) tool to examine the exposure of subsectors of the Japanese equity market over several climate scenarios. The article concludes with policy recommendations for aligning Japan's financial sector with global climate and sustainability goals.