Sustainable finance in Japan

By K. Schumacher, Hugues Chenet, Ulrich Volz. Journal of Sustainable Finance & Investment, 2020

114 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance, Global and Planetary Change

View Paper: https://www.semanticscholar.org/paper/63cb11f276fe2965e03822e2044cbb828bb20b33