Japan to promote environmentally friendly finance with popular system, state of affairs analyses

By Leika Kihara

FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo

© Reuters/Kim Kyung Hoon
FILE Photo: A guy putting on a protective mask walks earlier the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo

TOKYO (Reuters) – Japan will ramp up attempts to endorse sustainable finance this kind of as by nurturing its environmentally friendly bond industry and analysing financial institutions’ resiliency to weather pitfalls, according to the government’s new regulatory guideline.


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In collaboration with the central lender, the Monetary Solutions Agency (FSA) will conduct scenario analyses on Japan’s 3 mega-banking companies and prime a few non-lifestyle insurers to measure their resilience to hazards posed by climate modify.

The analyses will be based mostly on popular scenarios on local climate hazards and done as a pilot workout by June next calendar year, Japan’s fiscal regulator FSA mentioned in its fiscal 2021 regulatory guideline unveiled on Tuesday.

Japan will also established up a plan to certify environmentally friendly bonds and work with Japan Exchange Team – the operator of Tokyo Inventory Exchange – on a frequent platform that issuers and investors can faucet for information and facts on green bonds, in accordance to the guideline.

“It can be essential to generate an atmosphere where by sector contributors can effortlessly and accurately make investment decisions that lead to decarbonisation,” the FSA claimed.

The moves observe the Lender of Japan’s selection in June to improve funding for initiatives to fight local weather transform.

Japan is among the the world’s most catastrophe-vulnerable nations around the world with a historical past of major typhoons. It has been vastly afflicted by local weather change, with floods leading to lots of casualties.

But several Japanese financial institutions have dragged their feet on weather difficulties compared to their European counterparts, partly thanks to the country’s hefty reliance on thermal and coal electric power electrical power.

Key Minister Yoshihide Suga previous 12 months set a purpose to make Japan carbon neutral by 2050, bringing it a lot more in line with other nations around the world as international notice to local weather change heightens.

Japan’s environmentally friendly bond current market is rising but nonetheless compact with a dimensions of about 775 billion yen ($7 billion), towards the world’s $300 billion market place for the belongings.

($1 = 110.1000 yen)

(Reporting by Leika Kihara Editing by Christopher Cushing)

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