High Demand for Japanese Sustainable Finance Taxonomy

A survey by the Principles for Responsible Investment (PRI) has identified “substantial demand” from investors for some form of comprehensive sustainable finance taxonomy for Japan. The survey found that only 35% of respondents agreed that existing financial disclosure regulations and frameworks adequately support their achievement of sustainability-related investment objectives. Around 60% of respondents to the survey supported the development of a sustainable finance taxonomy in Japan, while more than two-thirds said they perceived the absence of such a taxonomy for Japan as a potential risk for investors. The majority of respondents agreed that if a taxonomy was introduced in Japan, taxonomy-based information disclosure should be mandatory for companies. However, the report notes that officials from Japan’s Financial Services Agency, Ministry of Economy, Trade and Industry, and Ministry for the Environment think that introducing a sustainable finance taxonomy could impose a heavy burden on the organisation responsible for developing and maintaining it. Additionally, there are concerns that an exclusive focus on a ‘green’ taxonomy could limit the flow of funds toward other projects and activities, including transition and innovation-related activities. The results of the survey are accompanied by an analysis of selected existing sustainable finance policies, regulations and guidance, and a set of policy recommendations.  

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