Japan launches TCFD consortium to work on company/investor climate disclosure

Group boasts high-level political and financial backers.

As of next week, investors and corporates in Japan will have a platform devoted to discussing climate-related disclosures, as the country’s financial heavyweights, regulator and government ministries rally behind the launch of a TCFD consortium.
A launch statement describing the consortium as a “catalyst to promote fruitful discussions on effective disclosures” boasted high-level signatures from five founders, including from Kunio Ito, the leading academic whose 2014 review catalysed corporate governance reform in Japan, as well as representatives from the Keidanren, Japan’s powerful business lobby, and Tokio Marine Holdings, the insurance group. The initiative will see two working groups focus on the ins and outs of climate reporting – from scenario analysis to sector-specific disclosure – as well as how the information is used for investment decision making, with the Financial Services Agency (FSA), the Ministry of Economy, Trade and Industry (METI) and the Ministry of Environment (MoE) acting as observers.
Ito himself will give opening remarks at a launch ceremony on May 27, followed later by figures including Hiro Mizuno, Executive Managing Director and CIO of Japan’s colossal Government Pension Investment Fund; and Mary Schapiro, of TCFD, SASB and US SEC stature, who will join via a video link. The endeavour takes inspiration from the FSB’s Task Force on Climate‐related Financial Disclosures, which released its final recommendations in June 2017.
The new consortium will see members attend an annual meeting, which will also act as the consortium’s decision-making body, where issues discussed in the working groups will be shared.
Among topics to be discussed in the working groups will be regarding the best medium for disclosure, which has been an area of uncertainty in Japan’s financial andbusiness communities, with many unsure whether to report in mandatory corporate filings or sustainability reports. For the working group on investment decision making, one area of focus will be on climate change-related financial products.Registration for the consortium is open. In order to be eligible for participation, entities must have expressed support for the TCFD recommendations. Japanese branches and entities of the global companies are also eligible, provided the global headquarters have supported TCFD. As of April 26, the number of Japanese entities supporting the TCFD had reached 81. Satoshi Ikeda, Chief Sustainable Finance Officer at the FSA, said with the eligibility requirements for the consortium, the number of Japanese TCFD was expected to jump to over 100 entities and surpass the UK and US.
This is just the latest move from Japanese government bodies in the area. Last year, METI started a TCFD study group, and in December it published TCFD Guidance complete with supplementary explanations, sector-specific guidance and model case studies, for companies starting disclosure.
The MoE has been known to provide subsidies for firms to conduct TCFD-based scenario analysis.
On its website, METI said the new consortium was “a framework in which companies proactive in addressing environmental issues can collect funds from around the world and further their development”.
It added: “The inauguration of the consortium [is] significant in achieving a virtuous cycle between the environment and growth. METI expects that the consortium…will proactively strive to convey related information to people inside and outside of Japan so as to encourage these efforts to be assessed in global markets.”