Japan’s ESG expert group due to make recommendations in Q3, says FSA

A group of industry experts, government officials and academics convened to advise on Japan’s sustainable finance strategy is expected to issue a series of recommendations some time around May, according to securities regulator the Financial Services Agency (FSA).

The group – dubbed the Expert Panel on Sustainable Finance – was appointed by the FSA at the end of last year and is envisaged to play a role similar to that of the EU’s influential High Level Expert Group on Sustainable Finance. Members of the Expert Panel met for its inaugural meeting yesterday.

The appointment of an expert advisory group on the subject mirrors similar moves by regulators in Australia, Canada and Malaysia.

The Expert Panel’s forthcoming recommendations are anticipated to centre on regulatory and supervisory measures to drive the adoption of sustainable finance, rather than voluntary initiatives. Specific themes being considered include promoting climate-related corporate disclosures and increasing the number of sustainable investment opportunities.

The FSA will also appoint an additional sub-committee under the Expert Panel to develop “practical guidelines” for the issuance of social bonds.

The Expert Panel is chaired by Tsuyoshi Mizuguchi, Vice Chair of Takasaki City University of Economics and its members include George Iguchi, Chief Corporate Governance Officer of Nissay Asset Management; Reiko Hayashi, Deputy President of Bank of America Securities Japan; Arisa Kishigami, Specialist Advisor at Chronos Sustainability; and Emi Onozuka, COO of Japan Catalyst Investment Consultant.

The Expert Panel also includes representatives from Japan’s powerful business lobby Keidanren – which has previously opposed stringent ESG regulations and is in favour of transition-focused policies, the Japanese Bankers Association, Tokyo University and Mitsubishi UFJ Research & Consulting.

Representatives from Japan’s Ministries of Finance, Environment and Economy, Trade & Industry sit on the panel as permanent observers, as well as the country’s central bank. 

Separately, a survey of 54 institutional investor signatories of Japan’s Stewardship Code found that more than 80% had integrated ESG principles into their portfolio management, fossil fuels and weapons screening processes, and engagement and voting activities. However, around 40% of respondents indicated that they did not have a dedicated responsible investment department.

The study was conducted by QUICK ESG Research Institute, a subsidiary of the Nikkei-owned financial data provider QUICK.