Japan’s MS&AD to offer TCFD assessments as PRI studies country’s pension system

Moves come amid reports that Government plans to close inefficient coal plants and GPIF publishes stewardship survey

MS&AD Insurance Group Holdings, parent company of Mitsui Sumitomo Insurance Company and Aioi Nissay Dowa insurance, has teamed up with a US start-up to offer TCFD-analysis for corporates, as demand for climate disclosure ramps up in the country.

The Climate Change Impact Assessment Service for TCFD will be provided through MS&AD’s risk consulting business, and will use Francisco-based Jupiter Intelligence’s climate and weather risk prediction platform to simulate the financial impact of natural disasters on companies for a range of scenarios, and sell the information to clients.

Jupiter was founded in 2017 by Rich Sorkin, known for running one of Elon Musk's first ventures, city-guide producer ZIP2, back in the 90s, before it sold for $300m. MS&AD invested in Jupiter in March 2019 via its $120m corporate ventures fund MS&AD Ventures, which was originally launched in Silicon Valley in October 2018 and invests in start ups that are “strategically relevant” to the insurance group. Other backers include QBE Ventures and Systemiq.

Jupiter claims its technology measures asset-level risk and covers flood, fire, heat and drought across “all sectors”, globally, up to 50 years into the future.

It is one of the firms that will provide data to nascent open-source climate data platform OS-Climate.

Elsewhere in Japan, the Principles for Responsible Investment (PRI) announced it is commissioning research into barriers to responsible investment and sustainability within the Japanese private pension systems.

According to a Request for Proposals, the research aims to “understand the extent to which the structure, policy and regulation of pension systems influence sustainability”.

It defines sustainability as “the ability of plan boards and managers to be responsible investors, active stewards, and allocators of capital to economic activities with desirable social and environmental outcomes”.

The final report will include a detailed analysis of the structure of the Japanese pension system, a stakeholder chain analysis, and analysis of barriers within investment practice, pension system structure and policy and regulation to responsible investment and sustainability.

The UN-backed body is offering £15,000 for the work. 

According to the document, Japan and the UK are neck-and-neck as the second largest retirement markets, with each having $3.1trn. The US is the biggest at $25.4trn.

The final report will be delivered to the PRI in January next year.

GPIF also hit the headlines this week after posting a record quarterly loss of $165bn. The world’s largest pension fund released the news in its investment results for fiscal 2019. 

Released alongside the report were the results of a survey the fund collected from over 2,000 listed companies monitoring the ESG stewardship activities of its external managers. It is the fifth year running that GPIF has conducted such a survey.

GPIF explained the ethos behind the report: “We engage in dialogue with our external asset managers on an ongoing basis regarding their stewardship activities. However, taking this approach alone could result in one-way information gathering and lacking objectivity.”

The survey found increased use of integrated reports by institutional investors, and increased awareness of ESG issues among corporates. 22% of respondent companies had already endorsed the TCFD, while around 60% yet to endorse the recommendations are considering doing so in the future. 

Meanwhile, the Japanese Government signalled plans to close or suspend up to 100 inefficient coal plants by 2030, according to national newspapers. The world’s third largest economy, Japan gets 32% of its energy supply mix from coal and is the only G7 member with plans for new coal plants. The Yomiuri newspaper reported that industry minister Hiroshi Kajiyama is expected to announce nearly 90% of the 114 coal-fired power plants that were built before the mid-1990s and are now deemed inefficient by the government (Japan has 140 coal plants in total), will be retired or suspended, although the Ministry of Economy, Trade and Industry did not confirm the news when asked.