Japanese government offers subsidies to support green bond issuance

Environment ministry will support for external reviews and consultants

The Japanese government is offering financial support for green bond issuers, in a bid to support the market until it becomes “self-sufficient”.

“Subsidies will be provided for the expenses that are required by those who support companies, municipalities and other bodies who seek to issue green bonds, in the form of granting external reviews, consultation on establishing a Green Bond framework, etc.,” the Ministry of Environment said (link).

“Although the number of green bond issuances is gradually increasing in Japan, it remains limited,” the ministry said.

“This is because the issuer’s burden to examine, develop and operate a green bond framework in addition to normal bond-issuance is relatively heavy.”

The government will subsidize costs up to JPY50m (€390,000), saying that it desires further expansion and development of the green bond market. “For this reason, the Ministry of the Environment will support the issuance of green bonds until when Green Bond market is developed as a self-sufficient market.”

It has selected three frameworks in a pilot project.They are: Japan Railway Construction, Transport and Technology Agency; Hokuriku Green Bond Co., Ltd.; and Nippon Yusen Kabushiki Kaisha.

The Tokyo Stock Exchange launched a green bond platform in January this year and the government puts the annual amount of green bond issuance in Japan at around $2bn in 2017.

“The issuer’s burden to develop a green bond framework is relatively heavy.”

Earlier this month the International Capital Markets Association launched a reference framework to enable investors and others to map green and sustainability bonds to the UN’s Sustainable Development Goals.

Examples of green bonds out of Japan include ones from shipping giant Nippon Yusen Kaisha, which was to be Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. and Nomura Securities Co. Ltd. ESG research house VigeoEiris was to conduct the third-party review.