Japan considers using dormant bank accounts to fund social investment body

A coalition of NGOs and social businesses in Japan are in talks with the ruling Liberal Democratic Party about using dormant bank accounts to set up a Big Society Capital-style organization in the country.

Big Society Capital is the UK’s pioneering social financial institution that was launched with a £600m (€767.7m) investment fund in April 2012.

It comes as the LDP has suggested in its manifesto to make use of the country’s dormant accounts, estimated to be around US$500m (€389.8m), and has set up a group to suggest ideas for how the funds will be used.

The group, called the Group of Councillors for Utilization of Dormant Bank Accounts, includes Shiozaki Yasuhisa, president of the LDP and Furukawa Mothisa, acting president of the Democratic Party of Japan.

Yosuke Ishikawa, who works at the general planning section at the Nippon Foundation, a grant-giving organisation, is the secretariat for a group of Japanese NGOs, social businesses, consultants and lawyers who are lobbying the group to use some dormant accounts to set up a social investment bank.

Nippon Foundation’s Executive Director Shuichi Ono sat on the Japan National Advisory board for the G8 Impact Investment Taskforce that recently released its first report on catalysing a global social impact investment market. Other members of the board include Yoshiyuki Nojima, general manager of CSR and environmental affairs at Mitsubishi Corporation.Speaking to Responsible Investor, Ishiskawa said it was in regular discussion with the group of councillors. He has also met with Big Society Capital in the UK to see how its model could be transferred to Japan.

The Japanese part of the G8 report recommends that Japan create dormant account legislation similar to the UK that allocates part of the assets for social investment. “The total value of bank accounts dormant for more than 10 years could be utilized for nonprofits and social enterprises is estimated around US$500m. The usage of these assets should include funding to selected venture philanthropy and impact funds to maximize social return,” says the report.

The report also recommends the promotion of transparent disclosure by pension funds, including the National Pension Fund with assets of more than $US1trn, and foundations regarding socially responsible investment practices.

The report also recommends developing social impact bonds in the country.

Under the wider programme of reforms of Prime Minister Shinzō Abe known as Abenomics, Japan has recently launched a Stewardship Code and its own version of the UK Kay Review; its first code of corporate governance is also underway.