Tokyo seeks asset manager for renewable energy ESG fund with strong social component

Tokyo ESG Fund will invest directly or indirectly in renewable energy facilities

The Tokyo Metropolitan Government (TMG), the municipal authority of one of the world’s largest urban areas, is calling for an asset manager to set up and run an “ESG” fund dedicated to investing in Japanese renewable energy facilities.

TMG is targeting at least ¥5bn (€41m) with the fund, which it is itself seeding with ¥500m (€4.1m).

The Tokyo ESG Fund will invest directly or indirectly in renewable energy facilities, such as solar, wind power, hydropower, geothermal, mainly as private equity investments.

The fund will also donate to NGOs, to be selected by TMG in fiscal year 2020, working to alleviate social problems, for example by supporting single parents, children and people with disabilities.

The donation amount will be determined by the selected fund manager, and be sourced from the administrative fee for the fund.

A TMG spokesperson said it was looking to entrust the fund to a manager with “recognition of the importance of ESG investment” and licensed to operate in Japan. The manager selection process will run until August 23.

The person said TMG aimed to promote and spread awareness of ESG investment with the launch of the fund, although there are no plans for more funds like this in the future.It’s not TMG’s first foray into green finance under governor Yuriko Koike. In 2017 it issued a ¥20bn (€164m) municipal green bond to finance green projects related to the Tokyo 2020 Olympics and the transformation of Tokyo into a smart city, and last month it joined UNEP’s Financial Centres for Sustainability Network (FC4S).

And it is by no means the only Japanese organisation to throw its weight behind efforts towards sustainability in finance, as key government and financial players increasingly rally around the cause.

The ¥159trn (€1.3trn) Government Pension Investment Fund (GPIF), the world’s largest pension fund, has spearheaded efforts under CIO Hiro Mizuno with the introduction of ESG benchmarks and its demand that managers consider and engage companies on ESG factors.

Though climate disclosures are still nascent in Japan, TCFD initiatives – including a study group, guidelines and a company/investor dialogue consortium – enjoy broad government backing, from the Financial Services Agency (FSA), the Ministry of Economy, Trade and Industry (METI) and the Ministry of Environment (MoE). The latter has also been known to provide subsidies for firms to conduct TCFD-aligned scenario analysis.

To contact TMG about the Tokyo ESG fund please email.