HATAKEYAMA Yojiro

Director-General, Industrial Science, Technology and Environment Policy Bureau, Ministry of Economy, Trade and Industry

The Japanese Government formulated the GX Promotion Strategy to simultaneously achieve the three goals of decarbonization, stable energy supply, and economic growth. The "Pro-Growth Carbon Pricing Concept," which combines upfront investment and carbon pricing, is the pillar of the GX policy, and the GX Econoy Transition Bonds to support GX investment amounting to JPY 20 trillion will be issued over the next ten years.
This year, the Global GX Conference and the TCFD Summit were integrated to form the GGX × TCFD Summit, focusing on the decarbonization of the industry, the financing required to achieve it, and the disclosure of information to support this process. It is hoped that this summit will further deepen the discussion on the realization of GX.

KATO Masahiko

Chairperson, Japanese Bankers Association

One of the primary roles of financial institutions is to use the information disclosed by companies to facilitate the provision of the funds necessary for the transition to the real economy and accelerate the efforts of companies.
Meanwhile, there is growing demand for the banking industry to reduce CO2 emissions through investment and financing. In marking the 150th anniversary of banking in Japan, the financial sector and Government of Japan will continue to work together to promote GX and achieve a decarbonized society through enhanced engagement, disclosure support for companies, and the expansion of sustainable finance.

Gianluigi Benedetti

Ambassador, Embassy of Italy in Tokyo

The industrial sector is expected to play a leading role in the transition to a climate-neutral economy. A critical aspect of industrial decarbonization is maintaining a competitive industry and preventing carbon leakage. In this context, the G7 Industrial Decarbonization Agenda initiative, which Japan has also focused on, provides a strategic framework for the decarbonization of heavy industry and the development of innovative technologies, and Italy would like to follow this meaningful activity. Notably, 64% of Italy’s industrial emissions come from the hard-to-abate sector, representing 5% of the gross domestic product and 700,000 jobs. The Italian Government is allocating 31.5% of the National Recovery and Resilience Plan funds—EUR 59.47 billion—to decarbonization efforts, but even so, these solutions are not well suited to all production conditions. Therefore, it is imperative to develop an integrated decarbonization strategy that does not exclude all options. Building on the work undertaken under the Japanese Presidency in the run-up to the next year’s G7 in Italy, we will work ambitiously toward this common goal.

As society’s expectations of companies’ contribution to the achievement of the SDGs increase, there is a need to create value by contributing to the solving of societal problems through corporate activities, that is, "solution-providing capabilities." In the context of climate change, greenhouse gas emissions are perceived as a risk factor that affects companies’ competitive positions, leading to the development of Scope 1 to 3 assessment methodologies. However, this alone is not sufficient to assess companies, and there is a need for additional mechanisms to assess a company’s contribution to reducing emissions in society as a whole and encourage positive climate behavior. One expected outcome is "avoided emissions" as an indicator of a company’s "solution-providing capability." From the perspective of financial institutions, they also want to look at the "growth opportunities" of companies rather than focusing solely on the "risk" aspect of reducing the company’s emissions, as they can allocate capital most efficiently by pursuing the contribution of reductions to society as a whole through innovation; furthermore, it was noted that a more holistic approach could be used to evaluate companies that contribute to decarbonization. However, it was also pointed out that to avoid greenwashing, avoided emissions should be clearly distinguished from Scope 1 to 3 emissions and, therefore, cannot be used as a means of offsetting.
It was stressed that it is important to facilitate discussions with various stakeholders on the disclosure and analysis of avoided emission data for preventing greenwashing. At the global level, the International Electrotechnical Commission is standardizing measurement methodologies for avoided emissions in the electrical and electronics sector, with the aim of publication by the end of 2024. Regarding the World Business Council for Sustainable Development, sector-specific case studies are being conducted based on the guidance issued in March this year to make it more relevant to the realities of the sector. Case studies on the use of avoided emissions by financial institutions are also being conducted by the GX League in Japan. For avoided emissions to be adopted as one of the criteria for evaluating companies in financial institutions, expectations were voiced for the standardization of measurement methodologies within the same industry, as in the electrical and electronics sector, and the expansion of similar initiatives to other comparable industries so that data could be compared across industries.
To further popularize the concept of avoided emissions in society, it was concluded that it is important to first establish a forum for discussion on avoided emissions among stakeholders and stimulate communication.

Emmanuel Faber

Chair, International Sustainability Standards Board (ISSB)

In June, the International Sustainability Standards Board (ISSB) published two IFRS Sustainability Disclosure Standards: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosure. Both standards were developed based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Financial Stability Board, which established the TCFD, praised the standards, stating that the TCFD’s efforts have borne fruit in S1 and S2. While the adoption of the standards is at the discretion of each country, the ISSB is deeply grateful to the Sustainability Standards Board of Japan for considering national standards based on the IFRS standards ahead of other countries.

MIZUNO Hiromichi

Founder and CEO, Good Steward Partners, LLC

In its eight years of existence, the TCFD has promoted the disclosure of information on climate change. However, this will soon come to an end. From here onwards, it will become important how the disclosed information is processed into a form that is easy for investors to use and how it is used in financial analysis and decision-making.
Although the anti-ESG movement is gaining momentum in the U.S., this is a political issue. If you ask the financial community, "Does climate risk affect investment performance?", most would reply, "Yes."
Japan is the most significant contributor to the TCFD initiatives. Expectations for future initiatives by Japanese companies are high.

Mary Schapiro

Head, The TCFD Secretariat

A shared global climate information disclosure standard has been established by the ISSB. The GFANZ published its transition planning framework last year.
There is a strong need to promote the achievement of decarbonization targets through consistent disclosure, including that of transition plans, to finance technologies and products that enable the decarbonization of the economy, companies aligned which have net-zero business models, companies with credible transition plans, and the managed phaseout of high-emitting assets that risk being stranded in a net-zero economy.

Although transition finance has first been perceived as greenwashing due to some of its initial projects, it is necessary globally, and understanding of it in Europe is progressing. To promote transition finance, the roadmap developed by Japan and the transition strategy described in the Climate Transition Finance Handbook published by the International Capital Market Association are of great importance. Various tools are becoming available, and opportunities are emerging to discuss in earnest the promotion of transition finance. To further facilitate transition finance, it was acknowledged that it is necessary to acknowledge that various modalities have their own strengths and weaknesses, such as taxonomies not being compatible with innovative technologies of which its timing of implementation is difficult to predict, and that the environment needs to be further improved.
While there are various types of financial instruments, such as green bonds and transition bonds, it was recognized that they all focus on different aspects of the same goal of combating climate change, and expectations for the rapid expansion of the transition bond market were expressed.
Setting out the example that ammonia combustion technology is expected to contribute significantly to the transition, the view was shared that research and development should be driven on all avenues toward decarbonization. It was expressed that Europe’s InvestEU, the U.S. Inflation Reduction Act, and Japan’s GX policy are innovative initiatives and will be a long-term trend. It was also recognized that the development and implementation of new technologies, which are an integral part of GX, require continued dialogue between financial institutions and companies as well as disclosure to ensure credibility.