Japan Prime Minister Kishida Says Japan Pensions With $600 Billion to Sign ESG Pact

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In a significant development, Japanese pension funds managing a staggering 90 trillion yen, (equivalent to USD$600 billion), have announced their intention to participate in a global initiative for responsible investment. Prime Minister Kishida made this momentous announcement during his speech at the “PRI in Person” forum, which brought together leading investors committed to advancing global responsible investment.

The Prime Minister extended a warm welcome to all distinguished investors gathered in Japan for this pivotal event, acknowledging the efforts of the PRI Secretariat and all involved in organizing it. He emphasized the importance of discussions on global sustainable finances and investments, particularly in the context of Japan’s commitment to addressing social and environmental challenges while promoting sustainable growth.

Japan’s vast household financial assets, totaling over 2,100 trillion yen ($14 trillion), primarily in the form of savings, hold significant potential to drive sustainable growth. Prime Minister Kishida outlined a policy package aimed at redirecting these substantial assets into investments, not only benefitting Japan but also making a global impact.

Addressing diverse challenges such as climate change, an aging population, and natural disasters requires tapping into the inherent strength of finances. Prime Minister Kishida highlighted Japan’s willingness to share its experiences and outcomes with the global community, positioning itself as a leader in facing social and environmental challenges.

The Prime Minister underscored the pivotal role of science and technology in addressing these challenges, highlighting innovative solutions developed by Japanese startups. One example he cited was a startup founded by young researchers that harnessed traditional printing technology for electronic circuit boards, achieving remarkable reductions in metal usage, CO2 emissions, and water consumption.

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Prime Minister Kishida outlined four major Japanese policy priorities aimed at addressing global issues and promoting corporate activities and investments that facilitate sustainable growth:

  1. Green Transformation (GX): Japan is committed to shifting away from fossil fuels and towards clean energies. To raise over 150 trillion yen ($1 trillion) of public and private financing over the next decade to achieve net-zero emissions by 2050, the government has introduced the GX Promotion Strategy, including carbon pricing and the issuance of “Climate Transition Bonds” to catalyze innovation in renewable energy and related industries.
  2. Supporting Startups: Recognizing the role of startups as catalysts for addressing social challenges and driving growth, Japan has launched a five-year plan to foster startups dedicated to global problem-solving. The aim is to amplify investments to 10 trillion yen ($70 billion) within five years, with a focus on impact investment.
  3. Enhancing Human Capital: Japan prioritizes human resource development, including re-skilling and efforts to promote women in the workforce. Disclosure requirements for human capital-related information have been imposed on listed companies in Japan to increase corporate value in the long term.
  4. Strengthening Sustainable Finance: To encourage investments in companies addressing social challenges, Japan plans to enhance the abilities of asset managers and owners, who manage a substantial portion of household financial assets. This includes a new policy plan aimed at improving asset management governance and promoting sustainability-focused investments.

Prime Minister Kishida concluded by emphasizing Japan’s commitment to cooperate with peer Asian countries to achieve global net-zero emissions, especially through the launch of an “Asia GX consortium.” This consortium will facilitate GX investments in Asia, involving both the public and private sectors.

In summary, Japan, under Prime Minister Kishida’s leadership, is taking significant steps to address global challenges, promote sustainable growth, and encourage responsible investments, with Japanese pension funds committing a substantial $600 billion to this cause. This announcement reflects Japan’s determination to play a pivotal role in the global transition to a more sustainable future.