First Meeting of Taskforce on Preparation of the Environment for Transition Finance to be Held

1. Background

Global society has been enhancing interests in realization of a decarbonized society. Achievement of the goals set in the Paris Agreement and realization of carbon neutrality by 2050 essentially require the provision of funds for securing transition to low carbonization, including energy efficiency improvement and energy transitions.

In September 2020, METI formulated the Climate Innovation Finance Strategy 2020, a policy for promoting finance for development, implementation and dissemination of transition technologies, as well as other innovative, advanced technologies. This strategy presents the recognition of the importance of building trust between issuers and financial institutions in the process of promoting fund raising through new financial products such as transition bonds and loans. Based on this recognition, it aims to enhance the understanding of transitions by formulating the Basic Principles for fund raising using the previously mentioned methods. The strategy also provides an opportunity to develop excellent case examples of fund raising efforts as a policy challenge.

On December 9 (Wed.), 2020, the International Capital Market Association (ICMA), a body publishing the Green Bond Principles and principles for other financial instruments, published the Climate Transition Finance Handbook (hereinafter referred to as the “handbook”) (see “Related materials” below). The handbook introduces the Climate Innovation Finance Strategy 2020 as an initiative on transition finance.

METI, jointly with the FSA and the MOE, will inaugurate a Study Group for Discussing Development of Environment for Climate Transition Finance in January 2021.With the guidance of the handbook taken into consideration, it will formulate Japan’s Basic Prnciples for fund raising through transition bonds, loans, etc.

Additionally, in FY2021, METI will open a call for model case examples of fund raising efforts through transition bonds, loans, etc. to collect excellent case examples of such efforts. METI will also provide subsidies for the expenditures incurred in review by a third-party assessment organization, with related budgets allocated under the FY2021 Budget Draft of the government. Through these efforts, METI will facilitate development of environments for provision of funds for transitions.

2. Overview of the Taskforce on Preparation of Environment for Transition Finance

Objective

Formulation of the Basic Principles for climate transition finance in line with international principles

Chair

Professor Ito Kunio, Director, CFO Education and Research Center, Hitotsubashi University

Organizers

FSA, MOE and METI

Schedule

The Taskforce will hold its first meeting on January 27 (Wed.), 2021, and publish the Basic Principles in the spring of 2021.

Other information

The meetings will not be open to the public in order to ensure an opportunity for members of the Taskforce to exchange their opinions in a frank and free manner. After the meetings, distributed materials and a summary of the minutes will be made available on the METI website.

Related materials

• Translation of ICMA’s Climate Transition Finance Handbook (in Japanese)
• ICMA’s Climate Transition Finance Handbook
• Overview of the Taskforce on Preparation of Environment for Transition Finance (in Japanese) (PDF:327KB)
• Project for Promoting Climate Innovation Finance (under the FY2021 budget) (in Japanese) (PDF:346KB)

Link to related information

• Climate Innovation Finance Strategy 2020

Division in Charge

Environmental Economy Office, Industrial Science and Technology Policy and Environment Bureau