October 12, 2021
On October 5 (Tue.), the Ministry of Economy, Trade and Industry (METI) held a Summit of the Task Force on Climate-related Financial Disclosures (TCFD; hereinafter referred to as the "TCFD Summit"). The event brought together global leaders of industrial and financial organizations working to advance the implementation of the TCFD recommendations (a framework through which companies disclose their information on climate change). As a summary of the discussions, METI compiled "Key Takeaways of the TCFD Summit."
1. Background to the TCFD Summit
With increasing interest in climate change, more than 120 countries around the world have declared they are aiming to be carbon neutral by 2050. In order to achieve this, financial institutions are also actively working toward achieving net zero emissions among their investees.
The TCFD is internationally supported as a framework for disclosure. With disclosing information on climate change becoming increasingly important for companies, their endorsement of the TCFD is also gaining pace. As of September 30, 2021, the number of TCFD endorsers had grown to 2,529 organizations worldwide (up by 1,096), with 509 of these in Japan (up by 203).
In order to achieve a virtuous cycle of economic growth and environmental protection, it will be important for companies to further their commitment to TCFD disclosure, and to improve the quality and depth of disclosure in order to help investors make appropriate financing decisions. It will also be vital for investors to accurately understand the disclosures.
The event in 2021 was the third TCFD Summit. Leaders from the industrial and financial sectors discussed how to promote further use of the TCFD recommendations in order to encourage the expansion of disclosure that will provide a sound basis for appropriate investment decisions. Specifically, the following shared views comprised the key results of the event:
- It is important to obtain commitments to carbon neutrality from investors through engagement, not divestment.
- Given the importance of reducing emissions throughout the supply chains, Scope 3 needs to establish calculation methods in order to solve the practical issues. It is also important to understand the background to why Scope 3 disclosure is necessary rather than simply using a check box format.
- Transition financing is essential worldwide, and it is important that disclosures include transition strategies. This is especially true of Asia, which is highly reliant on fossil fuels.
- The activities of Japanese consortiums are leading to consortiums being established overseas. The contributions from Japan are playing a major role in expanding global disclosure.
- Green Investment Guidance 2.0 and Zero Emissions Challenge 2 were announced.
2. Overview of the TCFD Summit 2021
Date and time:
October 5 (Tue.), 2021, 13:30 to 18:30
The World Business Council for Sustainable Development (WBCSD) and the TCFD Consortium
Number of registered viewers:
3. Details of the discussions
1. Welcome message by Mr. Hagiuda Kouichi, Minister of Economy, Trade and Industry (Read on his behalf by Mr. Kishimoto Michihiro, Deputy Director-General for Industrial Science, Technology and Environmental Policy, METI)
It is important that Japan rise to the challenge of achieving its targets and becoming carbon neutral by 2050, and contribute to global carbon neutrality. As it does so, it is important that all countries pursue their own variety of paths to achievement, in line with their actual circumstances. Creating innovation will be the key. The Japanese government will support TCFD disclosure and take the initiative in contributing to measures against climate change.
2. Welcome message from Mr. Hirose Naoshi, Vice-Minister for International Affairs
With a view toward total carbon neutrality worldwide, Japan will lead global decarbonization by aiming to establish innovative technologies and actually implementing them within society, in order to achieve "Beyond Zero." By funding these technologies, we will aim to create a trend whereby financing provides companies with the impetus to engage in efforts toward achieving carbon neutrality. Disclosure will become the basis on which companies' endeavors are assessed.
More information on what was discussed after the opening remarks is available here:
Division in Charge
Environmental Economy Office, Industrial Science and Technology Policy and Environment Bureau