JFSA Finalizes Guidelines on Climate Transition Finance
JFSA, along with the Ministry of Economy, Trade, and Industry and the Ministry of Environment, finalized the guidelines on climate transition finance. The guidelines are aimed to strengthen the position of climate transition finance, especially in the "hard-to-abate" sectors, and raise funds to contribute to achieving the 2050 carbon-neutral goals and the Paris Agreement. JFSA also published a summary of responses received during the consultation on these guidelines, which were open for comments from April 05 to April 16, 2021.
Transition finance, as mentioned in the guidelines, refers to a financing means to promote long-term, strategic greenhouse gas emissions reduction initiatives that are taken by a company considering to tackle climate change for the achievement of a decarbonized society. Japan, with the aim to achieve 2050 carbon-neutral, defines transition finance as a finance for supporting the fundraiser who have set their target consistent with the Paris Agreement and satisfied the elements set forth in these guidelines. The guidelines provide an overview of transition finance, focusing on its position in relation to the existing principles and guidelines; they also describe expectations on raising of funds for transition finance. The guidelines provide examples of responses and interpretations so that they can serve as a reference for the fundraiser, the financier, and other market participants when they consider concrete actions to transition finance, while considering the alignment with the International Capital Markets Association (ICMA) Handbook on Climate Transition Finance, issued in December 2020. At the request of the "Taskforce on Preparation of Environment for Transition Finance," ICMA has provided input into these guidelines while also confirming that it welcomes the proposed alignment with its Handbook.
Keywords: Asia Pacific, Japan, Banking, Securities, Climate Change Risk, Sustainable Finance, Green Bonds, ESG, Transition Risk, ICMA, JFSA
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
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