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
Featured Experts
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.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Previous Article
ECB Updates Treatment of Leverage Ratio in Monetary Policy FrameworkRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.