Tokyo Sustainable Finance Forum Video Archives

Why is sustainable finance important?

The Sustainable Finance Week, subsidized by the Tokyo Metropolitan Government, is intended to disseminate sustainable finance and increase Tokyo’s presence in this area through a range of events intensively organized under the theme of sustainable finance which contributes to the creation of sustainable cities.

Why is it important to think about sustainable finance now?

It is important to address climate change to build a sustainable economic society.
However, Russia’s invasion of Ukraine has led to the current tight supply-demand situation in the energy market, sending energy prices higher.
Acceleration of energy transition cannot be achieved only with government funds, and circulating private funds better will facilitate the procurement of funds required for decarbonization.
This is an important role of sustainable finance.

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Emerging notable trends

I will report four notable trends that emerged as I looked at investor reporting systems.

Firstly, asset owners and asset management companies have an increasing number of ESG reporting requirements to be fulfilled.
Secondly, there is a shift in reporting style from “Tell Me” to “Show Me.” Reporting requirements were initially focused on the exercise of voting rights.

Thirdly, reports delving into specific ESG issues are on the rise in relation to climate change.
Finally, there is a tendency toward global convergence in corporate ESG reporting.

The PRI should be a framework that will continue to provide value to investors and lead the way for market changes and should be aligned to regulatory requirements of countries around the world.
It is encouraging that the Japanese financial regulatory authorities place value on sustainable finance.

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The World Bank as a knowledge bank

The World Bank is not just a lender of money.
It is a knowledge bank working with its member countries to create a greener and more resilient future.
It has more than 130 offices throughout the world and staff with expertise in climate change and environment, sustainable cities and infrastructure, human capital, and other different fields.

The World Bank’s lending includes a technical package designed and monitored throughout the project’s lifecycle to achieve pre-determined sustainable development objectives.
The bank provides climate financing, offering project funds according to the achievement of milestones.

Just the same as it helped pioneer green bonds, the World Bank is now supporting further development of sustainable capital markets by engaging on different fronts, including building strategic partnerships.

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A stick-and-carrot approach

The investment world has seen a paradigm shift, as investors have begun to think about impacts on sustainable development.

Spending capital means providing capital directly to the promotion of and a shift to more sustainable activities.
A transition route to escape the worst possible damage from climate change may be a stick-and-carrot approach.
Investors can bring about indirect impact by changing capital cost for those who extract fossil fuels.
They can even cause supply shortages if they stop extraction of fossil fuels.

Investors can bring about results like government decisions by changing the capital cost for companies engaged in green activities and those in the extraction of fossil fuels.
They can influence whether mitigation of climate change can be achieved in the real world.

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Three pillars to accelerate GX

In relation to sustainable finance, the Japanese government has a policy to make the country carbon-neutral by 2050.
It has set out an intermediate goal of reducing greenhouse gases by 46% by 2030, and an ambitious vision on energy composition for 2030.
To fulfill its international promise, the government is determined to accelerate the so-called Green Transformation (GX), or an economic, social and industrial structural reform toward decarbonization.
More specifically, it will spend a total of 150 trillion yen in public and private GX projects in the next decade.

The Financial Services Agency has been working in line with three pillars, which are the enhancement of corporate disclosure, the fulfillment of market functions, and the fulfillment of financial institution functions.
These efforts will facilitate the healthy functioning of markets, and will allow us to promote the development of a framework to support a sustainable society and economic growth.

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Aiming for an environmental value economic bloc

I started a satellite data venture business and have learned that global warming is progressing.
Nowadays, we face the need to make changes to go carbon neutral.
Though we are conscious of it, we cannot take enough action because we do not know “what to do.”

That is why we created “becoz,” a new platform with environmental values.
It is a measure of environmental values that make your CO₂ emissions visible for your purchases paid by credit card.
We have an app to show you how to approach your target, and plan to apply it to a wider range of products including cars and houses.

We provide services to promote decarbonization at the individual level together with businesses and communities, with an eye toward creating an environmental value economic bloc.
By visualizing CO₂ emissions, we will change the awareness and behavior of ordinary citizens and make ourselves carbon neutral.

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ESG Visualizer Service Firm

We are Japan’s only nonfinancial big data group and environmental fintech venture company specializing in SDGs and ESG.

All investments and loans should be made based on the assessment on whether the target projects meet ESG requirements, but related costs are high.
For financial institutions, costs associated with investigation, analysis and evaluation are very high.
The costs will be reduced if data infrastructure supporting ESG data disclosure and evaluation is created around the world.
If this happens, everybody would be able to use it as social infrastructure just like roads and the internet.
We hope to create “google” for ESG data as social infrastructure.

We are now mainly working to collect and sort out open data.
In the future, we will aim to become an ESG visualizer service company that provides a service of making ESG visible.

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Aiming to Win 50 Million End Users

We are New Zealand’s first global leader in the field of fintech, providing payment platforms for banks and credit card companies across the globe as well as solutions against climate change.
The climate change solutions comprise the three core functions of measuring carbon footprint, spurring behavioral changes to reduce carbon footprint and providing opportunities to offset carbon footprint.

We aim to gain 50 million end users around the world by the end of 2023 by offering such services as calculating and visualizing the amount of CO₂ emissions utilizing customer transaction data from bank card payment services and proposing the most effective emissions reduction measure for each user.

In Japan, we have forged a global partnership with Mizuho Research & Technologies Ltd., and our project is eligible for aid under the Tokyo metropolitan government’s green finance assistance initiative.

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Biggest ESG Risk Data Provider in the World

We are the world’s biggest ESG risk data provider, and our data is now used by more than 500 client companies and nearly 50 partner companies.
We are also an ESG data provider, supplying data to advanced countries and emerging market and frontier countries, listed and unlisted companies, and infrastructure projects.

In addition, we offer our data to more than 80 major banks around the world, including Japanese megabanks, 17 of the 25 major investment advisory companies, U.N. agencies, index providers and business operators.

From an ESG risk perspective, we handle data that can be used for negative screening, not disclosed information from companies but information from media outlets, nongovernmental organizations and think tanks.
More than 120 staff members screen over 500,000 articles in 23 languages every day.

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Fusion of Financial and Nonfinancial Functions

Transition finance, which supports the process of transition to decarbonization, has an important role to play.
Without such functions, it would be difficult for Japan to attain its goal of realizing carbon neutrality in 2050.
We should aim to upgrade, in Tokyo, the financing function that supports the transition of the entire supply chains.
This matches the strategy by Tokyo, an international financial city, which leads others in the field of sustainable finance.

Mizuho Bank has formed a partnership agreement with the Tokyo metropolitan government.
Under the pact, we are cooperating in a range of areas, including helping corporate managers improve their business literacy and sharing various information.
In addition to providing financial services, beefing up nonfinancial functions and offering financial and nonfinancial services by putting them together is important for promoting sustainability.

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Evaluation of Nonfinancial Intangible Assets Is Important

Information obtained from companies’ financial statements disclosed for the evaluation of corporate values is mainly related to the near past and therefore has a short freshness.
Meanwhile, nonfinancial information, including on security centered around ESG, requires businesses to make long-term efforts, and such information has a long “best-before date.” Today, making investment judgments without taking this into consideration is impossible.
Our company is actively engaging in ESG investments by utilizing nonfinancial information for making decisions on whether to invest.

According to a U.S. company which offers a service of evaluating intellectual properties, intangible assets account for 90% of corporate values in the United States, 75% in Europe, 57% in South Korea and 44% in China.
By contrast, the proportion is lower in Japan, at 32%.
This is because the disclosure of and activities related to intangible assets are insufficient.
Companies (in Japan) are being urged to correctly reflect information containing evaluated nonfinancial intangible assets and intellectual properties in their corporate values.

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“Financing” Holds the Key

The world now faces difficult challenges such as the climate crisis and the energy crisis.
Financing holds the key to helping the world overcome the ordeals and achieve sustainable recovery.

Last year, the Tokyo metropolitan government updated its “Global Financial City: Tokyo” vision.
Tokyo is promoting the “Tokyo Green Finance Initiative” as it makes strategic efforts for the development of green finance.
It is helping foreign fintech companies working to push green finance advance to Tokyo.

We want to create a new financial trend of the public and private sectors joining forces to resolve challenges facing society.
For that purpose, the Tokyo metropolitan government will spend one billion yen to set up a social impact investment fund by the of the current fiscal year.
We expect the fund will attract ESG funds from both at home and abroad and create a wave of moves to take on challenges.

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