The Tokyo Sustainable Finance Forum was held on Tuesday, Feb 9th, 2021.
This forum, which aims to promote sustainable finance and the Tokyo Metropolitan Government (TMG)'s presence in the field, invited sustainable finance experts and explored a wide range of sustainable finance opportunities in the public and private sectors. The forum was attended by many people from domestic and overseas financial institutions, financial industry associations, and private companies.
This article provides an overview of the panel discussion.
The panel discussion focused on “Diversification and Possibilities of Sustainable Finance" from the multiple perspectives including financial administration, financial institutions, and academia on the four themes: (1) Characteristics and trends of sustainable finance in Japan; (2) Corporate value and sustainable finance; (3) Non-financial and ESG information; and (4) The decarbonization era, with/after COVID-19, and beyond. At the end of the panel discussion, the panelists were asked about expectations for the Tokyo Metropolitan Government, who is aiming to become a world-leading city in sustainable finance.
The facilitator, Ms. Isogai explained trends in sustainable finance while also emphasizing important points raised during the keynote speeches. Regarding the sustainability finance trends, she pointed out key figures: (1) In order to achieve the Paris Agreement, (USD) 100 billion（i）per year from 2020 will be required; (2) According to the International Energy Agency (IEA), it is estimated that (USD) 2 trillion（ii）will be needed in the future to accelerate the transformation of the energy sector; and (3) To achieve SDGs, it is estimated that annual (USD) 2.5 trillion（iii） funding gap is to be filled. She also pointed out that sustainable finance is a field with significant potential as well as a growing demand.
Mr. Ikeda, Chief Sustainable Finance Officer of FSA, gave an overview and background of efforts to date in the Japan’s financial administration. Mr. Takegahara of the Development Bank of Japan commented on Japanese financial institutions’ responses to ESG and SDGs and also the current status of the development of guidelines and so on. Mr. Matsuo of the Japan Exchange Group introduced trends related to the disclosure of ESG information by Japanese companies. Leo Van Stijn, from ING Bank N.V. Tokyo Branch, commented on the differences between Europe and Japan's sustainable finance and expectations for Japan.
Professor Iriyama of the Graduate School of Business Management at Waseda University pointed out that, as a challenge for Japanese companies, they are passive toward ESG agenda and lacking ownership, and also insisted that Japanese companies need a more long-term perspective for sustainable corporate value creation. Mr. Muto of MUFG Bank, introduced their various initiatives which aim at enhancing corporate value. Mr. Ikeda of FSA stated that management of the capital cost is important for enhancing corporate value over the medium to long term, and that in order to do so, it is necessary to work on non-financial information.
Development Bank of Japan's Mr. Takegahara explained how non-financial information is used by financial institutions and investors, and Mr. Matsuo of the Japan Exchange Group, explained trends in corporate non-financial information disclosure and required matters for listed companies. Professor Iriyama at Waseda University pointed out that while corporate non-financial information disclosure is important, the most important issue is companies’ inability to explain their long-term value, and the issue of the approach of engagement with investors.
Mr. Muto of MUFG Bank, stated that following the COVID-19 pandemic, a change of perspective is required in terms of how to respond to the challenges facing society and customers. He also introduced MUFG's efforts. Mr. Van Stijn, from ING Bank N.V. Tokyo Branch, cited responses to biodiversity as the next trend toward decarbonization, and introduced EU’s leading practices such as the formulation of a biodiversity strategy and circular economy for 2030（ⅳ）（ⅴ）.
After the Q&A session, panelists gave comments on their expectations for the Tokyo Metropolitan Government, which is aiming to become a leading city in sustainable finance.
One of the opinions expressed by multiple panelists is the expectation for the development of an ecosystem for sustainable finance. As a global financial center, Tokyo is a special location where many financial institutions are located, and many industries can discuss the issue across the board. While the FSA mainly deals with policy and registration aspects, Tokyo is expected to build an ecosystem for sustainable finance, which will be important to promote the development of sustainable finance. Some also expressed the opinion that it will become increasingly important to build a market where not only domestic companies, but also high-growth companies from Asia and all over the world can gather capital.
Many panelists expressed their desire to continue to have active and lively discussions, and also expressed their expectations for TMG's continuous efforts to promote sustainable finance.