JFSA code of conduct to be finalised this year

Comissioner Junichi Nakajima updates Tokyo Sustainable Finance Forum on regulator's plans

Japan’s ESG code of conduct will be finalised by the end of the year, Financial Services Agency (FSA) commissioner Junichi Nakajima said at the Tokyo Sustainable Finance Forum yesterday.

In July, the FSA published a discussion paper, Supervisory Guidance on Climate-related
Risk Management and Client Engagement
,
and released its draft Code of Conduct for ESG Evaluation and Data Providers, which aims to heighten transparency around ESG research firms’ data-gathering methodologies.

Nakajima also said the FSA would be setting up several working groups to progress plans for decarbonisation and sustainable finance, reiterating the briefing given by the 14th meeting of the Expert Panel on Sustainable Finance, which was held on 20 September.

The first of these will be tasked with addressing the practical challenges investment firms face when engaging corporates on decarbonising.

“It is important finance institutions increase their support to their investees in combatting climate change,” he said, adding he hopes to encourage more “active dialogue” on plans to decarbonise, rather than divestment.

The second working group, launching this month, is tasked with coming up with practical guidelines to expand Japan’s impact investment market, which Nakajima said was still “small in comparison” with other regions.

Japan is also hoping to expand its social bonds market, Nakajima added. In July last year, the FSA launched a consultation to produce a set of guidelines for social bonds issuance.

“In order to ensure that there is enough financing to address social challenges, it is imperative for Japan to promote the issuance of social bonds in the private sector to drive the necessary capital into the implementation of social projects,” the regulator said at the time.

Also speaking at today’s forum, David Atkin, CEO of the Principles for Responsible Investment, said he was “encouraged to see the emphasis given to ESG reporting” in Japan.

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Natasha Turner

Natasha is global deputy editor at ESG Clarity, part of the Bonhill Group, and has been a financial journalist for six years. She has been shortlisted for Story of the Year and Investment Journalist of...