Sustainable finance in Japan

Schumacher, Kim / Hugues Chenet / Ulrich Volz
External Publications (2020)

in: Journal of Sustainable Finance and Investment 10 (2), 213-246

DOI: 10.1080/20430795.2020.1735219

This article examines the role of sustainable finance and investment in Japan and how the Japanese financial sector can mitigate growing climate risks and support Japan's transition towards a zero-carbon, sustainable economy. It first illustrates Japan’s exposure to physical and transitional climate risks before reviewing emerging practices in sustainable finance. These include the growing importance of environmental, social, and governance (ESG) criteria in financial decision-making; more rigid reporting and disclosure standards; and the development of green bond and sustainable investment markets. The article also assesses the role of policies and regulations in scaling up sustainable finance and low-carbon infrastructure investments. Subsequently, it analyses transitional climate risks via scenario analysis, applying the Paris Agreement Capital Transition Assessment (PACTA) tool to examine the exposure of subsectors of the Japanese equity market over several climate scenarios. The article concludes with policy recommendations for aligning Japan’s financial sector with global climate and sustainability goals.

About the author

Volz, Ulrich



Further experts

Aleksandrova, Mariya

Climate risk governance 

Bauer, Steffen

Political scientist 

Beck, Tanja

Political Science 

Brandi, Clara

Economy and Political Science 

Brehm, Johannes


Dafe, Florence

Social Scientist 

Dippel, Beatrice


Hägele, Ramona

Political Scientist 

Iacobuta, Gabriela

Environmental Researcher 

Kuhn, Sascha

Social Psychology 

Lehmann, Ina

Political Science 

Malerba, Daniele


Mathis, Okka Lou

Political Scientist 

Never, Babette

Political Scientist 

Pegels, Anna


Schiller, Armin von

Political Scientist 

Srigiri, Srinivasa Reddy

Agricultural Economist