Japan FSA Releases Guidelines on Climate Transition Finance

The guidelines incorporate the recommendations on disclosures from the ICMA Climate Transition Finance Handbook, which was published in December.

Japan’s FSA (Financial Services Agency) has released guidelines on climate transition finance.

The guidelines will help to promote financing for projects such as renewable energy, as well as for transition efforts to move hard-to-transition industries towards decarbonisation, the regulator said.

The guidelines were jointly developed by the FSA, METI (Ministry of Economy, Trade and Industry), and Ministry of the Environment, in line with Japan’s pledge to achieve carbon neutrality by 2050.

The FSA issued a consultation on a draft version of the guidelines in April.

During the consultation, feedback was also sought from ICMA (International Capital Market Association), to ensure consistency with the ICMA Climate Transition Finance Handbook, which was published in December.

The guidelines incorporate the ICMA Handbook’s recommendations on disclosures, namely the four elements: (1) transition strategy and governance, (2) business model environmental materiality, (3) “science-based” strategy, and (4) implementation transparency.

In addition, the guidelines cover supplementary information to be disclosed and issues related to independent review, assurance and verification.

The guidelines are intended to help companies looking to raise funds in bonds and loans for investments in energy efficiency and initiatives to transition towards decarbonisation and low carbonisation.

They can also serve as a reference for fundraisers, financiers and other market participants, the FSA said.

The guidelines are available here.

An overview is available here.

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