Trio of reports launched at Tokyo Green Bond Symposium: Japan Green Finance 2018, Low Carbon Buildings and Green Taxonomy

First Japan Green Finance Report, more activity forecast in 2019 

Climate Bonds lifts collaboration with new Green Bond Issuance Promotion Platform

JRTT issues first Japanese Climate Bonds Certified Green Bond  


Inaugural Japan State of the Market report 

Last week’s Japan Green Bond Symposium, organised by Ministry of the Environment, Japan (MOEJ), formed the backdrop for the launch of Climate Bonds' inaugural  'Japan green finance state of the market - 2018' report, 'Financing Low Carbon Buildings' and ‘Taxonomies to Identify Green Assets' briefing papers. 

All three are designed for the 'Green Bond Issuance Promotion Platform', operated by the Institute for Global Environmental Strategies (IGES) with support from MOEJ.


The Reports

Japan – Green finance state of the market 2018 presents a detailed overview of the Japanese green bond market. With USD9.7bn in cumulative issuance, Japan is 10th in global country ratings and 2nd in Asia-Pacific after China.

2018 annual issuance was at USD4.1bn, 22% up on 2017 figures. The annual figure places Japan 12th in the 2018 country rankings and represents 42% of cumulative issuance since market inception in 2014 when Development Bank of Japan entered the green bond market with a sustainability bond.

The report analyses developments in sectors with green growth prospects including low carbon residential property, transport, forestry and paper, manufacturing and the public sector. 

Buildings and Energy dominate cumulative use of proceeds with over a third allocated to Buildings.


Buildings lead on use of proceeds at 35%

Top 5 issuers account for two-thirds of issuance

  • 91% of all green bonds have an external review at issuance, and all outstanding bonds issued prior to November 2019 have post-issuance reporting in place.
  • EUR denominated bonds are the most popular currency at 45% of issuance followed by USD at 28% and JPY at 26%.
  • Benchmark size deals of USD500m or more or equivalent comprise less than a quarter of deal count but account for almost 2/3rd (64%) of issuance.
  • Real estate financing is an area with high green issuance potential. Other areas include transport and sustainable forestry/paper products, as exemplified by the table of top 5 climate aligned issuers (companies that generate 75% or more of their revenues from climate-aligned business lines).

Top 5 Japanese climate aligned issuers include 3 in transport sector 

Notes: Data as of 30/06/2018. * Sustainable land use includes certified forestry and related products, e.g. pulp, paper and packaging.

The 2nd and 3rd Paper  

'Financing Low Carbon Buildings' ​and 'Green Market Taxonomies' were prepared specifically for the Platform. Designed to provide local issuers and investors with the latest global analysis and information from Climate Bonds. All three publications were developed with support from the Institute for Global Environmental Strategies (IGES) and will be translated into Japanese.


The Platform 

Launched in May 2018 with little fanfare, the Green Bond Issuance Promotion Platform provides information related to green bonds, policies, research, and MOEJ’s support programme for domestic issuers. 

Climate Bonds has been collaborating with MOEJ by providing market data and green bond information for the Platform since launch.

The platform also carries some information on domestic green bond issuance to date and Climate Bonds also published a comprehensive table of Japanese issuance in late in 2018. 


Sean Kidney on Japan 

“Japan, the world’s second-largest bond market, has been bubbling green since last year. Ministry of the Environment’s enthusiasm and efforts in promoting guidelines and making it easier for stakeholders to tap into this market is a highly commendable example of the pivotal role public policymakers have in supporting green innovation and market development.” 

Left: Sean Kidney's address to the Green Bond Symposium,

Right: Presentation to Mr Takashi Kitamura, Chair of Japan Railway Construction, Transport and Technology Agency (JRTT) marking the first Climate Bonds Certified green bond issued in Japan.

“There is a significant need to invest in climate resilient and adaptive infrastructure from both the public sector and corporate issuers. The latest announcement from Japan Railway Construction, Transport and Technology Agency (JRTT) of a Certified green issuance is welcome leadership from the public sector.” 

“We see the Green Bond Issuance Promotion Platform playing a positive role in assisting other public and corporate issuers in developing their green bond programmes.”


The last word

Japan has been relatively slow to the green bond market, a point noted by longtime green finance observers like Keith Mullin, and business media, while Responsible Investor is pointing to a rise on ESG activity, in part led by the giant Government Pension Investment Fund (GPIF). This movement will in time increase domestic demand for a quality green product.  

In November 2018, Green Finance Network Japan (GFNJ) was launched and on March 1 MOEJ’s Green Bond Symposium saw widespread participation from companies, local municipalities, institutional investors and other stakeholders. 

There’s also plenty of scope for large domestic climate aligned issuers, particularly in transport, to shift their bond offerings along the spectrum into green issuance. 

2018 saw a quiet, but an identifiable gathering of momentum around green investment that should see Japan remaining in the top 10 of global issuers at the end of 2019.

We expect an increase in activity, possibly some surprise issuers, and we’ll have some more to say later in the year. 


‘Till next time

Climate Bonds.