Japanese companies lead world in disclosing climate risks
Japan’s largest companies have signed up to new environmental disclosures at a faster rate than their European and US rivals, as Tokyo prepares to ramp up its implementation of climate standards before the 2020 Olympics.
Nearly 200 of Japan’s big companies and agencies, including Mazda Motor, Nomura and Sony have complied with the Task Force on Climate-related Financial Disclosures, a framework that was created by Mark Carney, governor of the Bank of England, and other central bankers in 2015.
Initially drawn up in response to a request from G20 leaders at a time of heightened international concern over the effects of climate change, the recommendations ask companies to report on how they are addressing associated risks within their sectors.
The figures are likely to spark debate at next week’s meeting of the United Nations General Assembly in New York, where the body will unveil measures further encouraging corporate and financial leaders to combat climate change.
The 172 Japanese companies supporting the TCFD puts the country ahead of the US, where only 107 companies have backed the measures, and the UK, which has a tally of 109 adoptees.
Until recently Japan has been viewed as a laggard compared to Europe on environmental, social and governance issues, and its companies have been less obviously vocal than some American groups about championing green issues on the world stage.
Next week, for example, a large consortium of mostly US companies will unveil a new initiative to champion the United Nation’s Sustainable Development Goals, which include environmental targets, with a “Live Aid’ style concert next year, in an effort to drum up more global support.
But while Japanese companies have been less involved in these types of dramatic gestures, the Abe government — in contrast to the Trump administration — has recently thrown its weight behind environmental goals. Japan’s ESG investing assets quadrupled from 2016 to 2018, from $474bn to $2tn, according to the Global Sustainable Investment Alliance.
Lenders and investors have applauded the TCFD co-ordination as a valuable tool for obtaining consistent information about companies’ climate risks at a time when many other green ratings can be opaque and inconsistent.
For example, Diageo, the world’s largest spirits maker, has reported its carbon
emissions and material vulnerability to water scarcity as part of its TCFD adherence. In Japan, Sumitomo Mitsui Banking Corp in April published new disclosures for TCFD about its risks to extreme weather as well as revenue opportunities for the company stemming from demand for financing renewable energy projects.
Japan vaulted ahead of the US and UK on TCFD in May when more than 60 companies threw their support behind the reporting programme. Notable Japanese companies that have not supported TCFD include SoftBank, Olympus and Honda.
Next month, Tokyo is scheduled to hold a TCFD summit. By the end of 2020, Japan’s Ministry of the Environment wants at least 100 local companies, compared to 51 currently, to have their carbon reduction efforts audited by the Science Based Targets initiative, a not-for-profit group that is a collaboration between the UN Global Compact and environmental associations.
Other climate initiatives are in the works as Japan prepares for the 2020 Olympics, said Kunio Ito, a professor of Hitotsubashi University and one of the founding members of Japan’s TCFD Consortium. “We totally believe the Tokyo 2020 Olympics will be a great opportunity to showcase our innovation to the world,” Mr Ito said. “We have so many exciting projects under way right now, from reducing food loss and waste to replacing single-use plastics.”