Japan’s Nikkei Asia Review
Sustainable Investing Gains Traction in Japan
TOKYO – ESG (Environmental, Social, and Governance) investing, a critical component of sustainable finance, is gaining traction in Japan, with more institutional investors and asset managers looking to incorporate environmental, social, and governance (ESG) considerations into their investment decisions.
Growing Popular
According to a survey conducted by Japanese asset manager Daiwa Securities, 71% of Japanese institutional investors are already incorporating ESG considerations into their investment strategies, while 26% are planning to do so in the next 12 months. The growth of ESG investing is driven by the increasing awareness of climate change, regulatory pressures, and the need for long-term, sustainable returns.
Government Support
The Japanese government has also been actively promoting ESG investing through initiatives such as the MiFID (Markets in Financial Instruments Directive) and the European Union’s Sustainable Action Plan. These initiatives aim to promote ESG investing, improve disclosure, and increase transparency.
Challenges Ahead
Despite the growing popularity of ESG investing, there are still challenges to be addressed, including data availability, methodology, and consistency. "ESG ratings are becoming increasingly important for evaluating companies, but there is a lack of standardization, which can lead to inconsistencies and confusion," said Akira Sakabe, head of ESG research at Daiwa Securities.
Industry Insights
Industry experts believe that ESG investing will become more widespread in the coming years, as more investors seek to align their portfolios with their values and create long-term, sustainable returns. "ESG is no longer an added extra; it’s a vital part of the investment process," said Michael J. Manby, CEO of Omikase Capital Partners. "As an asset manager, it’s crucial to incorporate ESG considerations to maximize returns and minimize risk."
Conclusion
As the finance industry continues to evolve, ESG investing is set to play a critical role in shaping the way investors make decisions. With the support of governments and regulatory bodies, Japan is poised to become a leader in sustainable finance, providing a sound foundation for long-term growth and prosperity.
