How is Impact Defined in Japan: Why Language Matters Nanako Kudo brought the concept of impact investing to Japan. Ten years later, she reflects on whether the impact investing movement she helped launch is actually having a positive impact. She responds, “Is impact investing really making an impact? The answer would be, no, not yet. The market has grown so much ... more than expected and grew much faster than expected ... Huge money is flowing to impact investing, but if we look at the situation of social issues, I don’t think there is enough progress or enough change on the ground comparing to the amount of money flowing.” 4 Kudo cites the 2024 World Economic Forum Gender Gap Index as evidence: “Japan is somewhere around 120 (118 out of 146 countries) or so and it doesn’t change a lot. A little bit of progress has been made in child poverty, but still six or seven children live in poverty in Japan. We are one of the richest countries in the world and there’s this poverty rate of 50 percent for single mothers. Why are these problems remaining?” 5 She also sees a disconnect between finance and social issues and says, “As it is, even with this kind of momentum built for impact investing and the impact economy, and everyone is talking about this word of impact, and this seems like everyone is passionate about taking action for social issues ... There this a disconnect. I think the intentions are true ... I really have a positive feeling about that. But somehow, we need more. We need more actions to connect those two.” 6 The Global Impact Investors Network (GIIN) defines impact investing as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.” 7 Even though the word impact does not translate easily into Japanese, it has become ubiquitous among the GSG Impact JAPAN ecosystem and used by members in business, philanthropy, and public sectors. Over the past decade, various Japanese prime ministers have supported the term impact in different forms—new capitalism, impact finance, impact investing, and sustainable finance. 8 In 2024, The Financial Services Agency (FSA) issued Impact Investing Guidelines. 9 Moreover, the Ministry of Health, Welfare and Labour announced a policy that GPIF (Government Pension Investment Fund) could make impact investments. 10 Also in 2024, executives Masahiro Minami, President of Resona Holdings, Toshiaki Sumino, President of Dai-ichi 166 “Social investment can be directly translated in Japanese, but impact investing is difficult to translate and hard to define. There was a lot of conversation about how to pick the right word. It means a lot because the words in Japanese have an image, nuance, and context.” —Nanako Kudo, Executive Director of SIIF 3
Ten Years in the Making
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