carbon emissions and water usage. 53 These efforts aim to enhance transparency and ensure investors have reliable information on companies’ environmental and social performance. They also will result in regulations that will impact Japanese companies operating globally. In Japan, finance authorities are mandating disclosure standards that are projected to affect nearly four thousand public companies in Japan. 54 In 2022, during a speech in London, former Prime Minister Kishida advocated for “new forms of capitalism” that represent a “stronger, more sustainable version” capable of addressing widening inequality, climate change, and urbanization challenges. 55 This vision aims to create sustainable and inclusive economies in Japan and other democratic nations to uphold freedom and democracy. Kishida noted the evolution from laissez-faire economics to the welfare state and neoliberalism, calling for enhanced collaboration between public and private sectors. 56 Prime Minister Shigeru Ishiba has expressed his intention to carry on the work of Prime Minister Kishida’s economic policies. 57 Ishiba, as the son of a long-serving politician from Tottori (a rural part of western Japan), has positioned himself as a champion of Japan’s “forgotten” regions. A former defense minister, he has pledged to clean up the ruling party, revitalize the economy, and address security threats from Russia, China, and North Korea. 58 Most interviewees expressed optimism that the new administration would support an impact economy, albeit with modifications. When asked about potential threats to Japan’s Impact Economy and focus on sustainability, several interviewees pointed to geopolitics, and in particular to the 2024 United States (US) election and the rise of far-right candidates. During Donald Trump’s first presidency, G7 members were discouraged from discussing climate change and sustainability, 59 leading to concerns that his second term could undermine sustainability regulations and collaboration on climate change and the UN Sustainable Development Goals. Despite the politicization of ESG, Japan has expanded its commitment to sustainability and has been recognized as an international “hot spot” for ESG initiatives. 60 On a global level, even with the politicizing of ESG, the Morgan Stanley Institute for Sustainable Investing and Wealth Management 2024 survey of individual investors found a continued growing interest in sustainable investing. The survey found that more than three-quarters of global investors are engaged in sustainable investing, with 57 percent reporting increased interest in the last two years and more than half anticipating higher allocations in the next year. 61 The drivers behind this surge include new climate science findings, performance data on sustainable investments, and a belief that strong ESG practices can lead to higher financial returns.
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Ten Years in the Making
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