To navigate this evolving landscape, financial institutions recognize that “new skills are required to balance profit and impact and stay ahead of fast-moving changes in this evolving field.” 66 This presents both a challenge and an opportunity: developing robust business models based on social and environmental outcomes. According to the IDFI, “collaboration between and among companies and financial institutions is crucial.” 67 Nanako Kudo, Member of the Executive Committee of SIIF, agrees that the definition of the Impact Economy is still evolving in Japan. She explains, “Unlike impact investing, which is clearly defined and focused on an investment, we are trying to define the term in a way that Japanese stakeholders can share the vision for an impact economy and use it widely.” 68 Kudo adds, “SIIF expanded its strategy beyond impact investing, because to achieve systemic social change, we need to work on all the different pieces of the ecosystem. We don’t have sufficient capital and collaboration, and commitment is needed across philanthropy, family offices, private investors, pension funds, government, and consumers.” 69 She stresses, “We need to be able to change governance structures that will incentivize and support both start-ups and big corporations that lead to new consumer behavior.” 70 Sizing Japan’s Impact Ecosystem By the Numbers Sustainable Finance and ESG Sustainable finance in Japan has access to the largest pool of capital and is estimated at ¥537.6 trillion (approximately US$3.6 trillion) and is growing. 71 It is driven by global and Japanese sustainability disclosure standards, climate goals to achieve net zero emissions of carbon dioxide (CO 2 ) and expanding business interest in sustainability and impact. Japan has been called the “next ESG hotspot” by insurance investors and the media. 72 At a time when ESG investing has become a political football, Japan has thus far successfully managed to “tread the ESG Tightrope.” 73 The areas in which ESG and sustainable finance have expanded are Green, Blue, and Sustainability Bonds in public and private investments at an estimated ¥6.7 trillion (about US$44 billion) in 2023. 74 In September 2022, Maruha Nichiro Corporation issued Japan’s first blue bond, raising more than ¥6 billion (US$39 million), surpassing the ¥5 billion issuance target. 75 The objective of the fund was to support an inshore salmon aquaculture project in Toyama Prefecture in collaboration with Mitsubishi Corporation. This project was evaluated according to the International Finance Corporation’s (IFC) Blue Finance Guidelines, which provide guidance on assessing contributions to ocean sustainability.
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Ten Years in the Making
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